Here is the guilty-plea announcement from the United States Department of Justice about Hewlett-Packard bribing the Office of the Prosecutor General of Russia through banks in Austria, Latvia, Lithuania, and Switzerland. Unfortunately, the names of the banks were not included. We don’t know if they included EBRD-funded Parex of Latvia, EBRD-funded Siauliu/Ukio of Lithuania, and EBRD-funded AP Bank (Parex/Citadele subsidiary) of Switzerland. However, the case seemed related to the Daimler/Parex case since the two cases were originally revealed at the same time. As usual, Latvian officials are not prosecuting anybody.
UPDATE – 26 AUGUST 2014 ON BFW (BLOOMBERG SUBSCRIBER SERVICE):
Dutch Lawmaker Asks Eurostat to Review Latvian Accounts
2014-08-26 11:29:53.256 GMT
By Corina Ruhe
Aug. 26 (Bloomberg) — Financial statements for Latvia are non-compliant with Eurostat standards, Pieter Omtzigt, Dutch member of parliament for the Christian Democrats, says in letter to Eurostat.
* Says Lavia “sold” shrs of nationalized Parex Bank to
European Bank for Reconstruction and Development in 2009
with secret “put option”, requiring Latvia to buy back the
shrs in future, guaranteeing unknown profit to EBRD at
expense of Latvian taxpayers
* Says money for Parex was only a loan effectively
* Says put option was major breach of European standards
* Says Eurostat obliged to instruct Latvia to restate
financial statements back to 2009; to include amount of put
option as debt
* NOTE: Latvia plans to sell Citadele this year
* NOTE: Dijsselbloem Says EBRD Has Put Option on Citadele,
For Related News and Information:
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–With assistance from Aaron Eglitis in Riga.
To contact the reporter on this story:
Corina Ruhe in Amsterdam at +31-20-589-8526 or email@example.com To contact the editors responsible for this story:
Fergal O’Brien at +44-20-7330-7152 or
ORIGINAL POST – 10 JULY 2014:
We have been sending emails to Bloomberg for years that the EBRD/Latvia/Parex bailout was fraudulent because of a secret put option, and finally they have picked up the story! This is one of the largest frauds of the European Financial Crisis, and is even larger if incoming rumors are true that the EBRD has committed similar frauds in other countries.
Trasta Komercbanka, run by a former Parex banker (Igors Buimisters) and a former Saeima chairman (Alfreds Cepanis), launders billions for Putin’s family through Latvia still now in 2014:
On 22 May 2012, the United States Treasury blacklisted Belarussian bank JSC Credexbank as a “Primary Money Laundering Concern.” We at LawlessLatvia weren’t aware of the Latvian connection until recently.
According to the Treasury, JSC Credexbank processed over $1 billion in shell company transfers in 2010 alone, an amount disproportionate to its size. Also, JSC Credexbank had shell company ownership itself.
This bank was previously named Northern Investment Bank and was an undisclosed subsidiary of Parex Bank according to John Christmas’ whistleblowing to EY (2004) and the Latvian Prosecutors Office (2005). Christmas had an internal Parex email stating that Parex secretly owned Northern Investment Bank, but nobody at EY or the Latvian Prosecutors Office cared about that.
If employees at EY or the Latvian Prosecutors Office had done their jobs, they could have stopped the Lukashenko Regime from laundering over a billion dollars.
The Netherlands Parliament will have a formal investigation of the Parex/EBRD/Latvia “put option” fraud. This investigation is different from the European Commission investigation, which is about how Latvia violated state aid rules to extend the Parex bailout loans. The apparent purpose of both frauds was to cover-up the truth about Parex at taxpayer expense.
Global Financial Integrity and the Adriatic Institute for Public Policy have posted about the apparently fraudulent EBRD bailout of Russian/Ukrainian offshore specialist Parex Bank of Latvia in 2009. The bailout empowered corrupt Oligarchs and devastated the Latvian economy. When will the EBRD explain its actions to taxpayers?
Here are photos from the 4 June 2014 United States Senate briefing. Senator Jeff Sessions gave a talk about the need for rule of law in Eastern Europe. John Christmas explained the Parex/EBRD/Latvia fraud cover-up, which has been going on since 2009 with no action from prosecutors. Four anti-corruption NGOs were involved in the event, which will hopefully lead to more media coverage of the problem and a Senate hearing later this year.
This is the slide show from Christmas’ presenatation:
This is the approximate text of Christmas’ presentation:
(slide 1 – dirty money flowing through Latvia)
Good morning, my name is John Christmas and I am here to talk about the offshore banks in Latvia and the disconnect between the mission and the actions of the European Bank for Reconstruction and Development – the EBRD.
I would like to thank the Adriatic Institute for Public Policy, International Leaders Summit, and Global Financial Integrity for organizing this event. Also, I would like to thank all attendees here at the Capitol, and thank Senator Jeff Sessions for his remarks.
