We want to catch a big fish just as much as society wants us to, so that we could put it on a banner as our achievement. We have to be ready for the fact that sometimes long and difficult work will end with nothing.
In the Shadow of the Big Fish 0
Aleksejs Loskutovs, Director of the Corruption Preventing and Combating Bureau, was interviewed by Inta Lase, LTV Panorama
Since the implementation of the new point system, drivers say that bribes to police officers have increased. Has the Bureau been involved in discussions on this topic, and what do you feel should be done to eradicate bribe-taking on the roads?
We are not really involved in this discussion, but it is a critical issue. I think that with this point system the number of dishonest policemen really could increase, because the negative consequences for the driver are significant and this makes it easier for a dishonest police officer to work. I believe that stricter control of police officers working on roads needs to be implemented. There isn’t one clear solution on how to combat the dishonest actions of police officers today.
How has the Bureau decided to act on the negative court decisions against the Bureau for the Green and Farmers Union (ZZS) donations case?
We will appeal these decisions and we are still on the war path. We realise that our position could have been better prepared in the previous court case, but we are still convinced that the contributions are illegal, and there are grounds to have them reimbursed. There are no grounds to shake our conviction. We must continue to fight.
You said that the decisions could have been better prepared. Does that mean that you will evaluate the professionalism of the staff who prepared the decisions and that you may decide to penalise them?
No. Because at the time the decisions were made, we considered the reasoning to be sufficient. With hindsight we can now say that the explanations and reasoning were not sufficient. We will appeal the court decision, and I think that we try more successfully to achieve the repayment of the illegal contributions. I don’t want to comment on it any further before our position is recorded in the appeal document.
In the future, how will you be able to prove that the contributors listed in party declarations are real persons? Will your working tactic change after this court decision?
The same as before, we will first check if the person has made a contribution to the party, then get an explanation from the contributor, and then ask the State Revenue Service to check the person’s ability to pay.
Up to now the Bureau has only verified the ability of contributors to make contributions, but the declarations also have another aspect - expenditures. What do you see as the most efficient mechanism to verify that the expenses listed by the parties are true to fact. Do you have plans to do so?
Yes, we do have such plans. This could lead to new difficulties and more insufficient information. But we can start by checking the expenses the parties themselves list. We can verify whether the information is true, and then we can check to see if the party hasn’t used other funds for unlisted expenses. Or conversely, we can check if the party has unlisted savings.
For instance, before the last Parliament elections, some parties organised large concerts, but the amounts listed in their declarations were very meagre, or advertisements were filmed very cheaply, although it was visually obvious that this was not the case. What will you do in cases when the accounting documents are in order, but the event or service has obviously cost more?
We will have to act work in a similar manner. First of all, we will work with the party documents, and then look further. If the discrepancy is very obvious, we will take statements from everyone who was involved in the event, to find out if the official expenditures listed by the party are true. This leads to another problem where, if an artist says that he really did perform for Ls 20, we may need to consider that he is also involved, but that would still need to be proved.
Can the existing five staff members who, if I am not mistaken, work with party declaration verification, cope with the volume of work? Don’t you need to increase the number of staff?
We have several areas with an enormous scope of work. For instance, the control of declarations submitted by officials. We need staff, but we are not the ones who decided the number of employees.
Does the draft budget for next year include funding requests for additional staff?
We will try to get more staff.
How will you try?
We will ask for money.
How much do you need in order to work adequately on the party financial declarations as well as the government officials declarations?
We haven’t calculated that yet. This year we requested additional funding for at least a few additional staff - six positions which require over 80 thousand lats. Money issues are always delicate issues and knowing that the government is always trying to save money, it’s difficult to say whether they will support us.
You mentioned the government officials declarations. How can the Bureau prove whether the income stated by the officials corresponds to their standard of living?
That is part of our everyday duties and the plan is as follows: we compare the income, which can be found out with the help of existing registers, to the official’s assets and lifestyle. If we find that the lifestyle does not correspond to the income, then we calculate according to the consumer basket: how much is left over for the family after the purchase of all the tangible assets. If he says that he is very frugal and subsisted on the cheapest groceries and wore the cheapest clothing, then we calculate whether the left over amount is sufficient to build a house or drive the type of car he has.
There have been incidents of officials who have been able to support their families on 20 lats a month and all of their income is deemed to be legal. There are also no criminal cases regarding illegal income.
Criminal cases aren’t possible here. But there have been cases where after our work, the State Revenue Service has audited the official’s income to verify whether the income corresponds to the lifestyle. Calculations were made and the guilty parties paid taxes which had not been paid.
Can you name these cases?
I won’t be able to remember them now.
But still, there is the criminal aspect of these offences for avoiding tax payments. Why doesn’t the Bureau go a step further and initiate criminal cases, maybe other offences will come to light regarding illegal income?
Because there were no grounds for a criminal case. Everything was within the limits of administrative jurisdiction. According to the Criminal Law, someone can be held liable for avoiding tax payment if there is repeated avoidance within a year. But declarations are submitted once a year, and a year has already passed by the time the next declaration is submitted. And secondly, criminal liability applies if the losses are large, which today means Ls 4000 or more. As far as I remember, this amount was not exceeded.
