Banker: Nightmare dodging extortion attempts in Latvia
By CARLO PIOVANO
Feb. 19, 2018
LONDON (AP) — Latvia's top banking official, a key member of the European Central Bank, has been accused by local bank Norvik of seeking kickbacks, trying to launder Russian money and retaliating against the bank when it refused to play by the "rules of the game."
In a high-stakes drama for the tiny Baltic country, Ilmars Rimsevics was detained Saturday by Latvian anti-corruption authorities and questioned for hours into the night. State TV showed him walking free on Monday, without charges, though he is still being investigated for suspected bribery.
Norvik bank has filed an international legal complaint against Latvia in which it alleges that a "Senior Latvian Official" repeatedly sought "to extort monetary bribes," and threatened the bank when its owner and chairman, Grigory Guselnikov, refused to pay up.
"The high-level official mentioned in our request for arbitration is Rimsevics," Norvik's CEO, Oliver Bramwell, told The Associated Press. Guselnikov confirmed that it was Rimsevics.
Rimsevics' lawyer told Latvian TV that he promises to provide more information about the case on Tuesday. The ECB declined to comment on Rimsevics' status.
The threat of criminal charges against the man who has been at the top of the country's banking sector since 1992, in the wake of the Soviet collapse, has plunged the small Baltic nation into turmoil.
Rimsevics' detention is particularly sensitive as he sits on the top policy-making council of the ECB, Europe's most powerful financial institution, and is privy to the state secrets of Latvia, NATO and the European Union.
Any connections to money laundering would raise concerns of the risk of blackmail from Russia's secret services or organized crime, and come at a time when Latvian security services warn that Russia is actively trying to obtain state secrets from Latvian officials to weaken the European Union and United States.
Guselnikov said he first met Rimsevics in 2015 after he was introduced to a man called Renars Kokins, who was said to know the country's legal and political landscape well. Kokins invited Guselnikov to a meeting in a large villa in the suburbs of the capital. Soon after Guselnikov got there, another man arrived, on foot, and entered without knocking: it was Rimsevics.
He was brief and to the point. He told Guselnikov he could help him because the nation's financial regulator was loyal to him personally. All he had to do was "cooperate" with Kokins, Guselnikov recalled.
Rimsevics left 10 minutes later and Kokins sat Guselnikov down at a table. He pulled a pen out and wrote on a piece of paper: "100,000 per month."
Kokins did not use the word "payment." He explained to the banker that all Latvian banks "cooperate" in this manner, Guselnikov says.
In the following weeks, Guselnikov tried to stall but found that every time he refused to pay, his bank would get hit with new regulatory measures.
Kokins did not relent, finding Guselnikov repeatedly after that.
Guselnikov says he met with Kokins and Rimsevics a few more times to try to clarify his position. Rimsevics took great care to not be seen at these meetings, Guselnikov says.
On one occasion, Kokins drove Guselnikov around the capital, Riga, for almost two hours before parking in front of a Chinese restaurant in the city outskirts. Kokins left the car and minutes later, Rimsevics entered it and sat behind Guselnikov, in the back seat, to speak, Guselnikov said. Another time they met in the restaurant itself, when it was completely empty.
"It was a nightmare for me for years," said Guselnikov, who is 41. "You can't understand how to get out of this dirty environment without reputation damage. That is why I decided to go out publicly and legally with my case. I can lose the bank, my money, but I will never become part of it."
Latvia has become infamous for money laundering since the high-profile Magnitsky scandal, in which $230 million in Russian taxpayers' money was siphoned off, largely through Latvian banks, according to U.S. and European authorities. Whistleblower Sergei Magnitsky was imprisoned in Russia in 2008 and allegedly beaten and denied medical care, leading to his death. The U.S. and EU sanctioned Russian individuals over the case.
In 2014, a trove of leaked documents, the so-called Laundromat reports by the Organized Crime and Corruption Reporting Project, detailed how $20 billion was sent from Russia, largely through Latvia, in 2010-2014.
Latvian banks then went through an independent audit last year, after which Latvian regulators levied fines against three banks for a total of 640,000 euros.
One week later, France fined Latvian bank Rietumu 80 million euros for money laundering. Major global banks, meanwhile, have stopped making dollar transactions with Latvian banks after the Laundromat's leaked documents illustrated how dirty money had reached firms like Deutsche Bank by way of Latvian banks.
Last week, the U.S. Treasury singled out one of Latvia's biggest banks, ABLV, for having "institutionalized money laundering," and the ECB on Monday blocked ABLV from making payments amid concerns about its finances. That forced ABLV to need a 97.5 million-euro ($121 million) loan from the Latvian central bank to stay afloat and keep the country's financial system secure.
All of this happened on the watch of Rimsevics, who became chairman of the Bank of Latvia in 1992 after attending college in New York state, and then governor, the top policymaking role, in 2001.