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Latvia - Corruption

Corruption is in full force in Latvia and groups with limited membership pursuing their own economic interests often call the tune, Inguna Sudraba (For Latvia from the Heart party), the chairwoman of the ad hoc parliamentary committee probing the so-called "oligarch affair" said 26 January 2018. When presenting to the parliament the overview of the committee's final report, Sudraba said there was "a full-cycle system" at work in Latvia, protecting its own and pushing for the results to advance own causes. The mass media are being used to create an illusion that democracy exists or to make noise to divert public attention away from other things.

In this system, "a cog protects other cogs" and it is vain to hope that the Latvian anti-corruption authority would help break down the system, Sudraba said, The Latvian ad hoc parliamentary committee probing the so-called oligarch affair adopted its final report. The committee said in its report that it had spotted signs suggesting state capture but would not identify anyone by name.

In July 2017 the Latvian parliament set up the ad hoc committee to probe the so-called oligarch affair to look for signs of state capture and to examine the quality of pre-trial investigation. Sudraba was elected as the committee chairwoman despite the fact that she had been mentioned in the oligarch conversations that the committee was supposed to probe.

The oligarch conversations are a series of transcripts of high-ranking politicians and businessmen's conversations at Ridzene hotel in Riga which have been published by the Ir magazine. Those records were one of the main pieces of evidence in a 2011 criminal case on bribery, money laundering, abuse of office and other crimes, implicating a number of high-ranking politicians and public figures, including Andris Skele, Aivars Lembergs, Ainars Slesers and others.

The Corruption Prevention and Combatting Bureau (KNAB) investigated the case for several years, but eventually concluded that the secretly-recorded conversations did not constitute compelling evidence, therefore the criminal case was closed.

As rapid as Latvia's growth has been, it has been hampered by corruption, which is prevalent at all levels and throughout all sectors of the economy. It also holds back Latvia's political development as many of the major political parties are tied to oligarchs who use politics to advance their personal business agendas. Latvia has seen progress in combating corruption, with several of the oligarchs under active criminal investigation and nother arrested. The complexity of the cases and the vast resources of the oligarchs make successful prosecution of these cases difficult, but if convictions and stiff sentences can be secured it will help provide a brighter future for Latvia.

Latvian law enforcement institutions, foreign business representatives, and non-governmental organizations, such as Transparency International, have identified corruption and the perception of corruption as persistent problems in Latvia. According to the 2011 corruption perception index by Transparency International, Latvia ranks 61st out of 183 countries (in order from the lowest perceived level of public-sector corruption to the highest). Among EU member states, Latvia ranks 22nd out of 27.

In an effort to strengthen its anti-corruption program, the Latvian government has adopted several laws and regulations, including the 1998 Law on Money Laundering (amended in 2009), and the 2002 Law on Conflicts of Interest (replacing the 1995 Anti-Corruption Law). The Conflicts of Interest Law imposes restrictions and requirements for public officials and their relatives. Several provisions of the law deal with the previously widespread practice of holding several positions simultaneously, often both in the public and private sector. The law includes a comprehensive list of state and municipal jobs that cannot be combined with additional employment. Moreover, the law expands the scope of the term "state official" to include members of boards and councils of companies with state or municipal capital exceeding 50 percent.

Latvia has signed the Criminal Convention on Corruption of the Council of Europe and the United Nations Convention against Corruption. Latvia has expressed interest in joining the OECD Convention on Combating Bribery. Under Latvian law, it is a crime to offer or to accept a bribe or to facilitate an act of bribery. Although the law stipulates heavy penalties for bribery, there have so far been only a limited number of government officials prosecuted and convicted for corruption.

The primary institution responsible for combating corruption is an independent anti-corruption agency -- the Anti-Corruption Bureau (known by its Latvian acronym KNAB) -- whose task is to carry out operational activities on fighting incidents of corruption. KNAB has recently experienced internal personnel controversies that have limited its effectiveness. A new KNAB director took office in November. The Crime Prevention Council chaired by the Prime Minister is in charge of coordinating and supervising all State authorities activities to prevent crime and corruption. The Prosecutor General's Office also plays an important role in fighting corruption.

There was a perceived lack of fairness and transparency in the public procurement process. A number of companies, including foreign companies, have complained that bidding requirements were sometimes written with the assistance of potential contractors or couched in terms that exclude all but "preferred" contractors.

The story of Aivars Lembergs is one of post-independence Latvia's most compelling yet morally troubling tales. To much of his electorate in Ventspils, Lembergs is the brilliant protector of the city's autonomy and the great provider of prosperity. To successive Lavian governments and individual politicians, Lembergs' economic and political patronage network is a force to either co-opt, plug into, or fight ) but definitely not to ignore. Aivars Lembergs is energetic, clever and confident. He styles himself a master of the universe in dealing with Russian elites, but many say Russia's leading oil businessmen are tired of 'the little tyrant from Ventspils."