Maybe you should propose a legislative amendment so that the penalty is not only administrative, but also according to the Criminal Law.
We might discuss the idea of lowering the limit from a large amount to a significant loss. The Criminal Law is a final solution. If there is a fine, then a person already has to part with money which has already been spent, and that is a sufficient fine.
That is a sufficient penalty for someone having lucked out once when the State Revenue Service or the Bureau has noticed income from an unknown source?
I believe it is sufficient.
Up to now, the Bureau has not been able to catch any of the so-called big fish, or uncover a serious case of stealing from the government. The only exception is the criminal case against former minister Auders and the case of prosecutor Nazarovs. Why?
First of all I would like to say that we want to catch a big fish just as much as society wants us to, so that we could put it on a banner as our achievement. The bigger the fish, the better it protects itself legally. On the other hand, if you look at corrupt relationships, then the situation is set up with the “tit for tat” principle in mind, and the solidarity between the parties involved is so intense, that it is almost impossible for us to get at them.
But aren’t there some investigative methods? Why can investigating agencies in Western Europe manage to get at high-ranking officials and uncover offences and penalise the guilty parties? There are many corruption cases against high-ranking officials.
It’s hard for me to say why western colleagues are more successful in this aspect. I can only guess that perhaps they have a sufficiently long established tradition of democracy. We know very well, that information can be obtained with the help of agents, but in our society there is a very negative attitude towards informers, and that does not encourage people to become involved in providing such information. Another thing - we hear about widely publicised corruption scandals in other countries, but we rarely know how long the investigation has taken. The Bureau has been working properly since 1 February of last year. I won’t analyse if this time period has been sufficient, but I believe that the larger the fish, the more time is needed to get at it and to gather the data needed in order to go to court.
How much time does the Bureau need?
I don’t know.
But when will you as the director say to your staff: you have spent enough time on this, it is time to show some results and uncover a case of stealing from the government. How much time will you allow for an investigation?
Any time limit I could name would be purely a guess.
But how will you be able to evaluate the results of your work?
For instance, a year has passed and you are still the director of the Bureau. How will you evaluate yourself, whether you have worked well or not so well, have you dealt with all your responsibilities?
Good question… For myself I would say: do I feel that we have done everything that we could do. That, of course, is an absolute indicator and such a criterion would not meet society’s expectations, but I don’t want to put myself or the Bureau in a strange situation and say that, for instance, by 1 March we will lock up a minister.
One of the indicators which determines society’s evaluation of the Bureau’s work is the Bureau’s ability to deal with conflicts of interest. If we look back at the audit that the Bureau did of Prime Minister Einars Repse’s loans, was the investigation well-rounded and do you believe that the loan interest he was offered is the same as what would be offered to anyone else with a corresponding income?
I have no reason to doubt the work of my colleagues. I can add that even before my appointment I asked around and was told by economists that, of course, not everyone would get a loan with the interest rate offered to Einars Repše, because the banks consider the applicants’ assets, savings, real estate and evaluate the selling options of the property. I was told that this is not an exception. Unfortunately neither you nor I have the level of income that would allow the bank to offer us such an interest rate on a loan.
Businessmen working in real estate said that in Repse’s case the key word was not property or money, but rather power and the ability to influence important decisions. How can you prove that this has not been goodwill shown to an official for the future, in order to expect a favourable decision for the extender of the goodwill in the future?
We are speaking of things with many conditions and unknowns. What would happen, if...
No, we are speaking of something which is a gift. Perhaps it isn’t ethical for an official to accept such loans for the future, even if they are extended.
… good question. I think we are talking about very interesting borderline issues. The borderline between a legal evaluation and an evaluation from an ethical point of view. On the one hand, any official can take out loans which differ only in amounts. From buying a refrigerator to large pieces of property. And here, to evaluate whether an official will be in a conflict of interest situation will be possible only when the situation occurs. When a decision has to be made to take or not take a decision in regard to the extender of the benefit. At the present time, there was no conflict of interest.
Where is the boundary of a conflict of interest situation?
The limits of a conflict of interest are set by law.
But the law can be interpreted. How would you explain it to an official?
We have to react to situations when a person has a conflict of interest. When it is possible to doubt the objectiveness of his decision taking in regard to those from who he has obtained some benefit. That is not yet bribery. We can only ask the person to end the conflict of interest situation.
When you took on this post you said that you will pay more attention to educating society. The explanation of these ethical issues would be one aspect of such educating. Do you feel that the Bureau has been sufficiently active in explaining ethics and in evaluating the actions of officials from an ethical standpoint?
I can’t answer categorically... No, it was not sufficient because all forms of educating the public could be more active, but there is a reason why we may have been slow in explaining ethics. The state programme we have developed for preventing corruption has not yet been approved, and it includes such tasks as taking ethics to state institutions and local governments. When the programme is approved, we will be able to ask others to develop codes of ethics because we will have stated our opinion on what they should include.
An important issue right now is how to avoid unjustified granting of funds to various projects applying for European Union funding. To avoid decisions being made in conflict of interest situations. Have you thought of becoming involved in the supervision of allotting these funds?
