After telling lies to Latvian voters for five years, the ruling political party has admitted that the sale of Parex Bank stock to the EBRD was fake because it was secretly reversible. Of course, the prime minister waited until after the election last month to inform the public.
Unfortunately the Bloomberg article below doesn’t explain the implications: Latvia has been understating its deficit and debt for five years, violating agreements with the IMF and EU. The article also doesn’t mention that Parex was a corrupt and fraudulent offshore bank with links to the Kremlin, and the people who looted the assets of Parex weren’t prosecuted.
Russia scholar Karin Dawisha recently published “Putin’s Kleptocracy.” It is an excellent book, detailing Vladimir Putin’s ascent from the KGB to the St Petersburg Mafia to the Russian Presidency. Dawisha links Putin with certain organized crime bosses in St Petersburg who are linked with Parex Bank. This might cause problems for Latvian officials (general prosecutor, central bank governor, and others) who are fighting to protect Parex because the FBI (as revealed yesterday by the Financial Times and Wall Street Journal) is probing Putin’s money laundering activities.
Now in November 2014, Parex Bank successor Citadele Bank is operating with mostly the same employees and its core business is still serving offshore shell-company accounts for Russians. Even though the Latvia/EBRD bailout is publicly known to have been fraudulent, the people who signed the deal are not being prosecuted. Former Latvian Prime Minister Valdis Dombrovskis is now Vice President of the European Commission responsible for the euro. Former EBRD President Thomas Mirow was not reinstated at the EBRD even though Putin recommended him. Instead, Mirow is now Chairman of HSH Nordbank.