Central bank chief suspended in Latvia corruption scandal

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central bank chief suspended in latvia corruption scandal Central bank chief suspended in Latvia corruption scandal skynews ilmars rimsevics latvia 4236081

Imagine the turmoil if Mark Carney, the Bank of England governor, had spent the weekend under arrest following allegations from a leading bank that he had been seeking and accepting bribes – all as payments from another top UK bank had been suspended while it was under investigation for laundering money including funds destined for North Korea’s missile programme.

That, roughly, is what is currently happening in Latvia. Ilmars Rimsevics, the governor of the Baltic state’s central bank, was arrested at the weekend on suspicion of demanding and receiving bribes worth more than €100,000.

Mr Rimsevics, who has held the post since 2001 and who also sits on the governing council of the European Central Bank, denies the accusations.

Latvia’s anti-corruption agency announced on Monday it had launched criminal proceedings against him.

Meanwhile, ABLV, Latvia’s third largest bank, stands accused by the US Treasury of widespread money-laundering.

The European Central Bank (ECB), which supervises Latvia’s banking system, has suspended all payments by the bank in the meantime.

Among those on whose behalf ABLV is said to have managed transactions include North Korea’s Foreign Trade Bank, a body the UN says helps finance the pariah state’s nuclear missile programmes, while the bank is also alleged to have handled money from Ukraine, Russia and Azerbaijan obtained corruptly.

ABLV denies the accusations.

And, in a third development, the country’s state police are separately investigating another senior official from Latvia’s finance sector – as yet unnamed – on suspicion of accepting bribes from a Russian businessman.

What is particularly striking about the accusations against Mr Rimsevics is that they come from another Latvian bank, Norvik, which is controlled by the Russian businessman Grigory Guselnikov.

It says Mr Rimsevics has been demanding payments since 2015 and threatening tougher regulation if the money was not forthcoming.

In response, Latvia’s prime minister, Maris Kucinskis, has suggested the allegations are “an attempt to disrupt the reputation of the Latvian state”.

Mr Rimsevics, who has refused to step down but who was today suspended from his post, says he has received death threats.

It’s all a mess – and one with potential to embarrass both the ECB and the European Commission.

The ECB, while responsible for regulating ABLV’s financial stability, is resisting attempts for it to investigate the US allegations of money laundering.

As for Brussels, there is potential for embarrassment because the current commissioner for financial services is Valdis Dombrovskis, a Latvian who succeeded Britain’s Lord Hill following the latter’s resignation after the EU referendum.

Mr Rimsevics himself is, according to the Associated Press, “privy to the state secrets of Latvia, NATO and the EU” having held senior positions overseeing the country’s banking system during the 25 years or so since it broke away from the old Soviet Union.

The problem for Latvia, a country of just two million, is that this is not the first time its banks have been accused of money-laundering.

Some of the money looted from the Russian state by corrupt officials in a fraud uncovered in the mid-2000s by Sergei Magnitsky, a lawyer later beaten to death in a Russian prison, passed through the Latvian banking system.

Most major banks stopped offering “Correspondent Banking” services – where a large international bank clears the foreign currency transactions of smaller banks through major financial centres – for Latvian banks years ago.

Numerous offshore companies named in the leaked Panama Papers had connections to Latvia. And as recently as March last year, the French national prosecutor called for the president of another Latvian bank, Rietumu Banka, to be jailed, amid allegations it had been laundering money illegally obtained by French nationals.

Yet Latvia has worked hard in recent years to clean up its act amid concerns that the loss of Correspondent Banking services had potential to hurt the country’s businesses.

Many customers who were deemed to put the banks at risk of money-laundering have been dropped by the banks.

The timing of all these allegations, accordingly, looks rather unusual.



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