Posts Tagged ‘Mike Collier’

July 2013

Latvia – like a Virgin island

Business News Europe

If you’ve ever wondered what sort of tax dodges they get up to in the British Virgin Islands, take a trip to Latvia and speak with Kristaps Zakulis, chairman of the country’s financial regulator, the Financial and Capital Markets Commission (FKTK). Zakulis displays impressive knowledge of and enthusiasm for talking about the Caribbean archipelago whenever Latvia’s own offshoring industry is mentioned.

During the course of an interview lasting less than an hour, he racks up a couple of dozen uses of the words “British Virgin Islands”, “former British colony” and “John Smith” – all the more impressive when the conversation was supposed to be about his agency’s investigation into the links between Latvian banks and the notorious Magnitsky affair in Russia.

The annoyance Zakulis expresses over anything bearing a Union Flag was clearly supposed to provoke your correspondent into a fit of patriotic indignation, yet never having been to the Caribbean archipelago or of a high enough net worth to open any tax-efficient account more impressive than a Post Office savings book, it was a wasted expenditure of energy.

But Zakulis’ probable point is that whatever is happening in Latvia is happening elsewhere too – which is certainly true as far as offshoring goes. To an extent the point could also be applied to the Magnitsky case, as banks in Moldova, Lithuania, Estonia and Cyprus holding accounts from the UK, Belize and – you guessed it, the British Virgin Islands – have been named by lawyers representing Hermitage Capital Management of laundering $230m in the case that led to the death in detention of their lawyer Sergei Magnitsky. According to the lawyers, around $63m of that total was laundered via six Latvian banks in 2007 and last year, Hermitage filed a complaint in Riga demanding the authorities look into its allegations.

Latvia’s Economic Police initially seemed disinterested, but did eventually open an investigation that is ongoing though yet to bring any criminal charges.

To its credit, FKTK was much more active in conducting an investigation and even found one bank culpable enough to impose the maximum fine it is allowed by law, LVL100,000 (€142,000). But the Magnitsky case has a way of making everyone it touches look absurd, from the ridiculous contradictory accounts of how the lawyer met his death in the first place to his ludicrous posthumous conviction pushed by the Kremlin. The Latvian connection does not disappoint in this regard either, for FKTK refuses to say not only when the fine was imposed, but even the name of the bank that is supposed to pay it.

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