Riga Regional Court is hearing the appeal case which follows a case brought by the bank's administrators, KPMG Baltic, against former members of the board of Latvijas Krājbanka.
It is alleged that the board approved the issuing of large loans to several offshore companies believed to be controlled by bank owner Vladimir Antonov as a way of moving assets out of the bank, and with no reasonable expectation that the loans would ever be repaid. Last year the court of first instance agreed with that allegation but now the defendants are exercising their right of appeal.
The defendants deny there was anything improper in the issuance of the loans and deny that Antonov was the ultimate beneficiary of the offshore companies to whom they sent the funds.
Among the seven defendants is former board chairman Mārtiņš Bondars, who has since embarked upon a political career, first in Saeima, now in Riga City Council. He also ran a short-lived campaign to become Latvia's president in 2015.
He denies any wrongdoing, telling LTV: "The loans for which Krājbanka's administrator is now taking me to court have been verified by Ernst and Young, an international auditor and by the Financial and Capital Market Commission. They did not see any problems with these loans during the time of the bank's operation," said Bondars.
Krajbanka's collapse was triggered by the collapse of its parent company, Lithuania's Snoras bank. Antonov meanwhile has spent subsequent years in London fighting attempts to extradite him to Lithuania to face fraud charges related to the Snoras collapse. But as reported by LSM, he was recently arrested in Russia in connection with suspected fraud at another bank he owned there.
As Latvia's oldest commercial bank, many depositors were shocked by the collapse of Krājbanka, despite frequent questions raised in the press concerning the business activities of Antonov and his associates.
On November 21, 2011, the Latvian financial watchdog, the Finance and Capital Market Commission (FKTK) ordered Latvijas Krajbanka to suspend all financial services. The decision was made due to a shortage of assets discovered at the bank, and a criminal investigation was started.
The Riga Regional Court declared Latvijas Krajbanka insolvent on December 23, 2011. On May 8, 2012, the court ruled to satisfy the request by KPMG Baltics auditing firm, which had been appointed the insolvency administrator of Latvijas Krajbanka, to start the bankruptcy procedure against the bank. Latvijas Krajbanka's banking license was annulled on May 10, 2012.
A useful chronology of the Krajbanka affair can be read HERE.