While society awaits clear answers on how cartels and behind-the-scenes agreements among major businesses will be tackled in Latvia, public debate is increasingly questioning whether legal form is being placed above substantive justice. A recent Supreme Court ruling on the inadmissibility of covertly recorded conversations in cartel cases has shaken established practice and raised concerns that cartels may be visible to everyone, yet no longer provable.
This issue was at the heart of a discussion on the programme “Kas notiek Latvijā?” (“What’s Happening in Latvia?”): what does this ruling mean for the future, has the state tied its own hands, and are very concrete economic interests hiding behind legal nuances?
“There are several decisive aspects in this case that, in the Competition Council’s view, the court did not assess and which could change the operative part of the ruling,” said Ieva Šmite, Chairwoman of the Competition Council, during the programme. “First of all, the evidence was obtained lawfully, certainly not through the back door. It was obtained with the authorization of the Supreme Court, and there are two expert examinations in the case confirming that the evidence is authentic — not falsified, not edited.”
Šmite also stressed that it would not have been possible to document the violation by other means. “The cartel participants themselves reveal in their conversations the mechanism for implementing the cartel — that it would be done orally, in a very concealed manner, that they would not even pass information to their employees, and that only those who met in those two meeting places would be involved.” The recorded conversations show that cartel participants were well aware of the illegal nature of their agreement. “There is a conversation in which one cartel participant refuses to attend the talks because his lawyers have explained that he is the initiator of the cartel,” Šmite said.
The Chairwoman of the Competition Council posed a rhetorical question: are the interests of three individuals against whom criminal proceedings were initiated, and whose rights were affected by these operational measures, more important than the interests of society as a whole?
Šmite emphasized that a violation of this scale and scope affects the economic interests of all of Latvian society. “The contract amounts exceed €600 million, the violation was committed systematically over more than five years. In our view, therefore, it had to be assessed.”
Meanwhile, the Chairwoman of the Supreme Court’s Administrative Cases Department, Anita Kovaļevska, invited to present a counterargument, said she believes it is an exaggeration to claim that cartels cannot be uncovered without wiretapped conversations. According to her, both in Latvia and at the European Commission level there have been cartels uncovered without surveillance, and where this is not possible in certain cases, it is an issue for the legislator to resolve. “The court’s task is to assess whether legal norms have been complied with. […] It was concluded that, taking into account the provisions of the Law on Operational Activities in conjunction with the case law of the European Court of Human Rights, the Law on Operational Activities does not allow the use of operational materials in administrative cases.”
According to Kovaļevska, the key message of the ruling is that in a rule-of-law state, one must fight wrongdoing using lawful methods. By contrast, Šmite stressed that this is not the first case in which an authority has relied on materials from a criminal case. “Yes, they were obtained through operational activities, but they were added to a criminal case and had become criminal case materials by the time the authority obtained them.” KNAB Deputy Head for Investigations Ineta Cīrule also noted that the materials which the Senate prohibited from being used to prove the cartel are criminal case materials and are usable. Kovaļevska, however, countered that operational activities constitute such a significant interference with human rights that the legislator must clearly define the specific, very important objectives for which they are permitted.
The Chairman of the Saeima Legal Affairs Committee, Andrejs Judins (“New Unity”), said there are various ways to avoid talking about the substance of the case. “Are there illegal agreements? Have millions been defrauded? No, we won’t talk about that.” Judins emphasized: “Of course, we can say that laws should be different, but we do not write laws in easy language. We assume and expect that people with legal education work in courts and that they can understand the essence of a violation. […] When I listen to all these arguments, I hear: there are especially serious crimes, serious crimes, less serious crimes, criminal offences, and somewhere even lower are competition-related cases. And that is considered so minor… But that is not the correct interpretation, because if it were so minor, penalties amounting to millions of euros would not be предусмотрены. This is not less than a criminal offence; it is a completely different system.” Judins added that laws can always be interpreted differently: “No matter what we write into the law, there will always be differing interpretations.”
Kovaļevska disagreed with Judins, saying this is not a case of reading the letter of the law and missing its meaning. According to her, “this is a case where the meaning has been deeply analyzed and it has been concluded that the law clearly reflects the legislator’s intent that operational activity materials cannot be used in the adjudication of criminal misdemeanors or other violations that are not crimes.”
Member of the Saeima Legal Affairs Committee Gunārs Kūtris (ZZS), a former President of the Constitutional Court, pointed out that “the law states what may be done in public law, and what the law has not permitted cannot be done.”
“What emerges here is a desire to use the back door — to bring in, through another process, evidence that is not permitted to be obtained directly. […] Under normal circumstances, for such a violation neither operational nor special investigative measures should be carried out,” Kūtris said on the programme.
Summing up the situation surrounding the collapse — or the dismantling — of the once high-profile construction cartel case, it is worth quoting Arvīds Kalniņš, Senior Prosecutor of the Prosecutor General’s Office Criminal Justice Department: “The Senate has said that the results of operational activities which have become criminal case materials are not usable in proving an administrative offence. What more can I comment?”
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