The Face of Latvia’s Scandal-Ridden Financial System Is Caught in a Corruption Case

(Bloomberg Markets) -- Ilmārs Rimšēvičs, the governor of the Latvian central bank, had been enjoying the start of his vacation in Spain when a buzzing phone interrupted his dinner. The call on that February evening brought bad news. Back in Riga, police were searching his home and his office at the bank. Rimšēvičs, who along with heading the Bank of Latvia for almost two decades sits on the Governing Council of the European Central Bank, flew home in ignominy. When he landed, police detained him and questioned him for 48 hours on suspicion of bribery and corruption.

Several months later, Rimšēvičs is still seething at the way he was treated. “Why was it necessary?” he asks, working to contain his anger. The compactly built 53-year-old economist is looking elegant: dark blue suit, close-cropped hair, a sleek watch on his wrist. But the extent to which his personal circumstances and professional standing have been tarnished is obvious. Our hourlong interview takes place in his lawyer’s office because he’s barred from using his own inside the central bank’s imposing neo-Renaissance building on K. Valdemara Street. “Why,” he asks again, “could this investigation not go on under normal circumstances without having this widely public scene of detention?”

The Face of Latvia’s Scandal-Ridden Financial System Is Caught in a Corruption Case

Rimšēvičs, who for almost three decades epitomized Latvian banking, is charged with taking €250,000 ($290,000) in bribes from a local lender linked to money laundering. He could face a trial and as many as 11 years in prison. Trasta Komercbanka, according to prosecutors, solicited Rimšēvičs’s influence to keep regulators at bay. He denies any wrongdoing. As central bank governor, he says, he wasn’t responsible for policing financial institutions. He says the accusations against him are driven by banks angry that he tried to combat money laundering despite a lack of government support. “I don’t have to justify myself,” he says.

Rimšēvičs’s personal humiliation is also a huge embarrassment for this tiny Baltic state. After the gaily named Singing Revolution of the late 1980s, the former Soviet republic regained independence in 1991 and, eventually, became a member of NATO and the European Union. The scandal is highlighting long-held suspicions of high-level official corruption in Latvia and its role in money laundering.

Latvian banks have been magnets for massive money flows. About 1 percent of all U.S. dollars moving around the world in 2015 were going through Latvia, according to Daniel Glaser, then a top official in the U.S. Department of the Treasury in charge of combating terrorist financing and money laundering. That’s 30 times more than might be expected in an economy the size of the Baltic nation’s. The Treasury’s Financial Crimes Enforcement Network has targeted Latvia as a destination for billions of dollars in dirty money from Russia, with which it shares a border and a long history. The nation of 2 million, with an area just a bit larger than West Virginia, finds itself caught up in the worst geo­political standoff between the two nuclear powers since the height of the Cold War.

This convergence of events threatens the dramatic economic transformation of a country that less than 30 years ago was a restive corner of the Soviet Union. Latvian authorities have only recently begun to crack down on the banking industry, where the lack of adequate controls has been glaringly evident for years, judging from interviews with bankers, regulators, and current and former officials in Latvia, Russia, the U.S., and across Europe. As the sector shrinks and U.S. pressure threatens to restrict Latvia’s access to the international financial system, the nation—the most corrupt of the three Baltic states, according to Transparency International—is scrambling to curb shadowy banking activity in record time.

Concerns about lax money-laundering controls in Europe escalated even further in September following disclosures that the Estonian unit of Denmark’s Danske Bank A/S may have laundered at least $9.1 billion from 2007 and 2015, with the dirty money stemming mostly from Russia. A “large part” of the $234 billion that flowed through the Estonian branch during those years “potentially can be classified as suspicious,” Chairman Ole Andersen told Bloomberg TV. The total amount of money in question is equivalent to nine times the GDP of Latvia's Baltic neighbor.

For months, Rimšēvičs all but paralyzed his country’s contribution to ECB policy making. He will technically retain his Bank of Latvia position until his term runs out at the end of 2019, because Latvian law protects the bank’s independence from government. But he’s barred from performing his official duties, including those at the ECB. In June, when colleagues from other European central banks gathered in the Latvian capital of Riga for a meeting of the ECB’s Governing Council, Rimšēvičs was absent. In July an EU court ruled that Rimšēvičs could appoint a substitute to take part in ECB meetings. In September, he finally named someone—his No. 2, Deputy Governor Zoja Razmusa.