(slide 2 – President Berzins and President Putin)
Latvia has an image in the media as a country with Western values which is on the side of NATO and opposed to the Kremlin.
Latvia is a member of NATO and most Latvian people share the values of NATO. But is the government of President Berzins really on the side of NATO?
The economy of Latvia is similar to the model in Russia. Oligarchs with connections to the Russian security services are rich from receiving state assets. Almost everyone else is poor.
Additionally, in the early 1990’s, Latvia became an offshore banking center under the guidance of KGB man Grigori Loutchansky who had a close relationship with Russian Prime Minister Viktor Chernomyrdin.
This early cooperation between the Latvian government and the KGB kicked off a racket for Latvian politicians that is still continuing.
Today, from the seventeen banks licensed in Latvia, fourteen specialize in offshore accounts for clients from Eastern Europe and Central Asia.
This racket has played no small part in the destruction of democracy and capitalism in the region, as national treasuries have been looted by tyrants and their cronies. Already violent revolutions in Kyrgyzstan and Ukraine were closely linked to Latvian banks.
(slide 3 – May 2007 KGB quote)
The largest offshore bank in Latvia for many years was Parex Bank. Here is a quote linking Parex to the Russian security services.
Parex served thousands of non-resident deposit accounts and sister company
International Overseas Services registered account holder companies for other Latvian banks as well, including those used for money laundering in the horrifying Sergei Magnitsky case, which of course you are familiar with because the U.S. Senate passed the Magnitsky Act in 2012.
Parex recruited me in 2002 to be their Western spokesperson to dispel what they called rumors that Parex was the Russian Mafia.
(slide 4 – photo of Mitterrand, EBRD facts)
The European Bank for Reconstruction and Development was established in the early 1990’s and was intended to heal the post-Communist countries of Eastern Europe and Central Asia. It was the brainchild of the president of France, Francois Mitterrand. The 2,150 EBRD employees responsible for $67 billion of public assets have a modern office tower in London, and as taxpayers you are paying their generous compensation and premium rent.
The EBRD was supposed to be a modern-day Marshall Plan. The Marshall Plan succeeded in healing the economies of Western Europe after World War II. However the EBRD has failed at healing the economies of Eastern Europe and Central Asia after the collapse of the USSR.
Although the EBRD has failed, this hasn’t stopped the EBRD propagandists from congratulating themselves for success, and the mainstream media is repeating these false claims. As a result, the EBRD is expanding into the “Arab Spring” countries.
(slide 5 – the USA and the EBRD)
The EBRD is funded by 65 countries. The United States government owns 10% of EBRD shares, making it the single largest contributor.
(slide 6 – “vitality” comment from annual report and “put option” comment from Nomura)
Now for the specific case which exposes what the Latvian government and EBRD are doing.
In 2004, I blew the whistle on Parex. Latvian authorities refused to investigate. I left Latvia after receiving threats.
Parex grew much larger, always reporting profits. Then suddenly at the end of 2008, the bank was bailed out and mostly nationalized, even though the government had no obligation to do this.
The government turned to the European Union, International Monetary Fund, and World Bank to fund the bailout and inflicted a brutal austerity program on the population.
The government maintained that the Parex was worth book value, however could not find any private-sector investor who would buy it.
That’s when the government turned to the EBRD. In 2009, the EBRD announced the purchase of 25% of Parex stock in a 144-million-dollar deal citing the “vitality” of Parex. Why did the EBRD think Parex was valuable when none of the other potential investors did?
In 2010, a website leaked a report from Nomura indicating that the EBRD had a secret “put option” to sell the shares back to the government. In other words, the stock sale was reversible and therefore fake with the likely objective of falsifying national accounts thus defrauding all creditors of the government.
(slide 7: London Stock Exchange filing)
This is a London Stock Exchange filing from 2010. The filing indicates that all Parex shareholders were equal, which should have included the EBRD plus the other minority shareholders.
In 2010, a new “good bank” called Citadele was spun off from Parex.
The government capitalized Citadele with taxpayer money and gave 25% of Citadele stock to the EBRD. The other minority shareholders from Parex got nothing and therefore lost their entire investments. This mysterious transaction could have represented compensation to the EBRD for conducting a false purchase of Parex stock a year earlier, thus backing up the Nomura report.
(slide 8 – Italian and Dutch headlines)
Since 2010, I have encouraged anti-corruption websites to publicize the EBRD fraud evidence since all Latvian newspapers refuse.
My “LatviavEBRD” videos have a quarter-million views on Youtube.
Also, European journalists Mauro Caterina and Arno Wellens published the allegations
The EBRD refuses to respond and therefore we have concluded that the EBRD must be guilty.