Yes and we are not just thinking. In contrast to the ethics issues, the first steps are already being taken to become involved on a practical level. We have met with the Director General of the Latvian Investment and Development Agency. We have an agreement that we will be provided with information on the allotment of funds and monitoring principles because only by being well aware of the system can we uncover weaknesses in the system. We will also be informed about the people involved in the allotment of funds and in decision making. We will be able to review the work of these officials and to check if there are conflicts of interest in the decision making and to look into their material status.
When will you be well informed of all the systems and be ready to start the monitoring work? And isn’t it a bit late, because farmers have already signed the first contracts.
We will become involved gradually and on as large a scale as possible because there are several ministries involved, but the number of Bureau staff monitoring the EU funding procedures are very few. The process may be in the early stages, but we are happy to be doing it.
Will you take into consideration the opinions of non-governmental organisation representatives who are also involved in monitoring the EU funds?
We consider all information which may be linked to corruption offences - offences in the allotment of funds, offences in funding for political parties, we listen to everybody.
But if you have very few staff members, maybe you should depend on the evaluations of the NGO representatives for EU fund monitoring?
I doubt that NGO’s will be able to do much to check up on the legal basis of specific actions. If we are provided with serious information, we will try to verify it, but if the information is not specific, we will probably not be able to find the rational seed in it. Even if it is there.
In order for anybody to provide you with information, you need the trust of society. Is public trust not undermined by the fact that it is unclear what is happening within the Bureau itself, what is your relationship with the former director of the Bureau Juta Strike and Alvis Vilks, and how these relationships reflect on the result of your work?
It is rather difficult to judge how it affects work results because you never know where you could have done just a little bit more if the situation had not been tense. The public is sceptical, of course, and is saying that the Bureau is combating itself instead of corruption. I am taking that into consideration, I can’t avoid doing that. At the same time I am also very aware that the public opinion of the Bureau is not only the opinion of the public, but it is also conscious incitement.
Who is inciting?
There will always be someone who is displeased with the present situation, and who will interpret it as seems necessary.
You admit that there are tense relationships in the Bureau. Juta Strike and Alvis Vilks have clearly stated that they see no reason why they should leave the Bureau. What do you propose as a solution in order to overcome the insults and ambitions of the past and to join forces in combating corruption?
... it’s hard to say. Everyone should work professionally and think of the joint aims of the Bureau. I am prepared to do that, but it’s hard for me to say how far my colleagues are prepared to go. The turmoil around is not always, I would say rarely is, the result of my initiative.
The result of your initiative is the investigation against Juta Strike, and you as the boss can ask for results from your staff. Do you think that a month is a reasonable amount of time to evaluate whether a person could or could not sign a few documents?
I had no reason to doubt the request of the investigating committee to extend the investigation time twice, because information had been requested from other state institutions The last letter was received today and the result of the investigation will be ready in a week.
Doesn’t that reflect badly on the Bureau’s image if it takes a whole month to resolve an internal issue? There is also the question of how you can combat large-scale corruption and stealing from the sate if you need a month to evaluate two pieces of paper?
It does reflect badly, but it would be worse and the stain would be much darker if the committee would make a decision without checking all the facts and evaluating the situation, and the decision would turn out to be unjustified and an error would have been made.
How do you see your working relationship with Strike and Vilks in the future and how will this internal conflict end?
That will not depend only on me. It will also depend on my colleagues. As far as I can say, looking at it subjectively I doubt that there will be any problems in working with Mr Vilks, but in regard to Ms Strike, I can’t even give you an answer.
But people want an answer. Is it a rational conflict? Is it the ambitions of two officials and in that case, what about work, the combating of corruption?
I think this involves both aspects, rational and emotional. In regard to work, I can say that we try to find a common approach and we discuss specific criminal cases, and why there have been less results lately. I can tell you that there were times, when we thought that we would have a criminal case and arrest very soon. But everything is linked to people, and there are people who are willing to help, and there are people who say they are willing to help, but at the last minute they change their mind and months of work does not result in setting up a criminal case. We have to be ready for the fact that sometimes long and difficult work will end with nothing.
Lately the Bureau has not had any arrests of new criminal cases. Why? Is it summer or is there a political hush up?
Maybe it’s summer, maybe there are other reasons. I don’t have sufficient justification to make a statement for which I do not have enough proof. I will refrain from further comments.
It is no secret, that everything to do with the Bureau at present is considered to be highly politicized. How do you plan to avoid politicizing your work and from the wish to interpret your work as being beneficial to one or another party?
It can be avoided by my actions. It probably won’t be very obvious how I avoid a political decision in favour of one or another party. If there is any distinct political pressure, I will, of course, talk about it, but usually we can only show our political independence through our work. I don’t know how much time is needed, for people not to say that the Bureau is working in the political interests of someone. You know that the Bureau is fighting for the repayment of the ZZS donations. I doubt that can be considered to be a demonstration by Loskutovs - that he is trying to show political independence by giving up 60 thousand lats of his supporters money. But that could be someone’s opinion.