CorruptionFraudNews

Latvia reeling from explosive corruption scandal

The stream of corruption scandals in the EU continues to grow and, in the most recent case from Latvia, in spectacular fashion. If the film rights for this latest saga have not already been snapped up, they soon will be.

Ilmars Rimsevics

Latvia’s central bank governor, Ilmars Rimsevics, is accused of soliciting a bribe from Trasta Kommercbanka AS, a bank closed in 2016 in connection with a $20bn money laundering scheme. It is alleged that in return for helping the bank evade justice he received around $300,000 from them. A Latvian lawyer working on the Trasta case was then assassinated in a hail of bullets as he drove through Riga, the Latvian capital on May 30.

Rimsevics denied all allegations and has refused to resign his post. EU rules dictate central bankers can only be removed from office for “serious misconduct” andx given the slowness of the Latvian justice system it is unlikely he could be brought to justice before his term ends in 2019.

Despite being a member of the European Central Bank’s Governing Council, Rimsevics can’t leave the country for meetings and cannot even access his office at Latvia’s central bank. He has had to name a proxy to attend in his absence while the ECJ prepares to issue a ruling on the restrictions placed upon him by the Latvian justice system, adding an acutely embarrassing element for the EU and the struggling ECB.

Rimsevics denies all wrongdoing and is deploying a now familiar argument in the world of EU corruption: it’s all a big conspiracy from the banking world, in this case, ABLV bank. When the US targeted ABLV over money laundering, links to organised crime and dealings with states under sanctions, Rimsevics believes the bank set him up as a counter blow. Though Latvian officials insist the two cases are unrelated both Rimsevics and ABLV blame each other for the difficulties they find themselves in. As details slowly emerge, there is a strong suspicion that there is much more to come out.

Latvia poses a real problem for the EU. It has a history of financial scandal and corruption and there is little serious prospect of reform in the near future. As a Eurozone member it only adds to the EU’s woes, despite its economy being small enough to pose little systemic risk to the wider continent or financial architecture. But given the extraordinary goings on in this case, the promise of much more to come, the stage is set for yet another damaging episode in the EU’s struggle to clamp down on corruption.

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