Other journalists have been slow to pick up the story, however they will eventually. Latvia and the EBRD are apparently doing the same thing Enron did in the 1990’s: fooling investors with fake reversible deals.
(slide 9 – Parex and government blame USA)
For now, the mainstream media is repeating pronouncements from Latvian politicians that they have heroically rescued Latvia by bailing out Parex which they say collapsed because of the United States. Here is language about that from a Parex annual report.
How can the United States be responsible for Parex overstating the value of its assets? And why should the United States put up with this slander?
The mainstream media is describing Latvia’s austerity program as a success story. But how can this make sense? The oligarchs are still in control. The national debt has doubled. And almost 20% of the population left. Latvia hasn’t seen an outflow of refugees like this since World War II
(Slide 10 – EBRD fostering)
The EBRD is spreading disinformation as well. For example, it is issuing press releases about fighting corruption in Ukraine while at the same time Citadele Bank is wooing Ukrainian clients offshore.
The EBRD claims that it is “fostering transparency and accountability.” However, the only feedback journalists are getting is “no comment.”
(slide 11 – Poikans)
It is frustrating fighting the EBRD in order to fight corruption. However, I recently gained new motivation.
It is well known that Latvian prosecutors never prosecute large crimes in Latvia, even when foreign countries provide completed cases.
But now, it’s not just about criminals not being prosecuted. Now, it’s about another whistleblower who is getting prosecuted.
The man on the screen is Ilmars Poikans. In 2010, he became the second whistleblower against Parex.
Mr. Poikans is expected to receive an eight-year prison sentence for his “crime” of informing taxpayers about how their money is being spent.
The cruelty of the prosecution is beyond comprehension for me. It is similar to Russia prosecuting whistleblower Magnitsky instead of the crooks he blew the whistle on.
If you hear a representative of the Latvian government saying how terrible it is that Russia chose to prosecute a whistleblower, please ask: why is Latvia doing the same thing?
If you hear an EBRD employee complaining about the human rights abuses in the Magnitsky case, please ask: why does evidence indicate that the EBRD is covering-up fraud at a bank connected with the case?
(slide 12 – Adriatic Institute logo)
Today begins a new chapter in the battle to expose the Latvian government and the EBRD. My intention is to work with the Adriatic Institute and its partners to publicly demand an explanation from the EBRD. More information will be on the Adriatic Institute website soon.
Of course we hope the United States government will support this effort.
(slide 13 – bar chart)
Finishing up, this chart shows the scale of the problem.
The first bar is $20 billion, the size of notorious bank BCCI at the time it was shut down in 1991, in part by Senator John Kerry and Jack Blum.
BCCI was similar to Parex. It specialized in offshore account services except it targeted Colombians rather than Russians and Ukrainians.
BCCI had a captive government, General Manuel Noriega’s Panama, just as Parex and other offshore banks have a captive government in Latvia.
The second bar is $66 billion, the size of Enron at the time it was shut down in 2001. As mentioned, the Enron fraud was similar to what the EBRD appears to be doing today.
The third bar is $94 billion, which includes all non-resident deposits in Latvian banks today plus the assets of the EBRD today because insiders told me that the EBRD has done deals similar to Parex in other countries.
(slide 14, actor Clive Owen)
This is from the 2009 movie about BCCI called “The International” starring Clive Owen. From this photo, it sure looks difficult and dangerous to shut down a bank fraud.
But the EBRD/Latvia battle can be much easier. All it takes to expose what is going on is for institutions with authority to demand an explanation.
In December 2013, exiled Parex Bank whistleblower John Christmas was contacted by an investigator. The investigator was originally using a false name. The investigator made statements connecting Parex Bank, Rietumu Bank, and Regional Investment Bank (Regionala investiciju banka) to the looting of billions of dollars from BTA Bank of Kazakhstan and Anglo Irish Bank of Ireland.
This is a description of the case:
The investigator, in emails, made frequent use of the term “Latvian Proxy Network” to describe “a large money-laundering network” of Latvian offshore banks that work in cooperation, often using the same shell companies, for “hiding/cleaning billions of dollars.”
In March 2014, a second investigator from a different organization also started asking Christmas about the same case.
Parex (now called Citadele) is fraudulently funded by the EBRD using your tax money.
Since the introduction of democracy in Latvia and Croatia two decades ago, both countries have been plagued by the same problem. The major political parties have been criminal gangs, stealing billions of euros from taxpayers. The European Union has successfully pressured Croatia to establish law enforcement. A former prime minister is likely to spend the rest of his life in jail, with his party convicted as well. Maybe the EU will pressure Latvian prosecutors to do the same. This would be a reversal of old EU policy toward Latvia, which included fraudulently bailing out Parex Bank to protect corrupt ministers. Perhaps Latvia and Croatia can both look forward to a future with government working for voters instead of oligarchs.
Croatia article: http://www.bbc.com/news/world-europe-26533990