Banks, Corruption, Financial Services, Latvia, Legislation

Ilmars Rimsevics.

The premier said that the extraordinary government meeting dealt with two issues - Rimsevics' detention, on which ministers were briefed by the Corruption Prevention Bureau (KNAB), and the situation with ABLV Bank.

Kucinskis said that there is no relation between these two cases, adding that KNAB would provide more detailed information on the Bank of Latvia governor' s arrest at a news conference later today.

Finance Minister Dana Reizniece-Ozola (Greens/Farmers) informed that ABLV Bank has promised to submit its business plan to the Financial and Capital Market Commission (FCMC) today to prove its ability to operate in the long term.

The minister said that the bank has expressed readiness to collaborate with the U.S. side, which last week accused ABLV of involvement in money laundering schemes. ABLV Bank is ready to open up for inspections and replace its managers to prove it can carry on with its operations. "This is a matter of life and death for the bank," Reizniece-Ozola added.

Bank of Latvia Governor Ilmars Rimsevics is suspected of demanding and receiving a huge bribe - at least EUR 100,000.

Jekabs Straume, the chief of the Latvian Corruption Prevention Bureau (KNAB), announced at the news conference today that the criminal proceeding in question involved two people - a high-ranking Bank of Latvia official and an individual - as well as a bribe of at least EUR 100,000.

But the criminal case opened on February 15 is not related to any of the credit institutions operating in Latvia - neither ABLV Bank accused of involvement in money laundering and corruption by the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury nor potential litigation between the Latvian state and Norvik Banka.

As reported, the KNAB has started a criminal proceeding and detained Rimsevics and businessman Maris Martinsons. The KNAB conducted searches at Rimsevics' home and his office in the Bank of Latvia on February 16. Martinsons was detained on Friday but got released on Sunday evening. Rimsevics was detained late on Saturday.

Within the last month, there have been two reports about possible corruption in the Latvian finance sector. First, Norvik Banka said that former insolvency administrator Maris Spruds, who has now been charged with extortion and money laundering, and a high-ranking financial official in Latvia had extorted money from the bank's biggest shareholder, promising that the financial regulator would get off the bank's back after the payoff.

Rimsevics, who was first appointed as the Bank of Latvia governor in late 2001, is now nearing the end of his third successive term in the office. He said previously that he would not seek to be re-elected for yet another six-year term as the head of the Latvian central bank.