Since 2011, Latvia’s Justice Ministry has been managed by ministers from the National Alliance. Although the party denies that its politicians have been lobbying interests of insolvency administrators, it was not possible to reform the justice sector over the course of the years.
In 2014, Laimdota Straujuma’s second government proposed Dzintars Rasnacs for the post of Latvia’s Justice Minister. Meanwhile, governors of the largest banks warn that insolvency administrators’ schemes already threaten state security, as reported by Nekā personīga programme of TV3.
«The people serving as insolvency administrators are also lawyers and representatives of the National Alliance in the government and the Saeima,» – said SEB Bank manager Ainars Ozols in November 2014.
«I think nothing weak in the justice system is beneficial for the National Alliance. Even if there was something weak there, measures were taken to strengthen it. You can see what we look like on the background of other EU member states. We are in the top 10. I think this is something to be proud of,» – Rasnacs once said.
Unfortunately, one year ago the State Audit concluded the opposite in its report. The ministry lacks a detailed plan and a clear goal. The state auditor also sees no recent improvements in Latvia’s justice sector.
«Look at our report and the results of the survey carried out by the Foreign Investors Council in Latvia. I believe those are rather grandiose numbers that make one wonder just how much the national economy loses from abuse of the insolvency process. I believe there should be justification to make things work faster. On our side we have prepared a letter to the Prime Minister with a request to enhance this process. We have not seen any speedy reaction or a desire to improve things,» – comments State Auditor Elita Krumina.
Last year, the State Audit compiled a list of urgent tasks. Justice Ministry is to prepare proposals to evaluate the work done by insolvency administrators and their supervision.
Supervision over the work of insolvency administrators is divided in Latvia. Their certification is carried out by the Latvian Certified Insolvency Administrators Association. The work done by insolvency administrators is monitored by Justice Ministry’s Insolvency Administration. A fight has begun on the political backstage in regards to the way this supervision can be reformed. Politicians have been recommended by the association to hand over control to Economy Ministry.
«The outlook does not look optimistic. This is because there is no reformation to speak of. What Justice Ministry has been saying over the years – that a lot has been done to sort out the industry to make sure matters of insolvency are no longer problematic – is not true. Our opinion is that Economy Ministry has not been taking active part in developments in this industry lately. This is because, matters of insolvency are handled and curated by Justice Ministry, making it a narrow legal matter. However, it is part of the national economy. Therefore, it is also important to consider the opinion of Economy Ministry in this field,» – believes head of Latvian Association of Certified Insolvency Administrators Olavs Cers.
Economy Minister admits that this initiative has been discussed. The most realistic plan would be to create a strong and independent Insolvency Administration, allowing it to perform the certification of insolvency administrators.
«There are different solutions available. One is possible under other ministries. The second – we have to think about expanding its freedom. Maybe they should report to the parliament. I believe we should also consider the scenario in the case of the Finance and Capital Market Commission. Yes, we have had problems with compliance with the law, but the independent nature of the committee and good pay motivated them to pull themselves together. The situation is rapidly changing now, and we see that Latvia has been demonstrating good results in bank monitoring activities lately,» – comments Economy Minister Arvils Aseradens.
«No, on rumour level attempts were made to take over the Patents Office and other institutions under Economy Ministry, but this will not happen. The Enterprises Register will remain under Justice Ministry as well. The same applies to Insolvency Administration. We will definitely enhance its capacity and expand the budget with an additional amount of EUR 100,000. The public electronic accounts will be the main instrument. Add to that the amendments to the law that will allow the head of the administration to apply disciplinary punishments to certified administrators. I hope the new director will bring order there,» – says Rasnacs.
The administration has been working without a manager since March. The previous director, Ervins Abele, left after receiving an average score from the ministry’s assessment of his work. The State Chancellery has announced a personnel selection process. Four contenders have applied for participation.