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Tuesday 19.06.2018 | Name days: Nils, Viktors
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Court declines Kargin’s and Krasovitskis’ plea regarding cancellation of Parex takeover contract

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RURiga Regional Court has declined the plea submitted by former Parex owners Valery Kargin and Viktor Krasovickis against Finance Ministry and former Parex bank regarding the 2008 investment contract.

The full ruling will become available February 3. It will then be allowed to be challenged within the next 20 days in the Supreme Court.

Reverta’s authorized representative Agris Bitāns noted that the court’s ruling is logical. However, he added it is hard to know all specifics of this matter. This will only be done after the full ruling has been received from the court.

Representative of the plaintiffs Uģis Grūbe did not comment the court’s ruling.

As previously reported, Kargin and Krasovickis asked Riga Regional Court to recognize the contract, according to which Latvia had once purchased the whole of Parex bank’s shares for a total of EUR 2.8, as void. They asked to cancel the contract that was signed November 10, 2008 and amendments to this contract dated December 2 and 3 of 2008.

The court declined their plea. The plaintiffs then challenged this ruling in the Supreme Court, which declined it again last August. The ruling of the Supreme Court is not subject to appeal.

Kargin and Krasovickis’ lawyer Uģis Grūbe had previously said that the fact the whole world actively provided assistance to many banks in October 2008, and Latvian state institutions lived in certainty that the global economic crisis would not come to Latvia, proved how unprepared Latvia’s legislation was at the time.

When Parex bank finally felt the impact of the global crisis, the bank’s management asked for assistance. However, Latvia had no support programmes and no additional fund to offer. According to Kargin’s and Krasovickis’ lawyer, that whole situation was a complete shock to Parex, Latvia’s government, Finance and Capital Market Commission. Everyone knew Parex banka’s collapse would have spelled the end for Latvia’s financial system. However, the government had no instruments to use, so this forced the state to acquire the bank, says Grūbe.

The bank’s takeover should have been carried out in accordance with the law, but the law was only adopted after the bank had been taken over. The law is called just that ‘Bank Takeover Law’.

According to this law, if shareholders do not voluntarily hand over their shares to the state, the bank can be taken over in accordance with a specific price stated in the law. This means shareholders can lose their shares for a symbolic price, but they cannot be provided with additional commitments.

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