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Cablegate: Latvia Fraud Summary: March 2009 Q August 2009

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RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK
RUEHYG
DE RUEHRA #0486/01 2731452
ZNR UUUUU ZZH
R 301452Z SEP 09
FM AMEMBASSY RIGA
TO RUEHC/SECSTATE WASHDC 6062
RUEHPNH/NVC PORTSMOUTH 0022
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHTL/AMEMBASSY TALLINN 0010
RUEHVL/AMEMBASSY VILNIUS 4063
RUEHWR/AMEMBASSY WARSAW 1104
RUEHFT/AMCONSUL FRANKFURT 2661

UNCLAS SECTION 01 OF 08 RIGA 000486

SIPDIS

DEPT FOR CA/FPP
DHS FOR CIS/FDNS

FRANKFURT FOR RCO, KERRY L. BROUGHAM

E.O. 12958: N/A
TAGS: KFRD CVIS CPAS CMGT ASEC LG

SUBJECT: LATVIA FRAUD SUMMARY: MARCH 2009 Q AUGUST 2009

REF: (A) STATE 057623; (B) RIGA 170; (C) RIGA 472; (D) RIGA 90; (E)
RIGA 165;
(F) RIGA 359; (G) 08 RIGA 628; (H) 08 RIGA 692

Per reftel A, Post has prepared its semi-annual fraud report for the
period
between March and August, 2009. Please replace prior version of
post's fraud
report (reftel B) with the following text:

A. COUNTRY CONDITIONS

Latvia is a member of the EU and NATO. Until 2008, Latvia's economy
was one
of the fastest-growing in the region, posting double-digit growth
rates in
real GDP. However, the country is currently mired in economic
crisis, with
soaring unemployment rates, falling real property values, a
tightened credit
market, and a sizeable national deficit. In fact, the Latvian
economy
contracted over the last 12 months, posting a GDP decline of 18.7
percent in
the 2nd quarter of 2009, calculated on a year-over-year basis (GOL
Central
Statistical Bureau). In light of these difficulties, the Government
of Latvia
(GOL) is struggling with very difficult choices as its leaders seek
to reduce
the annual deficit in accordance with existing agreements with
LatviaQs
creditors (e.g. International Monetary Fund, European Union, et
al.).

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Over the past several years, Latvia experienced significant labor
force
migration to other EU countries, most notably Ireland, Great
Britain, and
Germany (GOL Central Statistical Bureau). The increasing official
unemployment rate Q which measured 12.3 percent in August, 2009 (GOL
State
Employment Agency data) - is expected to motivate even more people
to look for
jobs abroad. The August index reflects an increase of 2.8
percentage points
since February and 7.1 percentage points compared to August, 2008.
This loss
of jobs has been widespread: while the eastern part of Latvia
(Latgale) has
been especially hard hit (current unemployment rate is between 18-26
percent,
except for Daugavpils district with 12.1 percent), the current index
is above
10 percent in all regions of Latvia. The European harmonized
unemployment
rate for Latvia was 17.4 percent in July 2009, the second highest
rate in the
European Union.

Of those without work, almost half (45 percent per GOL State
Employment Agency
data) have general secondary education, 37.7 percent have
professional
education, and 14.1 percent have higher education, the rest have
elemetary
school education or their education level is unknown. Construction
and real
estate, two of the most robust industries of the last few years,
have been
among the hardest-hit sectors. Demographic studies provided by the
GOL
Central Statistical Bureau indicate that the jobless rate is highest
(30.5
percent) for men and women in their early twenties.

According to data from the same source, the average net salary in
the Latvian
public sector dropped 10 percent between June, 2008, and June, 2009.
Due to
the widening national deficit, GOL ordered significant salary cuts

RIGA 00000486 002 OF 008


across the
board for all government agencies, including local municipalities
and their
subordinate agencies. Further cuts may be expected in the coming
months.
Average net salary in the private sector remains the same as in
2008.

