The strange case of the PM nominee, the Russian bank fraud and the Old Town apartment

Prime Ministerial nominee Aldis Gobzems (KPV LV party) find himself the center of attention again December 10 and not just because of his scheduled afternoon meeting with President Raimonds Vējonis about forming a new government.

LTV's De Facto investigative news show reported December 9 of a strange set of circumstances involving  an ultra-wealthy client of lawyer Gobzems - to whom he is alleged to have issued a loan.

According to De Facto, Gobzems formerly lived in an apartment in Riga's Old Town owned by Latvian citizen Marija Kovarska, who was linked to a major fraud at Russian bank Otkritie, which was bailed out by the Russian central bank in 2017. 

She is also known by the name Maria Averbuch and holds Israeli as well as Latvian citizenship.

Gobzems was also the woman's lawyer and issued a loan to her De Facto said, despite the fact Kovarska is in the habit of buying precious gemstones in Switzerland worth millions of dollars.

Kovarska and her husband Ruslan Pinaev were among those individuals sued by Otkritie bank for a huge bank fraud conducted via its Oktritie Securities subsidiary. A court in England found them guilty of being part of "a cunning and well-orchestrated fraud" that used offshore companies and bank accounts to launder the proceeds. The money was then spent on lavish villas, luxury sports cars and diamonds. Part of that effort was found by the court to have involved the purchase of gemstones by Kovarska in Switzerland so that wealth could be converted into a handy and easily transportable form. 

The Geneva Public Prosecutor has been pursuing a parallel criminal investigation and has brought charges of fraud and money laundering against Pinaev (now a fugitive in Israel with his wife).

Publicly available English court documents illustrated that Latvian banks including Norvik bank, ABLV bank, Baltikums bank, Rietumu bank and Latvijas Krajbanka were used as part of the complex series of cash flows in 2011.

English court documents tracing cash flows in Otkritie case

Kovarska is a former high-level employee of Parex banka, which dragged Latvia to the brink of bankruptcy in 2008 when it crashed. In Latvia, her lawyer in the dispute with Otkritie was Aldis Gobzems.

Yet the relationship clearly went beyond the usual one of lawyer and client, with Gobzems living in apartment owned by his client of almost 170 square meters on Grēcinieku street.

Furthermore, Gobzems lent money to Kovarska, De Facto claimed, with the apartment and its mortgage of 320,000 euros pledged in favor of Gobzems for several years, though the agreement appears not to have been declared for three years.

Additionally, De Facto said that Gobzems transferred 11,000 euros to Kovarska's lawyers in London in 2014. Kovarskaya testified that money had been paid by her parents, but the judge did not understand why Gobzems had to be used as an intermediary.

There is currently no suggestion that Gobzems' activities were illegal. Challenged by De Facto to provide an explanation of the unusual set of circumstances,  Gobzems denied any wrongdoing but provided no details.

"As an individual, I've been able to do a lot in life, it's not illegal. Thank you," the potential prime minister of the republic of Latvia told reporter Matīss Arnicāns.

As previously reported by LSM, Gobzems was nominated by Vējonis on November 26 and given two weeks to form a coalition. Since then he has issued a series of ultimatums to potential coalition partners, none of which appears to have been followed through and most notably including a bid on December 7 to form a cabinet of unelected, unnamed ministers from the private sector and to halve the number of ministries.

This too was delivered in the style of an ultimatum, with Gobzems saying that if the move was rejected he would demand the dissolution of parliament by Vējonis and fresh elections.

However, the bizarre plan was immediately rejected by all parties and it is now unclear whether even Gobzems himself will continue to pursue it or he will try to fall back on a more conventional government model.

Meanwhile, in the last few weeks Gobzems has had his membership of the Latvian lawyers' society revoked over disciplinary violations, he is being sued by the family of a murder victim for defamation and severe doubts have been expressed about his ability to obtain the necessary security clearance to carry out the duties of prime minister. 

But the latest revelations, plus his erratic demeanor throughout the coalition process must place severe doubts over his continued candidacy and it is possible Vējonis will use Monday's meeting to revoke Gobzems' status as nominee.  

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