Repercussions from the Rimšēvičs scandal are also being felt in Moscow. Rimšēvičs was among those who oversaw the creation of the Latvian banking sector in the 1990s, says Valery Kargin, co-founder of one of the oldest banks, Parex Banka. An important institution in those days, Parex had high-level Russian connections, including with Vladimir Putin before he was president, Kargin says. Much more recently, Latvian security authorities became concerned about Rimšēvičs’s perceived ties to Russia. In May, in the wake of revelations that he’d made a number of trips to the country, one of Latvia’s intelligence agencies stripped him of his government security clearance without giving a reason.

So for now—shunned by the elites who once courted him, excluded from the positions of power that once sustained him—Rimšēvičs is living in a kind of limbo.

The Face of Latvia’s Scandal-Ridden Financial System Is Caught in a Corruption Case

To Rimšēvičs, the future must have looked brilliant on New Year’s Day 2014. Latvia, having attained EU membership a decade earlier, had just become the 18th state to join the euro zone. This was the crowning achievement of Rimšēvičs’s career at the central bank: He’d been deputy governor from 1992 to 2001 and governor since then. 

His life had long followed the twists and turns of Latvian history. Rimšēvičs grew up an only child in an educated ­middle-class family. “The student who wanted always to do my best,” as he puts it, he drew inspiration from his mother, an economist. He spent his early life in a country stifled by economic and political stagnation, isolated from the West. Then came harbingers of change in the form of Mikhail Gorbachev’s perestroika and glasnost. The reforms changed Rimšēvičs’s life.

In 1988, three years before the Soviet Union collapsed, he was selected for a one-year exchange program at St. Lawrence University, a liberal arts college in upstate New York. Any Soviet who went abroad, even in those final years of the USSR, would have been “of interest” to the KGB security apparatus, says Arnolds Babris, a top Latvian intelligence official from 1995 to 2002. Rimšēvičs bristles when asked if he’d needed any KGB ties to get to the U.S. He says he won the coveted place on the basis of his top grades and a good command of English.

Soon after Latvia gained independence in 1991, Rimšēvičs, having earned a degree in economics and international trade relations at Riga Technical University, was back in New York, this time to get an MBA at Clarkson University. The next year, within months of getting that degree at the age of 27, Rimšēvičs catapulted to high office, becoming the first deputy governor of his country’s newly established central bank. During his time at the central bank, where he makes about €144,000 a year, Rimšēvičs acquired two properties in addition to his residence near Riga, including an apartment in the upscale Jurmala seaside resort outside of the capital, according to public income declarations.

Rimšēvičs is wistful about the period immediately following Latvia’s independence—“the most exciting time,” he calls it in vaguely American-accented English. Latvia was breaking free of Moscow’s orbit and setting up the trappings of statehood. “We were finally controlling ourselves,” he says, “and nobody dictated to us what to do.”

Russia’s influence remains evident, however, in many ways. Although he chastised one of his interviewers for addressing him in Russian, Rimšēvičs does speak the language—the mother tongue of roughly a third of his compatriots, a higher proportion than in Lithuania or Estonia. Russia is Latvia’s second-largest non-Baltic trading partner. And, as some Russians amassed great wealth in the freewheeling days of rampant privatization and the rise of the oligarchs, Latvia was quick to set up shop as a clearinghouse for cash from Russia and other ex-Soviet nations rife with corruption, from Ukraine to Kazakhstan. The seeds of trouble were sown.

Valery Kargin was one of a handful of well-connected Latvian businessmen who made their fortune offering financial services in the early ’90s. Kargin co-founded Parex as a foreign exchange office in Riga after obtaining a license from authorities in Moscow in the months before the Soviet Union fell apart. He set up its headquarters in the building housing the Latvian branch of the Soviet Bank of Industrial Construction, or Promstroybank. Parex grew to become one of Latvia’s first commercial banks, and Kargin, for a time, was one of the richest people in Latvia.

As the Parex saga shows, there was a Wild West quality to Latvia’s banking landscape in those days. And Rimšēvičs was at the center of it. He was “one of the creators and curators of the current banking system, including the supervision,” Kargin says. The Financial and Capital Market Commission, which regulates Latvian banks, wasn’t established until 2001, the year Rimšēvičs became the central bank’s governor. Before then, regulation fell to the central bank. Since then, the governor and the finance minister jointly nominate the FCMC chairman, who is subject to parliamentary confirmation.

