Latvian political party faces renewed illegal financing allegations

The political party Latvijas attīstībai (Latvia's Development) finds itself at the center of a scandal April 11, with journalists claiming it used illegal methods to fund itself.

The origins of the case date back several years, but now it appears to have revived in a much more virulent form after the Baltic Center for Investigative Journalism, Re:Baltica, and the Latvian Radio show Atvērtie Faili (Open Files) delved into it.

In 2020, party member, Māris Mičerevskis raised the alarm about what he said were illegal party financing methods, expressing his shock and disappointment.

As a result of his allegations, anti-graft agency KNAB started an administrative process. Signs of illegal financing were seen from 132 donors, often by means of using relatives, friends, employees, and other acquaintances as mediators for payments from other sources. Methods involved so-called 'envelope payments' [a term usually used to describe cash-in-hand payments to avoid tax and scrutiny], instant loans, and the use of ATMs to pay in cash to the party's account.

However, KNAB failed to start a criminal process despite the evidence it turned up and the admissions of some party members that such methods had been used, with the anti-graft agency pointing out inconsistencies in existing laws. Eventually, the statute of limitations kicked in and legal procedures came to an end.

The only thing KNAB could do was to order the party to repay part of the money to the State Treasury. The party must compensate the illegally received donations - less than 33 thousand euros

Re:Baltica analyzed how the illegal financing of the party took place and why no one will face any consequences for it, in the Open Files program of Latvian Radio.

After winning a court case, Re:Baltica obtained previously unavailable materials from KNAB a few months ago, which reveal much more about how Latvia's Development was illegally financed, with extensive testimonies from people who made payments to the parties outlining exactly what methods were used. 

"There were many sources. We failed to prove that one person financed this party on a large scale. (..) We really did the best we could in this case. And, yes, I understand that the public expected a criminal trial – me too. As an investigator, my heart also hurts that it failed," admits the deputy head of KNAB, Ineta Cīrule. 

The highest-profile members of the party, some of whom were serving as government ministers at the time of the initial whistleblower allegations [the party is now out of government and parliament], still deny they did anything wrong.

Former Minister and party chairman Jūris Pūce emphasized that he answered the questions a long time ago and has not thought about them since: "The situation has not changed, the actual circumstances have not changed. I have not given any person any money to donate to Latvia's Development." 

Another well-known party figure, Edgars Jaunups, a former member of the party's board, said in his written answer: "There have been no systematic party financing violations in the party's activities. And now the inspection body has also recognized this."

The examining authority, which is KNAB, has not actually recognized anything like that. 

Both Jaunups and Pūce in their answers and say that this material is created to defame the party before the European Parliament elections in June.

"I honestly don't understand the point of this article you're producing. And tell me, please, have you…considered the impact this article might have?" asked Pūce.

Re:Baltica editor Sanita Jemberga said: 

"It's clear from the record of this case that people are donating money that isn't theirs, that people are participating in an illegal scheme, that people are giving incredible testimony... and KNAB simply found out too late to be able to prosecute. Therefore, it is complete nonsense to claim that the fact that KNAB closed the case means that there was no illegal financing." 


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