Mainly due to his ownership and control of Mediju Nams, a company that published six newspapers, he has also proven adept at keeping himself in the public eye without revealing, or having others reveal, details of his personal and business life. One of the newspapers, Neatkariga Rita Avize, Lativa's second largest in terms of number of subscribers, serves as Lembergs' mouthpiece by organizing press campaigns against his enemies ) the favorites being the US Embassy, the Soros foundation, and the anti-corruption bureau ) and expounding Lembergs' position on every significant event in Latvia.

In 2006, Ventspils mayor Aivars Lembergs was charged indicted on corruption charges for refusing an order from the Cabinet of Ministers and using office for personal gain. But the charges were not overly serious and no jail time was involved. This case was dropped shortly after charges of money laundering and corruption were brought against him in 2007.

Lembergs' arrest in March 2007 on charges of large scale money laundering and bribery is seen as potentially the most important public corruption case in Latvia's history. Until his indictment, Lembergs managed to avoid indicment for corruption and conflict of interest by setting up complicated ownership, management, and income distribution structures for his business holdings. He had allegedly financed several political parties through 'political shares' in Ventspils companies as well as pay offs currently being called "Lembergs' Grants" or stipends to Members of Parliament and political parties.

In 2006 Latvia's monied interests, including Lembergs, want a change in the criminal code that would allow suspects access to evidence against them even while the investigation is ongoing, potentially allowing suspects to see what the police haven't yet found and take steps to destroy or hide information. The Riga Center District Court made the decision to arrest Lembergs in 2007 on the grounds that he could potentially interfere with the investigation process or intimidate potential witnesses and placed him in prison.

Revelations in 2006 that then Minister for Transport Ainars Slesers arranged a vote buying scam to sway a municipal election (and presumably free up prime real estate for development by him and/or his supporters) was met with a yawn. Allegations from New Era ministers that senior officials in the economic and justice ministry were mishandling EU structural funds and prison construction contracts respectively were used by other parties to make the point that New Era can't work with others; and the public seems to agree that New Era should have stayed in government and pursued its agenda from within the government.

A scandal in the passport office not only illustrates the nature of the corruption problem in Latvia, but also the challenges in addressing it. Between 2003 - 2005 almost 100 individuals, mainly from Russia and other former Soviet countries, were able to secure valid Latvian passports by having fraudulent entries created for them in the Latvian citizenship register. These people paid as much as 100,000 Euros to receive these documents. As the scandal unfolded in the press at the beginning of 2008, no officials lost their jobs, although one did resign.

The Corruption Prevention and Combating Bureau (KNAB) is primarily responsible for fighting corruption. The KNAB has faced lingering criticism from the international community and local NGO's for its perceived inability to or avoidance of dealing with high level, deep rooted corruption. While the KNAB has made great strides in addressing public corruption among bureaucrats, 2006 was the first year it really went after high level officials such as mayors, judges and the most senior bureaucrats. Corruption is closely linked to Organized Crime, which the KNAB is ill equipped to handle, and the KNAB often lacks the political support to deal with Organized Crime.

Internal struggles and the perception of bias in referring cases to prosecutors hampered the KNABs effectiveness during much of the year. NGOs and other observers expressed concerns that the KNABs director, Normunds Vilnitis, participated in a political attempt to hobble the agency. In March 2011, Vilnitis suspended and later dismissed his deputy, Alvis Vilks, allegedly over personality conflicts. Also in March 2011 the KNABs other deputy, Juta Strike, who was generally considered honest and competent, left the country in response to alleged death threats. In June 2011 parliament dismissed Vilnitis based on the findings of a special investigative committee that he had committed numerous legal and procedural violations during his tenure. In November parliament appointed Jaroslavs Strelcenoks as the new director of the KNAB.

In May 2011, while Vilnitis was on a vacation, the KNAB launched a major investigation into alleged corrupt practices by high-profile politicians and business leaders, including members of parliament, the mayor of the city of Ventspils, and the chief executive officer of Latvias national airline, airBaltic. The KNAB searched the homes and businesses of some of these individuals. However, parliament invoked its immunity to block the KNABs execution of a search warrant at the office of opposition member of parliament Ainars Slesers of the For a Good Latvia Party. The investigation continued at the end of 2011. These events, and the perception of corruption connected with them, led the president to call for, and the electorate to approve, early parliamentary elections.

On 04 August 2011, the KNAB warned that corruption risks remained high within the Latvian government on both the administrative level (e.g., bribery of civil servants) and the political level (e.g., abuse of office). The KNABs report raised special concern about irregularities in public procurement processes. During the year the KNAB initiated 20 criminal investigations against government and law enforcement officials, and other legal institutions initiated 169 such investigations. The KNAB also forwarded to the prosecutors office 23 criminal cases involving 52 individuals.





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