In the early years, Parex’s Russian connections extended to Putin, then deputy mayor of St. Petersburg. Kargin says the future Russian president personally authorized permission for Parex to open an office in Russia’s second-biggest city. Kargin also says that Putin’s now-deceased mentor in St. Petersburg, then-Mayor Anatoly Sobchak, was on friendly terms with Kargin and his Parex partner, Viktor Krasovitsky. In 1997, threatened with corruption charges, Sobchak fled to Paris, whisked away in an aircraft that had been chartered with the help of Putin, who was by then an aide to President Boris Yeltsin. In 1998, two years before he died under suspicious circumstances, Sobchak  traveled to Latvia to attend a lavish party at Krasovitsky’s seaside villa, says Sobchak’s widow, Lyudmila Narusova, who went with him. She says her husband turned down an offer from Krasovitsky to open an account for him.

The Face of Latvia’s Scandal-Ridden Financial System Is Caught in a Corruption Case

In another twist, Arnis Lagzdins, once head of compliance at Parex, performed the same role at Ukio Bankas in Lithuania. According to an International Consortium of Investigative Journalists analysis of the Panama Papers in 2016, one of Ukio’s clients at the time was Sergei Roldugin, a wealthy cellist who’s a longtime friend of Putin’s and godfather to his eldest daughter, Maria. The ICIJ described Roldugin as a “behind-the-scenes player in a clandestine network operated by Putin associates that has shuffled at least $2 billion through banks and offshore ­companies.” Roldugin has said he was collecting money to buy musical instruments for talented Russians, adding, “Everything is open.”

In 2015 the FCMC appointed Lagzdins as its attaché in Washington. Asked if it was appropriate to put him in that role given his past banking experience, a spokeswoman for the ­regulator says it chose him because he was “the best and most suitable applicant.”

Parex also had links to Russian mobsters from Putin’s home city, according to Spanish prosecutors at a law enforcement agency that investigates corruption and organized crime. Members of the St. Petersburg-based Tambovskaya-Malyshevskaya gang—which is suspected of drugs and arms trafficking, extortion, and murder—are on trial in Spain on charges of laundering €50  million. Prosecutors say that over a decade, beginning in 1999, the accused funneled some of that money through Parex accounts.  Parex denies the allegations. The mafia members had ties with top political and police figures in Russia, including with some of Putin’s closest allies, according to Spanish investigators.

John Christmas, an American-born banker who worked as Parex’s head of international relations, turned whistleblower in 2005, exposing what he claimed were Parex’s illicit activities. He fled Latvia that year after receiving death threats, he says, and is now in hiding. In a telephone interview from an undisclosed location in Europe, he says Parex existed solely as a destination for illicit funds. “It’s not that the bank was inadvertently used for money laundering,” he says. “The core purpose up to the very top of the bank was this.” Kargin dismisses the allegations as the invention of “lying tongues.”

Christmas says he warned Rimšēvičs personally in 2004 about fraudulent or suspicious Parex loans to influential Russian tycoons. He says Rimšēvičs got “emotional and angry” and called Parex’s owners “criminals.” Later, Christmas says, he wrote to Rimšēvičs and other Latvian officials, including the prosecutor general, about Parex’s activities. Still, nothing was done, Christmas says. Rimšēvičs confirms meeting with the American but says he has no recollection of using the word “criminals.” “I think we had a good conversation,” he says. “I think it was mutually beneficial, and I think we had a good understanding.”

At its peak, Parex was Latvia’s second-largest bank, with €4.5 billion in assets. (A unit of Stockholm-based Swedbank AB—a retail operation, like other Nordic lenders that do business in Latvia—was and still is the biggest.) In 2008 the global financial crisis swept through Latvia and triggered Parex’s failure. The government nationalized the bank at a cost of $1.9 billion and sought an International Monetary Fund-led emergency bailout of €7.5 billion, equivalent to a third of the country’s GDP. Despite the bailout, Latvia suffered the largest GDP decline in the world in 2008 and 2009, according to the IMF, and the malaise would continue to eat through the financial system.

Elizabetes Street in central Riga is famed for its handsomely preserved art nouveau buildings. One of those early 20th century gems is the headquarters of ABLV Bank AS, which was brought to its knees by allegations of money laundering this year. In his office there, co-owner and Chief Executive Officer Ernests Bernis denies his bank had anything to do with illicit funds. He says he and ABLV are, in effect, victims in a new cold war. “There’s a major geopolitical campaign against Russian money, against Russia, and our bank is collateral damage from this,” he says. Whether ABLV is a victim or an agent of its own destruction, its downfall is a ­morality tale for the tightly knit world of Latvian finance.

