The FICIL on Wednesday published an insolvency abuse report saying that even though legislature has been pushed through compliant to the requirements of the Organization for Economic Cooperation and Development, the overall situation in insolvency administration has not improved.
According to the report, from 2008 to 2014 Latvia may have lost around €665m due to insolvency abuse, taking into account both financial and non-financial loss.
"I think that the number - €665m, which is comparable to our education budget, - is huge," said Elksniņa-Zaščirinska.
The research spans more than 9,000 insolvency processes and finds that more than 60% of insolvency administrators have either not filed reports about the processes or filed them only partially.
"On paper the system exists, but in reality it does not work [..]. There's bad oversight, no competence, there's no suitable system," she said.
The research has found at least 1,500 insolvency processes with suspected foul play. Among telltale signs that could point to unscrupulousness are fictitious creditors and the overhaul of the board prior to starting the insolvency process, with the goal of evading liability.
"We've found that 54% of all insolvency administrators have these signs at least in three companies managed by them," said the head of the FICIL.
According to Elksniņa-Zaščirinska, insolvency process reform should "be prioritized by the state" as the lack thereof could stunt economic growth and play a part in foreign investors' willingness to put money into Latvia.
Read the full report on insolvency abuse in Latvia HERE.