Insolvency administrator rakes in close to €3m in six months

Armands Rasa, the insolvency administrator of Trasta Komercbanka, has been paid €2.9 million for his services, as creditors who have little chance of recovering their assets have voted to pay Rasa 30% of the recovered money, reported LTV's De Facto March 4.

"Please explain to me how you can earn so much money in such little time. I'd understand if it was a private company with a huge turnover.. but it's my account, and it's [being paid out] with depositors bearing the cost," says businessman Aleksandrs Gutorevs.

Gutorevs had a deposit of more than €1 million at the bank, which had its licence pulled two years ago. He had deposited the money in the bank as a subordinated debt, after selling his business.

He has not recovered even the state-guaranteed minimum of €100,000, because of the nature of his deposit. 

Gutorevs is unlikely to recover any money. Only regular depositors may yet recover anything from the bank, which was declared insolvent last year.

Last November, the bank's creditors - who are unlikely to recover any money - voted to raise Rasa's remuneration to 30% of the recovered funds. The law says insolvency administrators are to receive 2 to 5% instead, but does allow for creditors to increase the number. 

Rasa himself says he doesn't know why his remuneration was increased on such a grand scale.

"But at this time about 85% of the bank has been liquidated, so remuneration of a few percent just doesn't cut it to fully cover expenses needed each day," he told De Facto. 

He says he uses the money to pay other legal experts as well, including insolvency administrator Mārtiņš Bunkus. 

The bank's activity statements show that assets falling short of €5 million have been recovered during Rasa's work. However he is paid not for to the retrieved assets but rather what has been paid to the creditors. 

The Financial and Capital Markets Commission (FKTK) says the law hasn't been broken in this case.

"Creditors have their own considerations as to why they're prepared to pay so much to the administrator," said FKTK head Pēteris Putniņš. 

On March 1, the Latvian parliament passed amendments to the Credit Institutions Law putting caps on the remuneration paid to bank liquidators and insolvency administrators.

As reported previously, Latvia's finance watchdog, the Financial and Capital Markets Commission, pulled the license from Trasta Komercbanka back in 2016 for money laundering violations. 

Meanwhile the State Police are investigating a scheme in which, the police say, two insolvency administrators overseeing liquidation of Trasta Komercbanka in 2016 joined up with another four persons to run an extortion scheme.

In June 2017 the State Police carried out 16 searches, seizing a number of important documents and arresting several properties, luxury automobiles, and hundreds of thousands of euros in cash.

Six persons were detained in the case, among them former insolvency business high flier Māris Sprūds was kept behind bars until mid-February 2018 and released after his brother Kristaps posted a record-high €500,000 bail. 

De Facto coincidentally reported on March 4 that, according to inside sources, the money for Sprūds' bail was a loan from Anastasija Udalova, a high-ranking transport official in Latvia and the wife of Estonian magnate Oleg Ossinovski.

Ossinovski has been named a suspect in a graft investigation against Ugis Magonis, former boss of Latvian Railways. Magonis is accused of accepting €499,500 as a bribe, while Estonian millionaire Oleg Ossinovski is charged with giving the bribe.

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