As Parex spiraled out of control, many of its account holders moved their assets to ABLV, then Latvia’s seventh-largest lender. Their money wasn’t as safe as they’d hoped. On Feb. 13, the U.S. Treasury proposed banning ABLV from holding correspondent accounts in the U.S., effectively cutting the bank off from the American financial system. (The bank appealed the decision, which was still under review as of late September.) The Treasury accused ABLV of “institutionalized money laundering” by handling accounts used for large-scale illicit transfers out of Azerbaijan, Russia, and Ukraine, as well as conducting transactions that aided North Korea’s ballistic missile program.

Without naming anyone or presenting specific evidence, the Treasury said that ABLV executives had used bribery to influence Latvian officials. Depositors rushed to withdraw their money. In a demonstration of the power banks wield in Latvia, ABLV fought off U.S. pressure to put it under outside bankruptcy administration and went into voluntary liquidation instead. That allowed it to keep control of its finances as it wound down its business.

The Face of Latvia’s Scandal-Ridden Financial System Is Caught in a Corruption Case

The drastic U.S. action shouldn’t have come as a surprise. In 2016 the U.S. Department of Justice named ABLV and Parex as destinations for some of the $800 million in allegedly corrupt payments made to companies linked to Gulnara Karimova, a daughter of the late Uzbek President Islam Karimov, by three telecommunications operators in Uzbekistan: Sweden’s Telia and Amsterdam-based VimpelCom (now known as Veon), which reached settlements with the Justice Department, and Russia’s Mobile TeleSystems, which has ceased doing business there. 

That was just one in a series of money laundering scandals involving Latvian banks, including a $1 billion fraud in Moldova from 2010 to 2014. The money siphoned from deposits in three Moldovan banks was equivalent to about 12 percent of the country’s GDP. Most of the money disappeared in only three days—and was laundered through the Latvian financial system, according to a report by Kroll Inc., a corporate investigations and risk consulting company in New York. ABLV was among the banks that held accounts related to the fraud, said the report by Kroll, which the Moldovan central bank commissioned to look into what headline writers were calling “the theft of the century.”

Even the Moldovan fraud was dwarfed by the revelation that Latvian banks helped shift $20 billion from Russia to banks around the world from 2011 to 2014. The Organized Crime and Corruption Reporting Project, another global consortium of investigative journalists, uncovered this vast money laundering operation, dubbing it the “Russian Laundromat.” At the heart of the machinery, according to the OCCRP, was a single Latvian bank, Trasta, which had an unassuming headquarters on a cobbled street in Riga’s Old Town; $13 billion flowed through the lender.

Which brings us back to Rimšēvičs. Latvian prosecutors say the central bank governor solicited €500,000 from Trasta in return for helping to keep the FCMC at bay during the regulator’s investigation of the lender. They say Rimšēvičs got half that amount in the form of several cash payments in 2012 and 2013. They also say he was given a fishing trip to Kamchatka in Russia’s far east as a bribe from the bank in 2010. The charges related to Trasta—which Rimšēvičs denies—were part of a swirl of allegations that grew as the Riga banking world seemed to turn on him.

Igors Buimisters once part-owned Trasta, which closed when the ECB revoked its license two years ago. He denies any wrongdoing, saying, “Our bank was never fined.” Today, in a basement beneath a Riga supermarket, he runs a small business that rents out safety deposit boxes. He has tattoos on both arms, including one of an anchor. He’s open about the prevalence of money laundering in Latvia. In the banking business, he says, “it’s impossible to keep yourself away from such schemes. This type of money goes through nearly all banks.”

Buimisters declines to comment on the bribery charges against Rimšēvičs. He does say the central bank governor had influence because of his role in appointing the FCMC chairman and deputy chairman. “If he wanted to control a certain bank, he could,” Buimisters says.

The case against Rimšēvičs rests on testimony from the owners of Trasta as well as on audio evidence from recorded conversations in 2013, according to prosecutors. The exchanges were between Rimšēvičs and a businessman, Maris Martinsons, who prosecutors say was acting as a middleman. They were recorded by agents of the Corruption Prevention and Combating Bureau (KNAB) in a sauna on the outskirts of Riga, the Latvian magazine Ir reported in July. Of Rimšēvičs, Buimisters says, “Do you think he took money personally? Of course not. I am sure he doesn’t take money himself. There are specially trained people for that.”

Rimšēvičs says he’s in “very close cooperation” with prosecutors to prove his innocence. Martinsons denies any wrongdoing, says his lawyer, Aivars Purmalis.

