THE RETURN OF JURGIS LIEPNIEKS

C O N F I D E N T I A L RIGA 000304 SIPDIS NOFORN E.O. 12958: DECL: 06/02/2028 TAGS: PGOV PINR LG SUBJECT: THE RETURN OF JURGIS LIEPNIEKS REF: 06 RIGA 527 Classified By: Ambassador Charles W Larson, Jr. Reason: 1.4 (d) ¶1. (C/NF) Summary: Jurgis Liepnieks, former Chief of Staff to PM Kalvitis and confidante of Skele and now expelled from People's Party, offered his views of the state of politics in Latvia. He suggested that Skele is gaining dominance over the other oligarchs through financial leverage, that Kalvitis really may have a deal to become the head of Latvijas Gaze, and that corruption investigations of the Riga City Council have People's Party very worried. We take Liepniek's comments with the realization that he has his own political scores to settle, but we have always found him to be open with us and his information has had a high degree of reliability in the past. End summary. ¶2. (C/NF) Pol/econ chief met May 29 with Jurgis Liepnieks at our request. Liepnieks previously served as PM Kalvitis' chief of staff, stepping down after the 2006 elections. Liepnieks had previously served as a close advisor to then-PM Andris Skele and was responsible for much of the People's Party's (TP) public relations activities over the years. Liepnieks and Skele have had a huge, and very public, falling out and Liepnieks was expelled from TP in fall 2007. He is now working part time with former TP members Aigars Stokenbergs and Artis Pabriks in establishing their new party, but focuses mainly on operating his publishing house. Liepnieks is also indicted in the digital TV case and is widely rumored to have offered significant assistance to prosecutors in identifying Skele's role in the case. It has even been suggested that after leaving Kalvitis' office, Liepnieks went in to some sort of witness protection program for several months. We have no confirmation of this last point. ¶3. (C/NF) Despite being out of professional politics, Liepnieks remains a political animal. He is following the US presidential campaign in great detail and had many questions. Turning to Latvian politics, he lambasted the major polling firm in Latvia, Latvijas Fakti, as skewing its data to meet its client's needs. He cited as an example, a recent contract that Latvijas Fakti got to provide polling data to several ministries followed by a poll showing PM Godmanis' LPP/LC party at 6%, a number that shocked most observers as far too high. He said SKDS is much more reliable. (Comment: we think both companies have problems in methodology, but have found SKDS to be generally more accurate. End comment.) He added that in the recent SKDS poll, it shows that roughly 35% of those polled say they either would not vote in the election for parliament or did not know whom they would support. But, he said, this is when respondents were given a list of parties to choose from. When asked whom they would support for parliament without being given a list, nearly half of Latvians say they do not know. ¶4. (C/NF) Liepnieks opined that some recent public tension between TP and its coalition partners is based on two facts. One, TP wants to regain the prime ministerial post it lost when Kalvitis stepped down. Two, Skele is in a dominant economic position over other oligarchs and wants to exploit that. On the latter point, he said that various legal proceedings and changes in ownership of the oil transit companies have significantly weakened Aivars Lembergs, both financially and politically. More surprisingly, Liepnieks alleged that Transport Minister Ainars Slesers, believed to be among Latvia's wealthiest men, is having cash flow problems. Slesers' wealth, he claimed, is tied up in a number of projects, mostly real estate, that are taking longer to develop than planned and are at a point where if he withdrew his money now, he would suffer significant losses. He went on to allege that Slesers and Skele are involved in several joint projects, mainly around the port of Riga, and that Skele is demanding that Slesers come up with more money, knowing he can't, in order to gain leverage over him politically. ¶5. (C/NF) Asked what motivates Aigars Kalvitis, Liepnieks said it wasn't money, per se. Rather, he claimed, Kalvitis enjoys the trappings of power. He likes the good life of access and recognition at everything from hotels to sporting events and he likes being around wealthy people who can facilitate that. Asked if he believed reports that Kalvitis has a deal in place to become chair of Latvijas Gaze (50% owned by Gazprom),Liepnieks said he believed that Kalvitis has such an arrangement to move over when he is ready to leave politics. But, he added, it is not as many believe a deal made in Moscow, but rather one made here in Latvia, which Moscow has said it would not object to. ¶6. (C/NF) Queried what corruption cases have the greatest potential for creating shocks to Latvian politics, Liepnieks thought that it was the ongoing investigations into the Riga City Council. More than any other, he said, these cases touch on many leading politicians from many parties and if fully uncovered would damage the careers of many of Latvia's leaders. He alleged that this is the real reason for an assault on the anti-corruption agency (KNAB) - to derail these investigations. He said that investigations in the criminal enforcement chief of the customs service, Vladimirs Vashkevics, are not likely to be as damaging to TP as many people believe, although he did not specify if that was because the link would be very hard to prove or simply did not exist. ¶7. (C/NF) Responding to questions about the digital TV case, Liepnieks said he was frustrated by the slow pace of the case. "I just want to tell my story and be judged," he said. He added that the change of judge in the case after a petition from one of the other defendants was a good thing because the new judge is young and with a reputation for not being tied in to the corruption networks in the judiciary. That said, Liepnieks feared that the judge was given this case to prevent him from being able to take on the job of chief of the Riga regional court, where most high level corruption cases are tried, which would allow him to exercise oversight of many key cases. (Note: Three months ago a retired minister, with no known connections to Liepnieks, warned us that many wealthy individuals feared this same judge and would work to prevent him from becoming chief of the Riga regional court. End note.) Liepnieks concluded the meeting by noting the importance of establishing a viable system for plea bargaining in Latvia and applauding Embassy efforts to promote the idea. (Comment: Jurgis Liepnieks, and his seeming willingness to rat out Skele, is an excallent example of why Latvia needs a better system for plea bargaining that would reduce his sentence in exchange for cooperation. End comment.) ¶8. (C/NF) Comment: We have retained contact with Liepnieks because he remains one of the most astute observers of Latvian politics. Pol/econ chief established friendly relations with him in Kalvitis' office and he has always been very open in our meetings, both in and out of office. This was the first conversation in which we asked such pointed questions about individuals and their styles. There is no doubt that some of Liepnieks' comments are designed to spin, but we report the conversation in full because his unique insights provide a window on some elements of Latvian domestic politics that we might not otherwise have. LARSON