Loskutovs, Latvian Eliot Ness, Fights Graft, Anger (Update1)

Aaron Eglitis
October 4, 2007

Oct. 4 (Bloomberg) — When Aleksejs Loskutovs was appointed to head Latvia’s anti-corruption bureau in 2004, he made an unlikely Eliot Ness.

The obscure professor was more used to academic debate than crime-busting, while his soft-spoken, Russian-accented Latvian stood out in a nation where tension between the two communities runs high.

Three years later, Loskutovs, 45, has arrested hundreds of corrupt officials, businesspeople and politicians, helping lift the former Soviet republic above such nations as Greece and Poland in watchdog group Transparency International’s anti-corruption rankings.

“He’s been much better than I’d thought,” said Krisjanis Karins, head of New Era, Latvia’s largest opposition party and a former critic. “He’s turned out to be courageous and principled.”

Maybe too much so: The government of Prime Minister Aigars Kalvitis, feuding with Loskutovs, last week suspended him, alleging fiscal improprieties — a charge he denies. A commission formed to investigate him may recommend his dismissal as early as this week.

“It’s a political attack,” said Roberts Putnis, the chief of Berlin-based Transparency International’s Latvian office. “The prime minister is actively destroying the reputation of the institution, which is high in the public’s eyes. If he is fired, it will be the end of the anti-corruption work in our country.”

Soviet Legacy

The European Union has demanded its newest members, most of them from the former communist East, eradicate a legacy of payoffs, theft and nepotism left over from decades of Soviet rule. When Loskutovs — who had taught criminal law at the Police Academy of Latvia and worked for the Interior Ministry — arrived at the bureau in 2003, he found an economy where corrupt officials “were shameless, they weren’t afraid of anything and they’d openly demand a bribe,” he said in an interview in his Riga office. “Now they’re afraid.”

Like Ness, the legendary U.S. crime fighter whose team of Untouchables helped bring down Chicago mobster Al Capone, Loskutovs and his staff exposed a vote-buying scandal last year in Jurmala, a seaside town where Russia’s communist elite once vacationed.

Hundreds of Convictions

Transport Minister Ainars Slesers was forced to resign for his involvement, though he eventually returned to office. One person was convicted and international arrest warrants were issued for two others who have disappeared, said Dzintra Vitolina, a spokeswoman for the general prosecutor’s office.

About 200 policemen, border guards, customs officers and others have been convicted of bribe-taking since the bureau was set up, which may not have happened in the past, said Valts Kalnins, a researcher at Providus, a public-policy organization in Riga.

“Especially over the last year or two, Loskutovs has shown that he’s beholden to no political force,” said Nils Muiznieks, a political science professor at the University of Latvia in Riga. “Loskutovs has taken on anti-corruption cases involving some of the most influential people.”

The highest-profile case involved the mayor of the port city of Ventspils, Aivars Lembergs, a former candidate for prime minister. He is under house arrest awaiting trial on charges of money laundering and bribery. He has denied all charges.

`Sword of Damocles’

The shakeup prompted outgoing President Vaira Vike-Freiberga, during her farewell speech on June 21 in Parliament, to predict arrests in parliament.

“The sword of Damocles is hovering above some heads at this very moment,” Vika-Freiberga said. “It hangs by a hair, and we do not yet know when and where it will fall,”

Parliamentary Speaker Indulis Emsis resigned on Sept. 22 after the prosecutor general opened a criminal investigation into whether he gave false testimony during a probe in the western city of Ventspils. Emsis has denied the accusations.

While other eastern European nations have formed anti-crime bureaus, the Riga agency has more powers, including the ability to conduct sting operations, Rasma Karklins, author of “The System Made Me Do it: Corruption in Post-Communist Societies,” said in a telephone interview.

“They have been successful in the last year in finally catching some of the bigger fish,” she said. The bureau has “really turned the fight against corruption into a real policy.”

A Reprimand

Loskutovs’s current run-in with the government isn’t his first. Last year, he received a reprimand from the prime minister for his refusal to reappoint the head of the bureau’s investigations unit.

The latest confrontation is more serious: At issue is whether Loskutovs’s suspension will turn into his dismissal –and what would happen next. Kalnins and two fellow Providus researchers said in an article in the Sept. 29 edition of daily Diena that the prime minister lacked the right to suspend Loskutovs, and that the commission investigating him is illegal.

“Impartiality and objectivity is a basic condition for any investigation,” they said. “Unfortunately, in the case of Loskutovs, the recent public statements by authorities and politicians, the rush of the investigation and the sloppy legal procedures indicate that finding the truth is not the goal.”

To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net