U.S.-Sanctioned Mayor Who Ran Latvia Is Found Guilty of Graft

(Bloomberg) -- A Latvian mayor considered for decades the country’s most powerful politician was found guilty of corruption and handed a five-year prison sentence.

Aivars Lembergs, a tycoon who’s headed the Baltic Sea oil port of Ventspils since 1988, had seen the verdict in his trial delayed for years due to the nation’s cumbersome legal system. But a judge in Riga on Monday ruled he was guilty of extortion and falsifying documents and seized some of his assets, while throwing out other charges.

Lembergs said he’d appeal the decision, which he blames on his political rivals.

The ruling concludes a saga that began in 2007 when Lembergs, who’d earlier run for prime minister, was charged with extortion, abuse of office and money laundering. He’s since been sanctioned by the U.S., which said he’s shaped governments from behind the scenes and “corrupted law-enforcement officials to protect his interests.”

The outcome could help Latvia, a euro-area and NATO member of 1.9 million people. The nation is trying to shake off a reputation for financial misdealing following a string of dirty-cash scandals involving its banks’ ties to the former Soviet Union.

Lembergs was “the oligarch of oligarchs,” Valdis Liepins, a former lawmaker and board member of Delna, the local chapter of Transparency International, said by phone before the ruling. A judgment against him will be a signal “that they can get the others too.”

Lembergs’s rise stems from the privatizations that followed Latvia regaining its independence in 1991 as communism collapsed. As in Russia, the selloffs favored well-connected insiders and created a new class of super-wealthy businessmen who held huge sway over politics.

Asset Seizures

In a lengthy ruling, the judge read out details of properties, coins and offshore holdings in the British Virgin Islands, Liechtenstein and the Netherlands Antilles that will be confiscated.

Estimates of Lembergs’s wealth have stretched to 200 million euros ($240 million) or more, though he’s only ever declared holdings of about 1 million euros. His city’s port has been a key shipping hub, at times handling as much as 15% of Russia’s westward oil exports.

Privatization “resulted in a lot of assets in the hands of a few people, and not the most liked or acceptable,” former President Valdis Zatlers, who sought to curb oligarch influence, said by phone before the judgment. “Lembergs is a symbol of all these processes.”

Some of Lembergs’s assets were targeted by the U.S. government when it sanctioned him in 2019, leading to the closure of bank accounts belonging to him and some of his family. Latvia later nationalized and renamed Ventspils port to remove it from the sanctions list.

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