The international lawsuit between the Latvian state and Russian banker Grigoriy Guselnikov is in its final stage, and Latvia has no plans to back out, as reported by TV3 programme Nekā personīga. The programme reports that the cost of this lawsuit has already reached EUR 4.5 million in legal aid costs.
Russian banker Grigoriy Guselnikov family’s lawsuit against Latvia submitted to the London Court of International Arbitration is on its final stretch. In this lawsuit Guselnikov wants to prove the losses to his investments in Norvik Bank were caused by the arbitrary actions of Latvia state authorities and corrupt actions of local officials.
To counter this accusation, Latvia hired expensive foreign lawyers. This summer the court in London interviewed important witnesses. It is known that both the once governor of the Bank of Latvia Ilmārs Rimšēvičs and former head of Latvia’s Finance and Capital Market Commission Pēters Putniņš have testified. Businessman Renārs Kokins has also testified in writing.
Russian banker Guselnikov is currently a citizen of Britain. Ten years ago, then a citizen of Russia, bought Norvik Bank. Latvian authorities permitted this purchase and the bank supervisor accepted it. Later the bank was renamed PNB Bank. Of the nearly 100 000 of its clients, 40 000 were pensioners. It was the eighth largest bank in Latvia.
Just a couple of years ago Norvik Bank headquarters was located in Riga’s quiet centre. Now the bank is insolvent. The cost of the lawsuit with Guselnikov has so far reached four and a half million euros, as reported by Nekā personīga.
Guselnikov did not get along with institutions supervising PNB Bank.
The bank’s supervisor
concluded that large amounts of funds in the bank were illegally obtained.
This meant the credit institution had insufficient capital, and so its operations were limited.
The bank’s shareholders insisted that because of the endless and unjustified pressure from Latvia, the bank suffered losses and ended up at risk of insolvency. The regulator allegedly acted in such a way because the governor of the Bank of Latvia at the time Rimšēvičs had insisted on it and that he had “moral power over the Finance and Capital Market Commission”.
This is why in 2017 Guselnikov’s family and bank launched a lawsuit against the Latvian state.
During the trial Guselnikov mentioned corruption present in the supervision of Latvian banks, and that Rimšēvičs is the one behind it. The charges presented to Rimšēvičs by KNAB – in regards to Trasta Komercbanka – do add credibility to Guselnikov’s claims.
He claims that in 2016 and 2017
there were multiple attempts to extort a bribe from him.
The Russian-born banker also testified in court that one Renārs Kokins was allegedly the mediator between him and Rimšēvičs. He was the one who allegedly organised secret meetings with Rimšēvičs and acted as a mediator in corruption schemes.
Guselnikov’s ties to politically important people appear in various documented deals.
Former KNAB worker Juris Jurašs’ family allegedly received half a million euros for alleged legal consultations from Guselnikov’s bank.
However, Guselnikov’s case is weakened by the sad end of his bank. In 2019 PNB Bank was closed down by the European Central Bank. This happened shortly after Guselnikov rushed with replacement of shareholders. The bank had insufficient capital and ECB had no trust in new shareholders.
Latvia is represented in the London Court of International Arbitration by the State Chancellery and two hired foreign law firms – French Savoie Arbitration and Swiss LALIVE.
The State Chancellery’s Legal Affairs Department lawyer Dainis Pudelis explained to the programme:
“These two law firms have been paid EUR 4.5 million for various legal services so far. Work still continues. This amount
will go up even more, unfortunately.
We have found the case is very complicated. The strategy of our opponents is rather aggressive. They are using a lot of resources to push this case.”
Guselnikov’s case is based on the investment protection agreement concluded between Latvia and Britain in 1994. This agreement is no longer in force. Nevertheless, London Court of International Arbitration has ruled the previously agreed upon agreements deserve protection.
Also read: Bank of Latvia governor says support for borrowers should be made immediately available