Rigor in financial regulation has not been a strong point under Rimšēvičs’s stewardship at the central bank, according to his detractors. William Browder is a U.S.-born fund manager based in London who’s critical of Latvia’s record on fighting money laundering. He’s also a personal bête noire of Putin’s because of his campaign to expose and punish corruption within the Russian government; at his joint press conference with President Donald Trump in Helsinki in July, the Russian president mentioned Browder by name, saying his ­country’s prosecutors wanted to question him.

Browder, CEO and co-founder of Hermitage Capital Management, says he informed Rimšēvičs and other officials that six Latvian banks, including Trasta, laundered some of the $230 million in funds that were part of a fraud Russian officials perpetrated. Browder says a Hermitage Capital representative visited Riga in late 2012, meeting with Latvian police who were examining the case, as well as the head of the FCMC. “There was an extremely disappointing reaction, which meant that effectively no real investigation was opened,” the financier says. “They basically didn’t want to rock the boat.” In the end, Latvian authorities fined only one bank, which they didn’t name, €140,000.

Neighboring countries had already become convinced that Latvia didn’t have the political will to tackle money laundering. Lithuanian regulators, for example, didn’t give advance warning to their counterparts across the border when they shut down Bankas Snoras AB, the parent of Latvia’s Latvijas Krājbanka, in 2011.

It wasn’t until four years later that Latvia’s attitude toward regulation began to change. The push coincided with the country’s application for membership in the Organization for Economic Cooperation and Development, which warned in a 2015 report that a lot of the money flowing into Latvia came from “countries with reportedly high levels of corruption.”

In the wake of that red flag, brandished by the so-called club of wealthy nations, Latvia asked the ECB to revoke Trasta’s license and started handing out record fines. The next year it required five Latvian banks to strike a settlement with regulators over activities linked to North Korea. The authorities also demanded that banks undergo audits by U.S. accounting firms. But these actions tell only part of the story.

Grigory Guselnikov, a Russian-born U.K. citizen, is the chairman and majority owner of Riga-based Norvik Banka JSC. He says that even as supervision was tightening, Rimšēvičs was extorting bribes of €100,000 a month from his bank. Guselnikov made allegations of extortion in a 39-page complaint filed with the International Centre for Settlement of Investment Disputes, an arm of the World Bank, in December. He alleges that because Norvik refused to make the payoffs, demanded over a two-year period ending in 2017, the FCMC retaliated by increasing regulatory demands.

Guselnikov says that in 2015, during a meeting with Rimšēvičs in a large villa in a Riga suburb, the central banker told him he could prevent the FCMC from clamping down on Norvik if Guselnikov agreed to “cooperate” with an associate of Rimšēvičs who was present. After Rimšēvičs left the meeting, the associate wrote “100,000 per month” on a piece of paper. (In his complaint to the World Bank arbitration body, Guselnikov said the bribery demands were made by a “Senior Latvian Official.” Since then, Guselnikov has said the official is Rimšēvičs.)

Guselnikov says he met Rimšēvičs on several occasions. He says the central bank governor threatened to make sure that Norvik, which was one of the banks penalized over North Korea-related activities, came under so much regulatory pressure that it would be driven out of business. Some of these meetings, Guselnikov says, took place on the outskirts of the capital at Shangri-La, a rundown-looking restaurant whose outdoor sign is missing a letter. Rimšēvičs, who denies the Norvik chairman’s accusations, says he’s probably stopped at that restaurant dozens of times—he drives by it on his way home from work—but never to meet Guselnikov.

As prosecutors zeroed in on Rimšēvičs, his Russian travels attracted more and more attention. “It creates serious security risks,” says Ainars Latkovskis, head of Parliament’s Defense, Internal Affairs, and Corruption Prevention Committee. “If Russian security services knew that such a high-level official who was on the board of the ECB was coming to Russia so much, they would take advantage of that.” In May, after investigating the Kamchatka trip and other Russia visits by Rimšēvičs from 2010 to 2016, one of Latvia’s intelligence agencies, the Constitution Protection Bureau, revoked his security clearance. Rimšēvičs says that apart from two fishing trips to the Kamchatka region in 2010 and 2012, all of his Russian travel was on official business.

“Dubious money? There’s probably a lot of it.” Valeri Belokon, who owns a majority stake in Baltic International Bank, is talking about the vast sums flowing into and through Latvian financial institutions. Sitting in his luxuriously appointed office, Belokon, part-owner of the English soccer club Blackpool FC, is scathing and stoical at the same time about the state of Latvian banking. “We’re all hostages of this system, and we all created it,” he says. “People running the banks couldn’t refuse the lure of easy money.”

