AMBASSADOR'S MEETING WITH ANTI-CORRUPTION CHIEF

S E C R E T SECTION 01 OF 02 RIGA 000092

SIPDIS

NOFORN
SIPDIS

E.O. 12958: DECL: 02/19/2028
TAGS: PGOV PINR KCOR LG
SUBJECT: AMBASSADOR'S MEETING WITH ANTI-CORRUPTION CHIEF
(C-RE7-02279)

REF: A) STATE 168829 B) RIGA 78 C) RIGA 81

Classified By: Ambassador Charles W. Larson, Jr. Reasons: 1.4 (b and d
)


1. (S/NF) In his introductory meeting with Ambassador Larson,
anti-corruption chief Loskutovs reviewed the status of many
of the significant anti-corruption cases in Latvia at the
moment. Loskutovs was optimistic that charges would be filed
against Andris Skele in the digital TV cases and that the
court cases against Ventspils mayor Aivars Lembergs would
begin relatively soon. He also reviewed the status of
cooperation with other Latvian law enforcement agencies and
previewed possible charges against other officials. It is
clear that Loskutovs' suspension last year did little to
dampen his enthusiasm and, if anything, he seemed more
energized than before. End summary.


2. (U) Ambassador Larson called on anti-corruption bureau
(KNAB) chief Aleksejs Loskutovs February 15 for an
introductory call. Loskutovs was alone. Ambassador was
accompanied by pol/econ chief (notetaker).


3. (C) Loskutovs began by saying that Latvia "lies on a
border between the traditional democracies to the west and
the yet to be democratic countries in the east" and the
challenge is to develop more along the western model.
Anti-corruption efforts were key to this goal, he said, and
the KNAB had greatly benefited from training, equipment and
financial assistance from the USG over the years. He was
upbeat on the generally positive views of the KNAB by
Latvians, although he said that was not reflected in the
political elite where KNAB was often viewed as an enemy.
Loskutovs assessed that public opinion in Latvia was less
tolerant of corruption than in the past. He said that in
2007, there were no cases of alleged extortion by public
officials in exchange for government services, something that
had been quite common in earlier years. He also claimed that
most corrupt activity takes place outside of Latvia, in order
to make it harder for KNAB to detect.


4. (S/NF) Loskutovs proceeded to provide an assessment of
KNAB cooperation with other agencies. The closest relations
are with SAB (Constitutional Protection Bureau, main
intelligence agency) where cooperation is "excellent." With
the Security Police, Loskutovs felt that the overall
relationship was good, but expressed some concern that its
chief, Janis Reiniks, is not entirely free from political
interference (no examples cited). With State Police,
cooperation is overall strong and many of the small and
low-level corruption cases are passed to them for
investigation. Loskutovs was clear, though, that the law
enforcement agencies operating under the internal revenue
department (VID) were not to be trusted and that there were
"serious questions about the integrity of senior officials"
across the board in these agencies. KNAB cooperates as
little as possible with the financial police, asserting that
they "have thwarted investigations" by KNAB. He was
especially vitriolic about the criminal investigations
service of the customs bureau and its chief, Vladimirs
Vasekevics. Vasekevics is "corrupt" and "uses his officers
like a private security force," making cooperation with him
"impossible." Loskutovs added that Vasekevics is likely to
be indicted on corruption charges in coming months, although
getting all the evidence against him is proving to be a
challenge.


5. (S/NF) Examining specific cases, Loskutovs offered the
following assessments:

Digital TV - This is a very serious case with over 20 people
indicted so far. Loskutovs added that he fully expected that
Andris Skele, whom Loskutovs called Latvia's biggest
oligarch, would be charged in the case later this year.

Lembergs - Loskutovs expressed great pride in KNAB efforts in
this case, saying they had to work almost entirely alone
because other institutions could not be trusted to cooperate
in the investigation given the reach and influence of
Lembergs and his supporters. Asked when the case might go to
trial, Loskutovs said that the corruption in other agencies
made it a very slow process and it was important to double
check details. (ref c) Nevertheless, he thought the case
would be in court "in a short time" and noted that more
information had come in from other countries pursuant to MLAT
requests. He cited the recent freeze on assets belonging to
several of Lembergs' business associates as evidence that
they were getting closer to going to trial.

Vasekevics - The investigation into the chief of the customs
bureau's criminal investigation service is "active,"

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according to Loskutovs and an indictment could be forthcoming
(no time frame given). This would be a tough case, though,
both because Vasekevics is "one person in a much larger
network" and because he had wisely used his criminal activity
and its proceeds to garner political support and protection
for himself. (Comment: This is in line with reporting from
post GPRO on Vasekevics and reported ties to the People's
Party. End comment.)

Riga City government - Loskutovs pointed to the recent arrest
of a city property agency official as an important step in
addressing widespread corruption in the municipal government
(which controls an annual budget larger than that of the
Latvian state),but said it was only the tip of the iceberg.
While there are many potential cases here, Loskutovs
asserted, the city government is "very difficult to
penetrate."

Judges - Loskutovs was very pleased by the recent conviction
of two judges for taking bribes (ref b) and said that he
hoped others would be on notice that their positions as
judges did not protect them from anti-corruption
investigations.


6. (S/NF) Comment: This is the first Ambassadorial meeting
post has had with Loskutovs since the resolution of the
attempt by former PM Kalvitis to remove him from office. He
was focused and direct, and committed to his job. His
detailed accounting of coordination with other agencies and
the status of specific cases was unusually detailed compared
to previous meetings. We saw no sign that the events of last
fall have caused him to back off. In fact, he seemed to
pol/econ chief, who has watched him for nearly 20 months, to
be more animated and more aggressive than before.
LARSON