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Wednesday 19.06.2019 | Name days: Nils, Viktors
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BNN summary of the week: shadow over Latvia's economy; Kalnmeiers receives bashing

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe week passed in Latvia under certain unpleasant news. A study concluded that in spite of Union of Green and Farmers minister Dana Reizniece-Ozola’s praised tax reform the grey economy proportion in Latvia has increased.

Latvia’s State Audit was especially harsh in its criticisms. After going through annual accounts of state institutions, auditors concluded that the money allocated to development does not reach its goals. State Audit concluded the situation in the country is critical.

Another shadow has been cast over the State Revenue Service, which has possibly leaked confidential information. Prosecutor General Ēriks Kalnmeiers has also come under fire from the justice minister, who believes Kalnmeiers is unable to ensure proper function of the prosecutor’s office.

BNN offers a summary of this week’s topical news in a variety of categories: Grey zone; Compliance; Presidential Race; Audit; Leak; Fraud; Litigation costs.

GREY ZONE

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUGrey economy proportion in Latvia reaches nearly a quarter of GDP

In 2018, Latvia’s grey economy ratio grew 2.2 percentage points and reached 24.2% of the country’s GDP, as reported by Stockholm School of Economics in Riga Sustainable Business Centre’s director Arnis Sauka on Wednesday, 15 May.

He also says grey economy in Latvia has grown for the second consecutive year.

The researcher adds grey economy in Latvia had increased last year in spite of economic growth and better overall situation.

In 2018, the largest portion of grey economy in Latvia was made up of envelope wages – 43.5% and undeclared income – 35.2%. Unofficial employment also remains a problem in the country – 9.6%.

Full article here

COMPLIANCE

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvian minister proposes re-assessing prosecutor general’s professionalism

Latvia’s Justice Ministry has noticed signs that suggest Prosecutor General Ēriks Kalnmeiers is not fit to remain in his post, as there are suspicions regarding his reputation, Justice Minister Jānis Bordāns told journalists on 17 May.

«Justice Ministry has prepared a report for the government. We intend to commence a process to re-assess whether or not Kalnmeiers is fit to remain prosecutor general,» stresses the minister.

According to Bordāns, Kalnmeiers is unable to provide efficient function of the prosecutor’s office, quality control over his subordinates, or organize work in a way that would allow the institution to adopt internationally recognized good practices.

Justice Ministry has concluded that Kalnmieiers activities thus far have caused considerable damage to state and society’s interests and do not comply with high requirements of this post.

The ministry explains that in continuation of the justice department a report has been prepared for the Cabinet of Ministers, detailing the need to perform an audit of factors that influence efficient criminal processes if economic and financial crimes. The goal of the audit is acquiring a comprehensive look at factors that impede criminal processes and compile specific proposals to help resolve problematic topics. A quality audit is not possible without involving the prosecutor’s office. However, the ministry’s experience in relation to the level of responsiveness from the Prosecutor General’s Office shows that the institution’s full involvement in the audit may be at risk, the ministry explains.

Full article here

PRESIDENTIAL RACE

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Lithuanian Presidential candidate Ingrida Šimonytė

Next Lithuanian President to be elected in run-off between Šimonytė and Nausėda

The Lithuanian presidential election has produced no clear winner. With ex-Finance Minister Ingrida Šimonytė and economist Gitanas Nausėda showing the best results, the two with face each other in a run-off later this month, while defeated Prime Minister Saulius Skvernelis has announced his resignation.

The preliminary results of the Sunday, May 12, published by the Lithuanian Central Electoral Commission early on Monday, May 13, showed that Ingrida Šimonytė has received 31,13% of votes, while Gitanas Nausėda is on second place with 30,95%.

British-Canadian news agency Reuters reports that Šimonytė, 44, a former finance minister in a center-right government, and Nausėda, 54, a former senior economist at SEB Bankas, will face each other in a May 26 run-off.

Full article here

AUDIT

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUState Audit warns – situation with use of development funding critical in Latvia

A critical situation has emerged in Latvia in relation to planning and use of development funding, as concluded by State Audit (SA) in its annual report on correctness of institutions’ accounts for 2018.

