Soon after the Parex Bank nationalization in late 2008, the Latvian media revealed several large and fraudulent deals between Valery Kargin and Viktor Krasovitsky’s families and the bank. This was a rare time of honest reporting by the media.
The “auditors” at Ernst & Young must have known about all of these deals. However, they signed Parex annual reports containing false statements that the Oligarchs received no compensation from the bank.
Latvian authorities refuse to prosecute the perpetrators in all of these cases.
One headline story was about the fleet of luxury cars transferred from Parex in early 2008. The transfer occurred when the bank was still reporting profits every quarter and therefore before the surprise request for a bailout in late 2008. The implication is that the quarterly reports were fake and the Oligarchs already planned to give bank liabilities to the taxpayers in early 2008, but wanted to keep the luxury cars.
Another headline story regarded subordinated loans from the Oligarch families to the bank, done for the apparent purpose of compelling the Latvian government to pay huge amounts of money to the Oligarchs after the handover of bank liabilities.
And, if that wasn’t bad enough already, the article below describes an unreported reciprocal loan/deposit deal that existed for many years. It was revealed in December 2008 that Kargin and Krasovitsky each borrowed 28 million lats (twice as many dollars) from Parex and used it to make deposits at Parex at 36% percent interest. The apparent motive was to transfer millions from the bank to themselves without reporting the compensation to creditors and minority shareholders and without paying taxes, since interest income was not taxed.
pdf snapshot from 20 March 2012:
link, if not yet censored by Latvian authorities: