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Cablegate: Latvian High Court Rules On Appeal of Banka Baltija

VZCZCXYZ0018
RR RUEHWEB

DE RUEHRA #0883 3331308
ZNR UUUUU ZZH
R 291308Z NOV 07
FM AMEMBASSY RIGA
TO RUEHC/SECSTATE WASHDC 4564
INFO RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS RIGA 000883

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EFIN PGOV ECPS KJUS LG
SUBJECT: LATVIAN HIGH COURT RULES ON APPEAL OF BANKA BALTIJA
VERDICTS


1. Summary: On November 20, the High Court of Latvia finished
reviewing the previous ruling of the Riga Regional Court, and
delivered an appeal judgment over the Banka Baltija collapse case.
Banka Baltija was the largest bank in Latvia in the early nineties,
and the declaration of its insolvency in 1995 resulted in widespread
panic among its depositors and created significant economic
instability and political turmoil. The previous court had found all
three key defendants guilty of embezzlement and fraud charges, while
the High Court has now modified the sentences of two defendants and
found one defendant not guilty. Both prosecution and defense plan
further appeals. End summary.

2. The High Court upheld the over seven-year prison term for the
former Chair of the bank's Supervisory Board, Alelsandrs Lavents,
but overturned the lower court's decree to confiscate his property.
Regarding other defendants, the High Court reduced the prison term
to five and a half years for the former president of Banka Baltija,
Talis Freimanis, and found the head of the law office irojs L&A,
Alvis Lidums, not guilty. The court also affirmed a $40 million
claim against Lavents, and prohibited him and Freimanis from
engaging in business activities for five and three years,
respectively.

3. The court of second instance, the Riga Regional Court, had found
all defendants guilty on embezzlement, bankruptcy fraud and other
fraudulent activity charges that resulted in the collapse of Banka
Baltija.

4. Comment: Neither Lavents nor Freimanis are actually going to be
imprisoned as a result of this decision. Lavents has been under
arrest (mostly house arrest) for exactly the same period of time to
what he was sentenced; and similarly with Freimanis. The $40
million claim will also not come into effect until at least mid next
year when the complete text of the judgment is issued. Since both
sides have announced that they are planning to further appeal the
decision next year, the case will not be coming to a close any time
soon.

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