Latvia central banker accused of extortion in deepening scandal

Bloomberg

Latvia’s banking scandal deepened as its central bank chief and representative to the European Central Bank faced accusations of repeatedly trying to extort money from a local bank, in a blow to the Baltic state’s reputation.
The Latvian government has repeatedly demanded that Ilmars Rimsevics step down after the country’s anti-corruption agency arrested him over the weekend on suspicion of securing bribes. Rimsevics, who was released on bail and hasn’t been formally charged, denies any wrongdoing.
The governor, who’s led the Latvian central bank since 2001, may be protected by the central bank’s independence. The latest allegations, first reported by the Associated Press, concern Norvik Banka JSC, which is controlled by a Russian-born UK citizen.
Norvik detailed the accusations against Rimsevics in a 39-page complaint to a World Bank arbitration body. The document, obtained by Bloomberg News, didn’t name him, referring only to a “very high-level, senior Latvian public official.” The chief executive officer of Norvik bank, Oliver Bramwell, said this official is the central bank chief. “In our request for arbitration, that high-level official is Rimsevics” he said in a phone interview.
The complaint against Latvia, filed in December, also alleged that the Latvian banking regulator had retaliated against Norvik for the refusal to pay the bribes over a two-year period to late 2017.
Latvia, a key banking hub in the region, faces yet another bout with the sort of financial scandal that’s repeatedly roiled its economy since independence almost three decades ago. Just last week, the US Treasury Department proposed to ban ABLV Bank SA, the third-largest lender, from the US financial system, saying it helped entities allegedly linked to North Korea’s missile program and institutionalized money-laundering as a “pillar” of its business.
The latest allegations have put the government in a tight spot. While Prime Minister Maris Kucinskis has called for the central bank governor to step down, he also on Tuesday accused Norvik of seeking to undermine the integrity of the country’s financial system. Norvik must present evidence of its allegations, Kucinskis said on Tuesday.
“There is reason to think that this is more likely Norvik Bank’s and Mr. Guselnikov’s attempt to harm the state’s image,” Kucinskis told reporters in Riga. “Anyone can submit legal evidence or turn to the relevant authorities and inform them about violations, including payments or demands for bribes. At the moment, none of Norvik Bank’s representatives have submitted any evidence to any relevant authority.”
‘TOP LEVEL OFFICIAL’
Latvia’s Corruption Prevention and Combating Bureau, which arrested Rimsevics, said it had begun criminal proceedings against a “a top-level public official” of the country’s central bank. It’s investigating “an alleged solicitation and acceptance of a bribe” of at least 100,000 euros it said in a statement.
Rimsevics, 52, was released following 48 hours in custody after his friend put up a 100,000 euro bail, local media reported. He’s the longest-serving head of a national bank on the ECB’s Governing Council, which he joined in 2014 when Latvia adopted the euro. He has worked at the Baltic nation’s central bank since graduating in 1992.
As governor, Rimsevics enjoys robust independence. Deputy Governor Zoja Razmusa will fill in for
him while he’s not at the bank, a spokesman said.