Six years ago, large sums of money were stuck in the accounts of ABLV Bank customers. The Financial Intelligence Service, the State Police, and the Public Prosecutor's Office all started investigating the origin of the money. Well over a hundred investigations were opened. Several hundred million euros were seized as possible criminal assets. Money found to be dirty in court was confiscated and transferred to the State budget.
The amounts seized are so impressive that ABLV Bank has incurred substantial costs in storing the money while investigations are ongoing. And the bank in liquidation is seeking to recover these costs from the State Police.
More than 20 court decisions are publicly available, and all of them rule in favor of ABLV. However, the judgments have not yet entered into force due to pending appeals.
But the amount of money to be recovered from the police is impressive. The publicly visible judgments alone add up to €3.6 million.
Why has ABLV Bank incurred the costs of storing the money seized from customers? In the summer of 2018, the European Central Bank revoked ABLV's credit institution license. ABLV agreed to keep the money in an account with the Latvian Central Bank (Bank of Latvia). Given that the ECB interest rate had been negative for several years, keeping the money with the central banks was a paid service.
"ABLV Bank, which is to be liquidated, incurred expenses during this period until the summer of 2022 related to the safekeeping of funds seized in criminal proceedings with the Bank of Latvia. Taking into account that in the liquidation process the provisions of both the Commercial Law and the Credit Institutions Law oblige liquidators to act in the interests of creditors and to preserve the assets of the liquidating company as far as possible in order to comply with the law, the liquidators did everything possible to recover these losses," said Jānis Rozenbergs, Attorney-at-Law, ABLV liquidator.
ABLV has explained in court that the state-imposed obligation to preserve seized assets effectively prevented the bank from carrying out effective "asset maintenance". The money had to be kept immobile for the entire period of the seizure.
In the absence of such an obligation, ABLV could have avoided the costs by, for example, holding the assets in other assets such as securities and its loan portfolio.
The police do not agree to pay the invoices issued by ABLV. Both because the bank's liquidation and, consequently, its expenses were caused by its own commercial practices, and because ABLV itself concluded a contract with the Bank of Latvia for the safekeeping of the money.
"Yes, there are already several first-instance court judgments on the recovery of procedural costs [..] which were incurred at the time when the European Central Bank's interest rate was negative. All the judgments that exist are currently under appeal," said Normunds Grūbis, Head of the Chief Administrative Office of the State Police.
According to the Deputy Chief of the State Police, ABLV is claiming costs for a total of about 40 cases of monetary seizures. In the cases already in court, the amount claimed exceeds 3.6 million.
"These applications are still ongoing. Yes, from time to time they come. At the moment, we are also following the same tactic of not considering these expenses as reimbursable," the official said.
The Bank of Latvia in a written reply to "De Facto" said that although it cannot comment in detail on transactions with individual market participants, it is clear from the reply that ABLV banka has received more in interest than it has withheld from them since the start of its liquidation. Moreover, a credit institution in liquidation has the right, but not the obligation, to keep money with the Bank of Latvia.
