CER | Transparency International involved in Latvian scandal

Privasation saga

Anti-corruption watchdog Transparency International found itself embroiled in a corruption scandal in Latvia, after trying to monitor the troubled privatisation of a shipping company.

In an attempt to ensure there was no corruption in the sale of the Latvian Shipping Company (LASCO), which the country has failed to sell three times and which caused the collapse of the government last year, Transparency International's local chapter took the unusual step earlier this week of becoming an official monitor of the company's privatisation.

But after revealing allegations Thursday that a former prime minister offered USD one million to senior government officials to rig LASCO's sale, the non-governmental organization now finds itself in the middle of a scandal.

Transparency International officials said a LASCO board member revealed the alleged bribery attempt to them, information the organization passed on to prosecutors and then the local press this week.

The officials named, including Saeima Speaker Jānis Straume and Riga Mayor Andris Ārgalis, have denied the allegations and threatened lawsuits. Additionally, former Prime Minister Andris Šķēle called on prosecutors to open a case for slandering state officials.

LASCO board member Eižens Cepurnieks has also distanced himself from the comments. The deadline for bids for a 68 percent stake in LASCO is 1 February, and officials involved are concerned the current bickering may again derail the long-awaited sale.

The disputes are threatening to damage Latvia's international image and throw the centre-right government coalition into chaos. Latvia has failed to sell LASCO three times since putting the company up for privatisation in 1995, with the last failure triggering the collapse of a government last spring.

A failure to sell the company could have more serious political implications than the collapse of Andris Bērziņš's government, which some observers in the local press say is imminent, as there would be more pressure on President Vaira Vīķe-Freiberga to push for fresh elections. The left-wing Social Democratic Workers Party, which has been hostile to privatisation, currently tops the public opinion polls.

Prosecutors in spotlight again

The Prosecutor's Office launched an investigation in light of new information about two German bank accounts allegedly owned by former senior prosecutor Olģerts Šabansks. A few months ago, Šabansks was suspected of receiving bribes via another German bank account, but the Constitution Protection Bureau cleared him of the charges. The two accounts may have been used for money laundering and receiving a bribe for closing the investigation on a concrete case, according to allegations.

Progress made

The Council of Europe Parliamentary Assembly (CEPA) voted to end its monitoring of Latvia, recognizing the country's achievements in the observance of human rights and the integration of non-citizens. The final report on Latvia, read before the vote, praised its decision to ratify a number of Council of Europe conventions and to adopt the state language law and a social integration program.

The assembly urged Latvia to continue the democratic reforms and social integration of the population and to ratify the universal convention on protection of minorities, which it signed in 1995. Latvia's President, Vaira Vīķe-Freiberga, said in a speech after the vote that the multicultural environment of Latvia is reflected in its general education system which provides education not only in Latvian, but also in five other languages, including Russian and Polish.

Freibergs to oversee IT

President Vaira Vīķe-Freiberga's spouse, Imants Freibergs, was unanimously elected president of the Latvian Information Technology and Telecommunications Association for 2001 Freibergs said that the main goals of the association will be to attract all enterprises and organizations working in the sector and promote the association's participation in Latvian and international projects as well as represent Latvia's IT sector.

Freibergs also wants to pay greater attention to issues of professional ethics, professional education, general computer skills and e-commerce. Freibergs is an IT specialist and former professor at the University of Quebec, in Montreal.

A corridor for economic crimes?

A committee on money laundering, under the auspices of the Council of Europe, published a report maintaining that Latvia has become an attractive corridor for economic and drug-related crimes due to its geographical position. While Latvia has taken measures to diminish money laundering, its cash economy, casinos and foreign currency exchange businesses create ample opportunities for such crimes.

The committee also noted that half of accounts in Latvian banks belong to persons residing outside Latvia. Latvian officials reacted calmly to the report and promised to look into the issue. A Bank of Latvia official called the report "ridiculous and strange," because it links the number of non-resident bank accounts to money laundering.

And in other news...

The average yield on Latvian benchmark five-year T-bonds has been fixed at 8.16 percent, in line with analyst forecasts of 8.0 to 8.5 percent. The entire LVL 60 million (USD 97.7 million) issue was sold out.
Total securities market turnover in 2000 came to LVL 3.7 billion (about USD six billion), a rise of 61 percent year-on-year.
Latvian banks saw their assets grow by 38 percent in 2000 to LVL 2.7 billion lats (about USD 4.36 billion), the biggest annual increase in the last six years.
Latvian Privatisation Agency (LPA) Director General Jānis Naglis told a press conference that the legal proceedings at the International Court of Arbitration with Lattelekom's major shareholder, Tilts Communications, could last five years and cost millions in legal fees for both sides. In Naglis's view, both sides should seek ways to meet at the negotiation table, in order to avoid legal proceedings. Both sides are too cautious concerning a possible agreement settlement, because they do not want to threaten their position in the lawsuit.
Unknown vandals attacked the Latvian Consulate General in St Petersburg for the eighth time in the last 12 months, breaking two panes of the consulate's entry door and two windows on the first floor. There was no night guard on duty. The Latvian Foreign Minister submitted another diplomatic note to Russian authorities requesting that it provide adequate around the clock security at the consulate.
After a visit to Moscow as acting head of the Council of Europe, Foreign Minister Indulis Bērziņš said a meeting with his Russian counterpart, Igor Ivanov, was "sufficiently friendly for the first time," but it was too early to say it signalled a breakthrough in chilly Latvian-Russian relations.
Latvia reached the finals of the European basketball championship.
The Riga Vidzeme District Court gave a two-year suspended sentence to former Privatisation Agency board member Didzis Azanda, who was accused of abuse of powers for releasing confidential information. He was also fined LVL 2500 (about USD 4000).

Daria Kulagina, 27 January 2001

Moving on:

Sources:

Diena
Reuters
Neatkarīgā Rīta Avīze
LETA
BNS
Dienas Bizness
Bizness Baltija