Actual average net salaries in the outlying regions ranged from 271
to 313 LVL
(or 565 to 661 USD, per current ROE) per month in June, 2009. The
average
monthly net salary was higher in Riga Q 408 LVL (or 841 USD, per
current ROE).
By comparison, the estimated minimum cost of living (poverty wage)
in Latvia
in June, 2009, was 168 LVL (or 344 USD, per current ROE). As a
result,
QunofficialQ wages grew in popularity in Latvia as entities and
individuals
tried to evade paying social and income taxes, which increase
employer salary
expenses by up to 50 percent.

Latvia is essentially a bilingual country consisting of a Latvian
majority and
a Russian-speaking minority. The relations between the two are
sometimes
strained. According to statistical data, about 82.3 percent of 2.26
million
Latvian residents hold Latvian citizenship, whereas 15.5 percent are
Latvian
non-citizens. The remaining 2.2 percent of the population are third
country
nationals (TCNs) holding Latvian residency permits. Of this latter
category,
the majority are Russian citizens. While Latvian non-citizens hold
GOL-issued
passports, their non-citizen status limits them from exercising some
rights,
for example, voting. A significant number of non-citizens do not
speak
Latvian, the country's official state language, which restricts
their
employment opportunities and ability to naturalize. Latvian
non-citizen
passport holders are authorized to travel without a visa to Schengen
countries
for a stay of up to 90 days, but are not eligible for the U.S. Visa
Waiver
Program. The U.S. visa reciprocity schedule is the same for Latvian
citizens
and non-citizens.

Over the last few years, many business sectors in Latvia experienced
shortages
in skilled and unskilled labor. In response, the number of
residency permits
and work permits issued by GOL kept increasing over the last few
years.
According to GOL State Employment Agency data, the majority of TCNs
employed
in Latvia are from Ukraine (about 40 percent of the total of
employed TCNs),
Moldova, Uzbekistan, Russia, Thailand, and Belarus. Most of these
individuals
are employed in the construction, manufacturing, transportation, and

hospitality industries.

B. NIV FRAUD

NIV fraud is low in Riga. Wide-ranging fraud schemes are rarely
encountered.
In some cases, visa applicants present bogus employment documents to
establish
their bona fides, or omit information about their criminal records.
Post has
not yet encountered attempts from NIV applicants to falsify Police
Clearance
Letters. Post continues to perform document checks in conjunction

RIGA 00000486 003 OF 008


with all NIV
cases. The number of cases involving fraudulent documents has not
increased
during this reporting period.

Latvian law enforcement institutions are working to combat organized
crime
groups, money laundering, and trafficking-in-persons schemes.
Recent cost-
cutting measures by GOL have affected the work of these
institutions.

Latvia joined the Visa Waiver Program on November 17, 2008. This has
resulted
in a considerable decrease in the number of NIV applications at
Post. More
specifically, Post processed 2,383 NIV applications between March
and August
of 2009, representing a 50 percent decrease compared to the same
time period
in 2008. The refusal rate (excluding G refusals) during the
reporting period
was 5.28 percent. Over the same reporting period last year, the
refusal rate
was 5.52 percent. According to post's annual B1/B2 visa validation
survey, the
visa misuse rate remains very low. The latest validation study
indicated a 1.6
percent misuse rate for visa holders issued by post between June,
2007, and
June, 2008 (see reftel E).

Of the NIVs issued by Post from March until August, 2009, about 60
percent
were C1/D visas. In absolute numbers, the number of applications for
C1/D
visas has increased approximately 30 percent, measured
year-over-year (from
925 applications to 1204). C1/D visa fraud is rare and the refusal
rate
remains very low (0.16 percent). Post has established good
cooperation with
local crewing agencies. Previous validation surveys showed a 100
percent visa
compliance rate for sailors (see reftel F).

Post issued 139 J1 visas between March and August of 2009,
representing a 4
percent increase over the same reporting period one year before.
Almost all
applications were from qualified applicants, with the exception of
two Summer
Work & Travel (SWT) applicants. Post requested additional
information from
these individuals, but they never returned. The 2008 SWT visa
validation study
(see reftel G) showed a 100 percent visa compliance rate. The
updated
validation study for this category will be performed at the end of
October,
2009. The last survey on Au-pair program participants revealed 2
instances (7
percent) wherein visa holders overstayed the authorized period of
stay (see
reftel H). Because of worsening economic situations, J1 visa fraud
remains an
area of concern.

Post does not process a high number of visas in other NIV
categories. Fraud
cases involving other types of visas tend to mirror similar schemes
being
tried at multiple posts in the region. For example, post has noticed
that the
limited number of H1B visas issued to fashion models has led several
U.S.
agencies to try using the B1 visa category to facilitate paid work
in the U.S.
In these cases, the model typically says he or she intends to "meet
with
fashion photographers" - while the actual plan is to appear in

RIGA 00000486 004 OF 008


fashion shoots
and runway shows. Similarly, Post has recently received
applications from a
number of professional minor league hockey players, who request B1
visas for
their try out, but readily disclose their intention to work during
their
travel should they make the team.

C. IV FRAUD

Post has no IV fraud to report. In October, 2007, post began
processing
immigrant visas for children adopted from Latvia. Warsaw processes
all other
immigrant visa categories for residents of Latvia. Upon request, FPU
in Riga
assists Warsaw in verifying authenticity of documents and other
information
submitted by the applicants. Post has requested authorization from
the
Department to begin processing all categories of immigrant visas
during fiscal
year 2010.

D. DV FRAUD

Warsaw adjudicates immigrant visas for Latvian Diversity Visa cases.
Post
receives many DV-related inquiries from individuals who have
received e-mails
or phone calls from third parties. Post generally forwards these
e-mails to
RSO and FPU KCC as well. These letters often contain the Department
of State
logo, presumably copied from Internet resources. A warning message
about DV
fraud is displayed on postQs website.

E. ACS FRAUD

Post has no ACS or passport fraud to report.

F. ADOPTION FRAUD

Post has no Adoption fraud to report. There is no evidence of
instances
involving corrupt GOL officials, adoption agencies, or orphanage
officials
handling adoption cases. The Ministry of Welfare (previously the
Ministry for
Children, Family, and Integration Affairs), which is the central
authority for
adoption purposes, strictly monitors local adoption agencies and
Latvian
orphan courts. Post has no current concerns about fraud related to
Latvian
government procedures for making eligible orphans available for
adoption.

Orphan courts in Latvia carry out functions similar to those of
social workers
in the U.S. Orphan courts have the authority to decide if the birth
parents'
rights can be terminated, if an orphan should be placed in an
orphanage, if
custody will be transferred to someone else, and if inheritance
rights apply
when a child's parents die. In the context of international
adoptions, the
orphan courtQs main role is to establish that adoption would be in
the child's
best interest.

In light of extensive negative publicity on adoption in Russia and
other CIS
countries, there is a certain degree of opposition among officials
in the
Latvian government and the general public in relation to adoption.
This has
contributed to a general sense of reluctance to promote local and

RIGA 00000486 005 OF 008


international adoption. As of March 1, 2008, applications for
intercountry
adoption are approved only when the adoptive parents file to adopt:
a)a
sibling group of three or more children; b) a child over age 9; c) a
child
with severe health problems; or d) a child not adopted by Latvians,
who is
subsequently released for intercountry adoption.

As of April 1, 2008, intercountry adoption from Latvia to the USA is
carried
out under guidelines established in the Hague Convention on
Protection of
Children and Co-operation in Respect of Intercountry Adoption.

G. USE OF DNA TESTING

Riga has requested DNA testing in very few ACS cases in the past.
Latvian DNA
laboratories are EU-certified, but none cooperate directly with any
U.S.
laboratories that are authorized to provide testing for immigration
law
purposes. Currently, tests can be done with the assistance of
Post's panel
physician, who contacts a U.S. laboratory to conduct the test. The
laboratory
in the U.S. then sends the results directly to Post and the
applicant. DNA
tests have never uncovered any evidence of fraud in Riga. Post
monitors the
panel physician on a regular basis to mitigate potential fraud
concerns.

