ECB Says Latvia Broke Law by Barring Accused Central-Bank Head
(Bloomberg) -- The European Central Bank and Governing Council member Ilmars Rimsevics accused Latvia of infringing central-bank independence by barring him from his post amid a probe into bribery accusations that he denies.
The Frankfurt-based ECB and the governor of Latvia’s central bank have both appealed at the EU’s highest court against restrictions that stop Rimsevics from exercising his office. The EU Court of Justice released details on the cases on Monday.
The Baltic country’s banking sector was rocked in February when the U.S. Treasury proposed banning the country’s third-biggest lender, ABLV, and days later Rimsevics was detained by the anti-corruption bureau for 48 hours. He was accused of being part of a group that solicited and received bribes of at least 100,000 euros ($119,340). The bank and Rimsevics deny all accusations of wrongdoing.
The ECB claims that Latvian authorities broke the law by imposing stringent bail terms on Rimsevics’ work before a ruling on the case by an independent court, the case summary shows. The ECB also says the authorities haven’t provided all the information on the case.
Side of Justice
In a separate filing, the Latvian governor said he has been “unlawfully” prevented from carrying out his role. EU law states that central bank heads can only be removed if they can no longer perform their duties or if found guilty of “serious misconduct.”
Spokesmen for the ECB and Latvia’s anti-corruption bureau declined to comment. Rimsevics’s lawyer Saulvedis Varpins wasn’t immediately able to comment, and Latvian Prime Minister Maris Kucinskis’s spokesman Andrejs Vaivars didn’t immediately respond to a request for comment.
The ECB’s concerns “are very understandable, but I think just as understandable will be our answers,” the prime minister said in an interview with LTV on April 10. “I’m convinced that justice is on our side.”
Rimsevics, still officially a member of the ECB’s Governing Council, is barred from exiting the country and can’t even appoint a substitute. That means Latvia -- a euro-area member since 2014 -- has been unable to have a formal say on policy decisions since February. Deputy Governor Zoja Razmusa has attended as an observer at the meetings, where decisions are usually taken by consensus.
Ironically, the Governing Council will hold its next meeting in Riga, Latvia’s capital, on June 14. That could be a critical session as policy makers are expected to start debating how and when to end their 2.6 trillion-euro bond-buying program.
The ECJ has been asked by the ECB to issue an interim ruling that could soften the governor’s restrictions as early as this week.
Also on Monday, ABLV announced it had appealed at the Luxembourg-based EU court against the ECB’s decision to declare it was on the verge of failure. The bank was then closed under Latvian law after the EU bank-resolution authority said the lender was too small to warrant a rescue.
“ABLV and its Luxembourg subsidiary were neither illiquid nor was their illiquidity imminent in the foreseeable future,” the bank said in a statement announcing the filing of the case. They were “in an extraordinarily strong financial position not only as regards their capitalization and profitability but also and particularly as regards their liquidity.”
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