LATVIAN SPEAKER OF PARLIAMENT EMSIS' $10,000

C O N F I D E N T I A L SECTION 01 OF 02 RIGA 000651 SIPDIS NOFORN SIPDIS E.O. 12958: DECL: 08/31/2017 TAGS: PGOV KCOR LG SUBJECT: LATVIAN SPEAKER OF PARLIAMENT EMSIS' $10,000 PROBLEM Classified By: Charge d'Affaires a.i. Stuart M. Seldowitz. Reason: 1.4 (d) ¶1. (C) Summary: Parliament Speaker Indulis Emsis may be on the verge of being charged with corruption for receiving a USD 10,000 cash payment in fall 2006. He and his office allege no wrongdoing and have been eager to get their version of events to us. If the transaction was clean, it demonstrates incredibly poor judgment by Emsis. On August 30 and 31, Emsis commented to the media that he is ready to step down so suspicions about him illegally accepting money do not damage Latvia's reputation. However, he stated he still has some consultations to do before leaving office. It may be these consultations represent foot-dragging on his part to allow the coalition time to minimize the political damage from the scandal. End summary. ¶2. (U) In October 2006, former PM Indulis Emsis (then a parliamentary committee chair) attended a lunch with other coalition leaders in the cabinet office building's private dining room. At the end of the lunch, Emsis left his briefcase behind and when he returned to retrieve it, it was gone. After police investigated, it was found the next day in the possession of one of the waiters. Emsis then filed a report saying that USD 3500 of USD 10,000 cash he had in the briefcase was missing and the waiter pled guilty to stealing the money. Emsis claimed the money came from a loan from a friend to buy a tractor. On August 24, 2007, an internet news site published a report saying that Emsis, who was elected speaker of parliament following the October 2006 elections, was being investigated for corruption in this case and prosecutors would soon ask the Parliament to strip him of his immunity so he could be charged. ¶3. (C) On August 28, Pol/Econ chief met with Viesturs Silenieks, Emsis' political advisor and effective chief of staff, at Silenieks' request. Silenieks confirmed the essential elements of the story, even acknowledging that he delivered the cash to Emsis, which was handed to him in an envelope by the benefactor over a working lunch. Silenieks said the money came from an unspecified businessman with whom Emsis has a long standing personal relationship that predates Emsis' entry into politics. Silenieks claimed the same individual had paid for Emsis and his wife (and Silenieks and others) to spend their Christmas vacations in the Maldives in ¶2006. According to Silenieks, all the initial investigation focused on the theft of the money, not the source. ¶4. (C) That changed in April this year, Silenieks said, when the anti-corruption bureau (KNAB) asked him about the source of the money and whether it was connected to Ventspils mayor Aivars Lembergs, who was arrested in March on corruption charges. (Note: Lembergs was the candidate for prime minister from Emsis' Union of Greens and Farmers in the October 2006 elections. End note.) Silenieks said he believed that the KNAB focused on the source of the money only in April because Emsis listed it as income on his 2006 financial disclosure statement filed April 1. Silenieks, who has admitted to us that he has spoken to prosecutors voluntarily on several occasions about the Lembergs case, said that in an early August meeting with prosecutors, it was clear to him that they remained interested in the source of this money. Emsis allegedly called prosecutors to arrange to come and speak to them voluntarily upon his return from a planned official visit to Australia and New Zealand on August ¶29. ¶5. (C) Pol/Econ chief noted to Silenieks that regardless of the source of the money, there was no way that 10,000 dollars in cash being handed over in envelopes was going to be seen as something positive. Asked of Emsis would be speaking to the press following his meeting with prosecutors, Silenieks said that Emsis was barred from doing so by an earlier non-disclosure agreement he had signed. Pol/econ chief suggested that the prosecutor might be willing to revisit that in order to allow Emsis to address concerns about his legal status given that he is the second ranking constitutional officer in Latvia. ¶6. (C/NF) Separately, we were previously informed by reliable sources within the government that prosecutors were investigating Emsis for possible receipt of bribes from Lembergs and that the money involved in the October theft was being looked at from this angle. On August 29, a source in the PM's office also said that there is a belief within the coalition that Emsis' situation is more serious than he is letting on publicly. The source added that if Emsis were charged and arrested, he would have to step down as speaker and there was no obvious choice within his party to take the job, which could lead to a broader coalition reshuffle. RIGA 00000651 002 OF 002 ¶7. (C) On August 30 and 31, Emsis informed the media that he is ready to step down as Saeima chairman so that suspicions about him illegally accepting money do not damage Latvia's reputation. Noting that he first needed to consult with the president and prime minister, he stated: "This case casts a shadow over Latvia. There are only suspicions; no charges have been made yet. But how long will this continue, that one of the top officials of the state is a suspect?" Emsis met with President Zatlers on August 30 to gain guidance on what he should do in the situation. On August 31, Pol/EconOff spoke to Andris Pelss, foreign policy advisor to President Zatlers, regarding the substance of this meeting. Pelss reported Emsis was "intent on resigning." ¶8. (C) Comment: Based on Emsis' comments to the press and his meeting with President Zatlers, it is increasingly likely that he will step down sometime next week. His "consultations" with the president and prime minister may represent a delaying tactic to allow behind the scenes negotiation within the coalition--on next steps and how to minimize the political damage. Whatever happens, the news for Emsis is not good and Silenieks' eagerness to get us the "full story" leads us to believe that Emsis and his people know it. Even in the best case, Emsis has demonstrated incredibly poor judgment in taking loans from friend paid in cash and passed in envelopes through intermediaries. And if the same individual has been providing vacations and other items to Emsis, several additional lines of investigation will be open to prosecutors. In the worst case, the money is a bribe - be it from Lembergs or someone else - and Emsis is in serious legal jeopardy if prosecutors can prove the case. SELDOWITZ