H. ASYLUM AND OTHER DHS BENEFITS

Post is aware of very few cases when Latvian passport holders
traveled to the
USA and claimed asylum. Before issuing a Transportation Letter to a
Lawful
Resident of the U.S., post verifies applicantsQ immigrant status
with DHS.
Post has seen no evidence of any other DHS-benefit fraud.

I. ALIEN SMUGGLING, TRAFFICKING IN PERSONS, ORGANIZED CRIME,
TERRORIST TRAVEL

Since Latvia joined the Schengen zone, land border checkpoints
between
Schengen zone countries have been eliminated. Latvia continues to
have border
checkpoints on the Latvian-Russian and Latvian-Belarus borders. Due
to the
open borders, Latvia has become more attractive as a transit state
for
smugglers attempting to bring aliens into the EU and Schengen travel
zone.
The number of asylum seekers and third country nationals (TCNs)
detained for
being present in Latvia without appropriate documentation or trying
to leave
for other EU countries without proper travel documents has increased

significantly. Similarly, the number of people detained for alien
smuggling
has also increased significantly. Specifically, 3 persons were
detained
between January and June of 2008, but 15 were held for this offense
in the
corresponding period in 2009. The majority of asylum seekers and
TCNs in
Latvia without proper travel documents are from the former USSR
countries.
Several Syrian, Chinese, Bangladesh, Indian, and Iraqi nationals
have also
been detained.

The number of bogus marriages between Latvian nationals and TCNs
(e.g.
Pakistanis, Indians, et. al.) continues to increase (see reftels C

RIGA 00000486 006 OF 008


and D).
These fraudulent unions are generally arranged by marriage brokers
to make
TCNs eligible for EU immigration benefits.

This year Latvia reportedly has been a source country for human
trafficking
(TIP) victims. During 2009, no cases were identified in which
Latvia was used
as a transit or destination country for TIP victims; however, it is
difficult
to estimate the magnitude of TIP in Latvia since no formal surveys
have been
performed on the issue (see reftel D). Victims are most often women
deceived
by spurious employment offers who are trafficked as prostitutes to
Great
Britain, Belgium, the Netherlands, Norway, Italy, Germany, and
Cyprus.

As tens of thousands of Latvian men and women leave the country in
search of
better employment abroad, the NGO community believes that there are
cases
involving unidentified Latvians being trafficked for labor
exploitation. Law
enforcement continued investigating a case involving more than 50
victims
purportedly trafficked to the U.K. as forced labor. With the
Latvian economy
in crisis and the local unemployment rate among the highest in the
EU, there
is a reason to believe that more Latvians may now be at risk of
becoming TIP
victims. Since Latvia has entered the Schengen travel zone,
identification of
potential TIP instances has become more challenging (see reftel D).


The nature of organized crime (OC) in Latvia has evolved and become
more
sophisticated over the last two decades. OC groups benefit from
improved
information technology and from holes in legislation that minimize
scrutiny,
as long as criminals avoid violent acts. OC groups are most commonly
involved
in drug trafficking, car thefts, and economic crimes. With reduced
or
eliminated border control within the EU, OC groups perform more
cross-border
activities.

According to Latvian police statistics, the number of murders has
decreased by
75 percent over the last 15 years. Crimes involving the use of guns
and
explosives have decreased similarly. The number of drug-related
crimes,
however, has increased tenfold, and combating narcotics has become a
major
priority for Latvian law-enforcement institutions in Latvia. Latvia
is both a
transit as well as a destination country for drug trafficking.
Police report
many instances of drug-related cases of theft, prostitution, human
trafficking, and money laundering.

So far, post has not encountered any individuals with known
terrorist ties.

Upon receiving or obtaining credible data about individuals
sentenced or
arrested for serious crimes involving moral turpitude, organized
crime,
Trafficking in Persons, or alien smuggling, post enters quasi-hits
or L
lookouts in the Independent Name-Check System, if there is reason to
believe
that the individuals might apply for visas or visa free travel in
the future.

RIGA 00000486 007 OF 008

J. DS CRIMINAL FRAUD INVESTIGATIONS

Riga's Consular Section enjoys excellent cooperation with the
Regional
Security Office. Post has established a memo format for referring
cases to
the RSO for investigation. The Consular Section and the RSO in Riga
regularly
cooperate in conducting security checks on visa applicants who may
be
ineligible under certain sections of the Immigration and Nationality
Act.
With the RSO's assistance, the Consular Section can promptly obtain
background
from RSO contacts within various law-enforcement agencies.

K. HOST COUNTRY PASSPORT, IDENTITY DOCUMENTS AND CIVIL REGISTRY

Latvia has two different types of passports - citizen and
non-citizen
passports. In November, 2007, Latvia began issuing biometric
passports that
meet ICAO standards to both citizens and non-citizens. Passports
issued after
September, 2008, also incorporate fingerprints. Citizen passports
of the
older type, i.e. those issued before July 2002, have been invalid
for
international travel since July 1, 2008.

Passports are issued by the Office of Citizenship and Migration
Affairs of
Latvia (OCMA). In early January 2008, a large-scale scheme was
discovered
wherein more than 150 Latvian passports were issued illegally to
non-citizens
and third country nationals between 1998 and 2005. A number of
government
officials, mostly OCMA employees, accepted bribes and misused their
powers to
facilitate illegal issuance of Latvian passports. OCMA employees
issued
genuine passports by first creating a false identity in the national

citizenship registry, then issuing a genuine passport for that
fraudulent
identity. It is believed that wealthy Russian nationals purchased
these
passports to secure free movement within the EU. Post has created
over one
hundred CAT1 files to reflect the fraudulent passport holders' fake

identities.

There are two types of Latvian driver's licenses: a new,
EU-promulgated photo-
digitized driving license and an older-type driving license with the
photo
affixed under laminate. Driver's licenses are generally accepted as
proof of
identity by public and private institutions in Latvia. The Road
Traffic
Safety Authority has implemented an anti-corruption program and
cases
involving bribery and the illegal purchase of driving licenses have

significantly decreased. Forgeries are usually based upon
older-type driverQs
licenses. The Road Traffic Safety Authority reports that these
licenses
mostly are used for travel abroad rather than within Latvia.

There is no evidence of fraud in relation to the issuance of Latvian
civil
records, such as birth, marriage, or death certificates. Latvia
does not yet
issue national identity cards.

L. COOPERATION WITH LATVIAN GOVERNMENT AUTHORITIES


RIGA 00000486 008 OF 008


Post receives good cooperation from and has excellent contacts
within Latvian
government institutions, including the Security Police, Criminal
Police,
Maritime Administration, and State Border guards. It is not
difficult to
carry out the verification of civil documents through the Civil
Registry. The
Security Police and the State Police have proven to be useful
contacts when
post wishes to check an applicant's criminal record. The Maritime
Administration is forthcoming about verifying sailors' credentials
and in
addressing concerns about the licensing of crewing agencies.

M. AREAS OF CONCERN

According to the GOL State Employment Agency and OCMA, working-age
adults in
Latvia are increasingly likely to look for employment abroad, given
the
current economic climate. Post receives an increasing number of
phone
inquiries from Latvians who are eager to learn about living and
working in the
U.S.

It is clear that B1 business visas are sometimes being confused with
visas for
temporary workers, investors, and intra-company transferees, perhaps
due to a
misinterpretation of the word QbusinessQ. In response, Post will
perform
additional public outreach to better explain the purpose of B1
business visas.

N. STAFFING AND TRAINING

Consul Timothy P. Buckley is Post's Fraud Prevention Manager. Zane
Zvigule is
the Fraud Prevention Programs Analyst, and also performs visa
processing and
interpretation duties.

GARBER

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