CONTENT PREVIEW
Country Risk

Latvia’s bribery investigation against central bank governor poses risk of government reshuffle or PM resignation

22 February 2018

Key Points

  • The risk of resignations within the government or of the prime minister stepping down has increased.
  • An early election a few months before the scheduled vote in October or a technocrat government in power until October has become more likely.
  • There is an increased risk of disruption to business operations, or of contract alterations or cancellations for companies doing business with the public sector.

Event

On 19 February, Latvia’s Corruption Prevention and Combating Bureau (KNAB) announced that a high-level official at the central bank was suspected of accepting or requesting a bribe of at least EUR100,000 (USD123,176).

Bribery allegations

Mario Draghi, president of the European Central Bank (left), hands the Euro Star over to Ilmārs Rimšēvičs, president of the Bank of Latvia, during Euro Conference Latvia in Riga on 12 September 2013. Latvia replaced its former currency, the lats, with the euro in January 2014. (Ilmars Znotinš/AFP/Getty Images)Mario Draghi, president of the European Central Bank (left), hands the Euro Star over to Ilmārs Rimšēvičs, president of the Bank of Latvia, during Euro Conference Latvia in Riga on 12 September 2013. Latvia replaced its former currency, the lats, with the euro in January 2014. (Ilmars Znotinš/AFP/Getty Images)

Prime Minister Māris Kučinski has confirmed media reports stating that Ilmārs Rimšēvičs, the governor of Latvia’s central bank, was questioned and later detained by KNAB as part of criminal proceedings. Rimšēvičs was released later on 19 February after his bail in the amount of EUR100,000 (USD123,176) was paid. He denies all accusations and on 20 February announced that he would not be stepping down.

KNAB’s investigation against Rimšēvičs coincides with separate corruption and money laundering scandals concerning two Latvian commercial banks. However, KNAB and the government have stated that the bureau’s actions against Rimšēvičs are unrelated to other cases.

Latvia’s anti-corruption body

During the past few years, KNAB has been criticised of being highly inefficient in its investigations into political corruption, and accused of political influence, in-fighting, and misconduct. However, under its new director Jekabs Straume, appointed to the post in June 2017, the bureau seems to have become more active and has improved effectiveness in terms of launching legislative initiatives and restarting investigations. Following the arrest of Rimšēvičs, the government announced that it fully trusted KNAB and was ready to support it to prevent any influence on its work.

Want to read more? For analysis on this article and access to all our insight content, please enquire about our subscription options at ihs.com/contact





(315 of 711 words)
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT