Thursday

2nd Apr 2020

EU judges to rule on ECB empty chair

  • The Frankfurt-based ECB welcomed Latvia as a new member in 2014 (Photo: ECB)

EU judges are to rule on Latvia's handling of a bribery fiasco in a test case for eurozone banking supervision.

The European Central Bank (ECB) filed the case at the EU court in Luxembourg on Friday (6 April) after Latvia banned its own central bank chief, Ilmars Rimsevics, from office on bribery allegations last month.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or join as a group

  • The ECB brought the case to protect its independence from national politics (Photo: Michal Jarmoluk)

The move is to see the ECB's 25-member governing council meet with an empty chair in Frankfurt in April, but the EU central bank is seeking an injunction to overrule the ban in order to "preserve the normal functioning of its decision-making".

The ECB also asked the EU judges to rule "whether Latvian authorities breached European Union law" in prohibiting Rimsevics from "holding office at the Latvian central bank and exercising his functions as a member of the ECB's governing council".

Latvian authorities have accused Rimsevics of taking up to €100,000 in bribes while in office and while attending ECB meetings.

He denies the allegations and plans to contest his dismissal in the courts.

The ECB brought the case in order to protect its legal independence from national politics in the 19 eurozone states, but the affair cast a harsh light on EU anti-corruption structures.

The empty chair fiasco comes amid two other eurozone banking scandals - the forced liquidation of ABLV, Latvia's third largest lender, and Malta's suspension of Pilates Bank, also last month.

The US said in March that ABLV, which Rimsevics was supposed to oversee, was guilty of "institutionalised money laundering" to help North Korea evade sanctions.

The US accused Pilates Bank of sanctions busting on Iran, amid broader allegations of Maltese government corruption and the assassination of an investigative journalist on the island.

The US announcement on ABLV prompted a bank run and the ECB intervened with liquidity assistance to prevent the lender's collapse, but it pulled the plug after 10 days, forcing the bank into liquidation.

The EU central bank later admitted that its own supervisory structure, the Single Supervisory Mechanism (SSM), had failed to tackle the problem.

The SSM scrutinises business models and governance of eurozone banks, but the EU and the eurozone have no centralised anti-money laundering body, the SSM noted.

"I agree with you it's very embarrassing to depend on the US authorities to do the job," Daniele Nouy, the SSB chairman, told the European Parliament at the time.

"This has to change," she told MEPs at a hearing on 26 March.

Old problem

Revelations in 2017 that Germany's largest lender, Deutsche Bank, had helped Russians to evade sanctions in dodgy financial transfers worth tens billions of euros were similarly brought to light by US authorities.

Meanwhile, allegations of high level money-laundering in Riga and other EU capitals go back well before Latvia joined the eurozone in 2014.

Latvian authorities fined another bank €140,000 in 2013 for its role in handling tens of millions of euros that were embezzled from the Russian tax payer and funnelled back to the inner circle of Russian president Vladimir Putin.

The money trail, which was linked to the death of Russian anti-corruption activist Sergei Magnitsky in 2009, also led to banks in eurozone members Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, and Lithuania, as well non-euro states Denmark and the UK.

Whistleblower fears for life as US arrests Malta bank chair

US authorities have arrested the chair of the Maltese-registered Pilatus Bank for tax evasion. The bank facilitated political corruption in Malta but its whistleblower is now facing jail in Malta and fears for her life.

Analysis

First 100 days: Digital and Green Deal policies hit by crises

The first 100 days of Ursula von der Leyen's commission were supposed to be about the digital and environmental transitions. However, that agenda has been hit by first the coronavirus, and now the Greek border situation.

Feature

How corporate lobbyists steer EU law-making

Former EUobserver investigations editor Peter Teffer has written a new book about how lobbying in the EU works. The EU's focus on the internal market offers corporate lobbyists a perfect means to forward their interests.

This is the (finally) approved European Commission

MEPs gave the green light to the entire new European Commission during the plenary session in Strasbourg - but with the abstention of the Greens and a rejection by the leftist group GUE/NGL.

Magazine

Welcome to the EU engine room

Welcome to the EU engine room: the European Parliament (EP's) 22 committees, which churn out hundreds of new laws and non-binding reports each year and which keep an eye on other European institutions.

Stakeholders' Highlights

  1. UNESDAMaking Europe’s Economy Circular – the time is now
  2. Nordic Council of MinistersScottish parliament seeks closer collaboration with the Nordic Council
  3. UNESDAFrom Linear to Circular – check out UNESDA's new blog
  4. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  5. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  6. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms

Latest News

  1. Court: Three countries broke EU law on migrant relocation
  2. Journalism hit hard by corona crisis
  3. EU fighting shortages and faulty medical supplies
  4. New EU navy operation to keep migrant details secret
  5. MEP: Constituents are our window into this tragedy
  6. Without European patriotism, EU decline is inevitable
  7. EU cancels April Fool's 'fake news'
  8. A coronavirus 'Marshall Plan' alone won't be nearly enough

Join EUobserver

Support quality EU news

Join us