By Samuel Rubenfeld
December 10, 2019
Aivars Lembergs has repeatedly been accused of money laundering, bribery and abuse of office, the U.S. Treasury Department said Monday when imposing sanctions on him.
Lembergs, who the Treasury called an oligarch, has served as mayor of the Latvian port city of Ventspils since 1988, but was suspended amid a corruption trial; he denies the allegations. He controls entities through political parties and corrupt politicians, and exploits both for his own economic gain, using his influence to place certain officials in government positions and obstruct others from rising to leadership roles, the Treasury said.
Lembergs has long faced corruption allegations and members of his family have been accused as well, according to media reports: A leak associated with the Panama Papers scandal revealed assets tied to Lemberg’s daughter and his son is a co-defendant at the trial.
Ventspils opposition leaders last month raised concerns about Lembergs’ use of luxury cars for private transportation but said there was little they could do under the law to stop him, according to a local media report.
The Treasury designated Lembergs as part of a wide-ranging sanctions action coinciding with International Anti-Corruption Day. It also sanctioned four Latvia-based entities Lembergs owns or controls, issuing a license allowing 30 days for wind-down transactions. The U.S. State Department on Tuesday said it barred him, and his immediate family, from entering the U.S. The Latvian Foreign Ministry warned in a statement that the U.S. designation of Lembergs could cause difficulties with implementing existing contracts signed with him or the entities he controls.
At a press conference on Tuesday in Ventspils, Lembergs called the U.S. allegations “fake news” instigated by political opponents, according to a Reuters report. “Americans are being used in internal political infighting,” he was quoted as saying. “I don’t have a chance to defend myself just like during Stalin’s regime in the Soviet Union.”
Lembergs added on social media that he asked to be replaced from the board of Ventspils Freeport Authority, one of the four sanctioned entities tied to him, in order to keep the port operating. The Latvian state is taking over the ports of Ventspils and Riga, Prime Minister Krisjanis Karins said Tuesday, according to a report by Latvian media outlet LETA.
"The port's takeover by the state completely severs all its connections with the sanctioned person," Karins was quoted as saying.
Ventspils is Latvia’s second-largest port and a key element of the country’s transit business, with 38 companies based there, said Transport Minister Talis Linkaits, according to the LETA report.
The U.S. has worked closely with the Latvian government, the Treasury said, as the tiny Baltic nation works to address several money-laundering scandals and the trial of its central bank governor for alleged bribery. Latvia in June passed an anti-money-laundering overhaul and the country last month submitted its progress report to the Financial Action Task Force (FATF).
Latvian lender ABLV Bank liquidated following a finding in February 2018 by the Treasury’s Financial Crimes Enforcement Network (FinCEN) that the bank was “an institution of primary money laundering concern” under Section 311 of the Patriot Act. The bank had wide commercial holdings, Kharon reported in August 2018.
Bank management allowed the employees to orchestrate and engage in money laundering schemes, and it solicited high risk shell company activity, enabling the bank and its customers to launder funds, FinCEN said in a notice of proposed rulemaking.
Multiple actors also exploited lax risk controls at ABLV Bank to facilitate illicit financial activity, including transactions for parties connected to U.S. and United Nations-sanctioned entities, some of which were involved in North Korea’s procurement or export of ballistic missiles, FinCEN said. Ukrainian tycoon Sergey Kurchenko, who was sanctioned by the U.S. in 2015 for misappropriating Ukrainian state assets, “funneled billions of dollars through his ABLV shell company accounts” prior to his designation, FinCEN found.
