Parex Bank's nationalization in Nov. 2008 cost the Latvia government €284.57 million and was a primary reason it sought IMF funds.
RIGA — Latvia’s General Prosecutor’s Office has opened a criminal probe into possible wrongdoing by government institutions in the takeover of Parex Bank last year.
Andrejs Vasks, spokesman for the office, told Baltic Reports that a preliminary probe into the bank’s nationalization last year showed that there is basis to believe violations may have been made. He said the violations involved “offenses committed by state institutions” and that right now there are no suspects. He could not specify which articles of the Criminal Code might have been violated, only that the probe would look into possible violations of state service.
Vasks said the prosecutors began looking into possible violations based on numerous complaints filed with the General Prosecutor’s Office from December to July. Vasks told the Delfi portal that the recent report by Latvia’s chief auditor on Parex’s nationalization also played a role in prosecutors’ decision to launch the probe.
Much of the report — about two-thirds, according to Auditor General Inguna Sudraba — has remained classified since it contains classified information.
The announcement comes at a bad time for the government and Parex, whose management is trying to find a strategic investor for the troubled financial institution. Earlier this month Prime Minister Valdis Dombrovskis said there were several interested buyers. To add insult to injury, the European Union announced in July it would examine whether Latvia’s bailout of the bank violated competition laws.
Parex went belly-up last October on the heels of the global financial crisis. As depositors in Russia began pulling out funds en masse, the bank faced a liquidity crunch and had to turn to the government of then Prime Minister Ivars Godmanis for protection. To date the government has spent over €1 billion in propping up Parex by boosting liquidity and providing state guarantees. The government currently owns an approximate 70 percent stake in the bank.