Other Latvian bankers paint a similar picture. Norvik’s Guselnikov says bank customers based in Russia and other former Soviet states were paying commissions in excess of 10 percent for no-questions-asked transfers of dirty money to Latvia. (Alexander Sharkevich, a former Russian Interior Ministry official who conducted money laundering investigations, says he agrees with this estimate.) Guselnikov, who lives in the U.K. and says he’s not safe in Latvia since going public with his accusations against Rimšēvičs, says the central banker wielded his authority coldly and with arrogance. “For 25 years this person has been in power—more than Putin,” he says. “I talked with him. He says, ‘I am the king of Latvia.’”

ABLV CEO Bernis says that over a period of years, Rimšēvičs made “hints” about the need for the bank to “cooperate.” (A person close to ABLV who asked to remain anonymous says Rimšēvičs threatened to spread information detrimental to the bank, saying, “If you don’t want to cooperate, the Americans will come.”) As a result, Bernis says, he cut off contact with Rimšēvičs by early 2015. After the U.S. Treasury announced its crackdown on ABLV in February, Bernis says, his bank filed a complaint with Latvian police detailing evidence of wrongdoing by Rimšēvičs; he declines to disclose details of the complaint.

With regulators and the financial world breathing down its neck, Latvia is striving to move on. “You have to control the money that is passing through your banking system,” says Peter Putnins, the chairman of the FCMC since 2016. “This was not the case previously. We are going the de-risking way.” The government now prevents banks from holding accounts in the name of shell companies with no active business operations and is moving to cut the share of non-EU deposits to 5 percent by the end of the year, from 35 percent at the start of 2018 and about 20 percent in June. 

By 2018 about a dozen Latvian banks were handling the non-EU business, down from 16 in 2012. An anti-money-­laundering watchdog of the 47-nation Council of Europe said on Aug. 23 that it would keep Latvia under review until the end of 2019. The body, Moneyval, said it was unclear whether Latvian “authorities have taken sufficient steps and have the necessary means” to tackle the problem. The sooner Latvian authorities get a grip on it, the greater the relief will be among the Scandinavian banks that dominate the retail banking sector in Latvia, including Swedbank, Olso-based DNB ASA, and Sweden’s biggest lender, Nordea Bank AB. “We’ve been quite clear all along that use of the Latvian financial system for illicit purposes should not be tolerated,” says Sanda Liepina, a former senior World Bank official who’s been CEO of the Association of Latvian Banks since last year, when the group’s Nordic members installed her.

In a sign the country may hold out hope of retaining some of the business coming in from former Soviet states, the FCMC’s Putnins says he “cannot exclude” it. “We can’t say, ‘Just go away,’ ” he says. “This is legally impossible.”

Although tightening regulation is a mark of progress, the dark side of Latvian banking is never far away. In May, Martins Bunkus, a lawyer specializing in bank insolvencies whom Latvian TV said had been working on the winding down of Trasta when it was in administration, died in a fusillade of bullets fired from a machine gun mounted on a pickup truck outside a Riga cemetery. Bunkus had reported threats against his life to the police in 2016.

Rimšēvičs says the lawyer’s assassination made him take more seriously the risk to his own life—“showing that these things are related to” retribution by Latvian banks that have come under scrutiny. As current and former bankers come forward with information detrimental to his bribery case, Rimšēvičs accuses them of going after him precisely because he’s targeted them in the past. He says he’s been “threatened,” though he doesn’t say by whom or with what: “I don’t feel safe. I have been the one who tried to stop these things all by myself.” A Western diplomat in Riga who spoke on condition of anonymity because of the sensitivity of the matter dismissed the central banker’s assertion that he tried to clean up the financial industry, describing Rimšēvičs as the problem, not the solution.

As of late September, Latvian prosecutors were still assembling their case against Rimšēvičs. By then he’d completely lost the support of the country’s political establishment, and the focus in government and the banking world had shifted to his eventual successor. Would it be Martins Kazaks, a former chief economist at the Latvian subsidiary of Sweden’s Swedbank who joined the Bank of Latvia’s board in June? Or would it be Deputy Governor Razmusa, who’s standing in for her disgraced boss?

Rimšēvičs says he’s going nowhere for the time being: “I have no plans at the moment. My only plan is to fight in court.” 

©2018 Bloomberg L.P.