airBaltic CEO Bertolt Flick could face a hefty fine or possible jail time for not complying with the tax authority's request. Photo by Harry Callan.

RIGA — Latvia was abuzz Friday with reports that tax authorities are waiting patiently for airBaltic CEO Bertolt Flick to provide information on his income and the income of the air carrier’s top officials.

The news agency LETA reported that a representative of the Latvian Revenue Service said authorities would give Flick the opportunity “within reason,” or until Christmas, to provide information on personal income.

Following this is the foreboding phrase that Flick risks a steep fine or even a prison sentence if he refuses to comply with the tax authority’s request. Reports indicate that Flick was supposed to have provided in May a list of all government officials who occupied positions in airBaltic, but he refused to do so on the basis that he does not consider himself to be a government official. Last month a court ruled that Flick should provide the list, but the CEO declined to comply.

“As a private investor who owns 47.2 percent of airBaltic, I can’t be a government official,” Flick was quoted as saying.

The decision by tax authorities to zero in on Flick and other company executives is not surprising given their high net worth and the tax service’s core task to raise revenues. In addition, Flick has found himself in the center of several controversies in recent months, particularly concerning the size of his compensation package, which is reported to be quite high for Latvian standards — not least of all considering airBaltic closed 2008 with a loss of nearly €40 million.

Flick’s decision to launch a new cab company raised many eyebrows given the oversaturated taxi market in Riga. Flick has also asked the government for additional investment in the company since, in addition to covering the annual loss, the carrier’s charter capital is too small for its continued development.

This request for patronage during a time of steep recession has angered many Latvians. Finally, a cloud of mystery also hangs over Baltijas Aviācijas Sistēmas, a firm controlled by Flick and other airBaltic managers, who bought a 47.2 percent stake in the carrier from Scandinavian Airlines earlier this year. airBaltic is 52.6 percent owned by the Latvian government. The state’s stake in airBaltic is managed by the transport ministry.