As explained by SA Public Relations and Internal Communications Office manager Līga Krapāne, after analysing accounts from ministries and state central institutions, auditors concluded that the money allocated in Latvia for development rarely reach their goal.

In the audit of annual accounts SA primarily focused on correctness of accounting records. 2018 generally shows that the quality of accounts and reports in institutions has not changed when compared to previous years and remains satisfactory, says Krapāne.

However, in addition to correctness of accounts, SA also performs so-called compliance checks, in which auditors study how well and in accordance with set goals allocated funding was used by surveyed institutions. Auditors ask institutions to report if funding helped yield the desired result. The result of checks, unfortunately, made SA sound the alarm and invite responsible officials to turn their decisions and actions more towards public interests.

SA performed inspections and submitted 50 reports on matters of compliance and in at least 50% of cases auditors concluded that it is necessary to act immediately in order to fix problems and reassess the usefulness of many activities.

Full article here

LEAK

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvijas Naftas Tranzīts suspects State Revenue Service of illegally leaking confidential information

Joint Stock Company Latvijas Naftas Tranzīts (LNT) has suspicions that Latvia’s State Revenue Service (SRS) has illegally leaked confidential information about LNT’s business transactions and an ongoing audit procedure.

LNT has turned to Finance Minister Jānis Reirs and State Revenue Service’s director general Ieva Jaunzeme with a request to investigate the possible illegal disclosure of information related to the LNT audit procedure.

The SRS is currently in the process of performing a tax audit at LNT. As part of this audit SRS has requested from LNT different documents, including business contracts, which the company has provided.

On 2 May 2019, the LNT board members received an e-mail from a journalist, who is working for the LTV program De Facto . In his e-mail he inquired about information that is not publicly accessible.

Full article here

FRAUD

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RURiga Tourism Development Bureau may have caused damages worth EUR 300 000

As a result of criminal activities Riga Tourism Development Bureau (RTDB) has caused damages worth no less than EUR 300 000, according to initial estimates.

Corruption Prevention and Combating Bureau (KNAB) reports that facts uncovered by investigators show that officials of RTDB may have wasted a great deal of the foundation’s finances with fictive cooperation contracts, private expenses, fictive employment contracts, as well as large-scale fraud. Other crimes include forgery of documents and use of forged documents.

The exact extent of losses will be clarified soon through examination of accounting documents, KNAB adds. Investigators say the investigation of this criminal case will take a long time, considering that possible criminals are associated with foreign countries, as well as the fact that there is a lot of work ahead.

Information uncovered by KNAB shows that tracks of the crime lead to foreign countries. This means investigators have had to send several investigation requests to European authorities. Now it will be necessary to issue several requests for assistance, which could lengthen the investigation even more.

It is also necessary to perform different kinds of examinations. This is an especially time-consuming process in Latvia, because all separate examinations are performed one after another. For example, voice examination usually requires 12 months, whereas document and handwriting examination – two to four months.

Full article here

LITIGATION COSTS

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Vilnis Ķirsis (L) and Nils Ušakovs (R)

Court enforces 1 000 euros from Nils Ušakovs in favour of Riga City Council deputy

Riga City Vidzeme Suburb Court has declined suspended Mayor of Riga Nils Ušakovs plea against Riga City Council deputy Vilnis Ķirsis over supposedly offensive statements the latter made against the plaintiff.

According to the court ruling available to LETA, the plea was declined and proceedings in Ušakovs’ plea to find statements made by Ķirsis as offensive and untrue have ended. On top of that, the court has enforced from Ušakovs EUR 1 000 in favour of Ķirsis to cover litigation costs.

The court of justice also noted that the audio recording from a city council meeting shows that Ķirsis said the following: «And if someone asks what the face of corruption is like, they I can say we see two faces of corruption at every meeting of Riga City Council. […]». The court concluded that the statement «face of corruption», considering the content of the sentence and grammatical structure, is nothing more than a reference to a question made by a Riga resident, not a statement that contains the opinion of the plaintiff. As for the part of the statement applied to Ušakovs – Riga City Council’s face of corruption – contains claims not about the plaintiff’s allowed corruption activities, but the corruption in the city council, where the creative expression «face of corruption» is applied to Ušakovs as the head of the municipality.

Full article here


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