President returns credit law amendments to Saeima

On June 16 the Latvian president returned controversial amendments to the Credit Institutions Law for parliamentary review after suggesting that politicians were seeking to influence the insolvency process of the Trasta Komercbanka which lost its licence last year for money laundering violations.

"I approve that the regulation of insolvency proceedings is being improved upon, as is its application," said Latvia's president Raimonds Vējonis.

However, he said that the norms which the Saeima adopted pertaining to conflicts of interest "make one suspicious about the desire to affect specific processes", particularly the liquidation of the Trasta komercbanka.

The botched amendments state that people who, within the preceding two years, were authorized to represent a creditor in relations with a credit institution may not be appointed to liquidate it. A similar restriction would have applied to insolvency administrators in credit institutions.

These amendments would have prevented Armands Rasa from being approved as the new insolvency administrator of Trasta Komercbanka. Rasa enjoys the backing of Latvia's finance authority, the Financial and Capital Market Commission (FKTK).

The Saeima approved the amendments on June 8 with 56 MPs voting 'for'. These were members of the Union of Greens and Farmers, National Alliance, Harmony, and For Latvia from the Heart.

Twenty MPs were against the amendments. Another seventeen did not vote.

Also on June 8 the police detained high-profile insolvency administrators Māris Sprūds and Ilmārs Krūms, as well as insolvency administrator Nauris Durevskis and finance expert Jorens Raitums.

Krūms was recommended as the insolvency administrator appointed for the liquidation of Trasta Komerbanka by FKTK - the bank's liquidator.

However in May, FKTK said it was ending its cooperation with the administrator and asked for his removal.

On June 8 LTV aired a report showing that Durevskis, Krūms and Sprūds had been donating to the Greens and Farmers Union as well as National Alliance.

In 2016, after Justice Minister Dzintars Rasnačs promised on air that his party will do so, the National Alliance returned €10,000 that it received in donations from Sprūds' father Valdis. 

As reported, according to a study by the Foreign Investors Council in Latvia and the auditing firm Deloitte, malicious insolvency processes and the overall abuse of insolvency has led to the Latvian economy losing €665 million between 2008 and 2014, and this number could increase to €852 million in the next ten years.

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