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Inside Vladimir Antonov’s reckless gamble with the Baltic banks

Jun 13, 2012
By Ieva Martina and Ramunas Bogdanas

Inside Vladimir Antonov’s reckless gamble with the Baltic banks

As Latvijas Krajbanka, the second bank in Latvia to collapse in recent years, and Snoras bank crashed and burned, costing millions in losses to already cash-strapped taxpayers, have the bank regulators learned any lessons?(part 2 in a 3-part series)

Because of his relationships with the local oligarchs, quarrels in the local banking regulator’s office and distrust among officials in neighboring Lithuania, Russian millionaire Vladimir Antonov was able to use his bank in Latvia to fulfill his ambitions to build a business empire and sustain a luxurious lifestyle. As Antonov’s empire disintegrated, it became clear his business model was unsustainable. It’s another hole as well in the pockets of Latvia’s taxpayers.
Antonov the savior

“I dragged him in, so that he’d save Krajbanka from closure and from losing its license in 2005,” wrote businessman Edgars Jansons in an SMS to Re:Baltica, explaining how the Russian millionaire Vladimir Antonov became the owner of the 10th largest Latvian bank – Latvijas Krajbanka. Jansons, who is considered to be one of Latvian “oligarch” Aivars Lembergs’ people, did not agree to a face-to-face interview. But he added that Antonov’s arrival ended “the battle and legal proceedings” between the Latvian banking regulators, Lembergs and business interests from Moscow.

These words are backed up by facts. Antonov’s arrival was significant as it saved Krajbanka from a slow death. A battle for influence had been taking place for a long time within the bank. On one side of the trenches was the “Ventspils group” – with the mayor of Ventspils, Lembergs himself, who owned 3 percent of the shares, while almost 10 percent were owned by oil transit business flagman Ventbunkers, which has been connected with Lembergs’ businesses for a long time.

On the other side was the so-called “Moscow group,” whose public face was the Netherlands-registered company Macasyng Holding. This off-shore company was represented in Krajbanka by a person called Alexandre Rene Garese. He was named as an undesirable person in 2003 by Lithuania’s security service because of a suspicion of connections with the Russian mafia, which wanted to legalize itself on the Western markets.  

“As later transpired, Macasyng represented a group of people in Luxembourg who had a joint business with businessmen of Russian origin,” remembers Krajbanka’s largest shareholder at the time, Arnolds Laksa. He sold his shares to the Muscovites. Laksa doesn’t know who the real owners were: “I just know it wasn’t Antonov.”

Rene Garese wasn’t noticed at Krajbanka board meetings. Girts Rungainis, a consultant to the Latvian government and investment banker and who was also in the bank’s leadership at the time, states that Rene Garese represented a small Russian oligarch’s interests. But he says he couldn’t remember the person’s name.

Regardless, it is clear that Antonov put a stop to the unremitting legal battles between the shareholders. In September of 2005, the Lithuanian Snoras bank, owned by Anotonov, purchased Krajbanka (83 percent of shares) after discussions lasting for nine months. How much the bank shares cost is not officially known, but experts estimate that it was around 28 million euros.

The USA was putting great pressure on the Latvian banking system at the time. Latvia had ended up on the blacklist as a significant money laundering point for dirty money from Russia and the post-Soviet countries. Two small banks - VEF Banka and Multibanka - were closed down for having insufficient monitoring systems. These events could have influenced the “Moscow group’s” decision to sell its shares to Antonov. Plus, the transaction took place with one of its own, with a Russian.  

The road to Latvia
“It seemed that the situation at Krajbanka stabilized with the arrival of one shareholder. That’s why the Financial and Capital Market Commission (FCMC) permitted this significant participation in Krajbanka,” says Janis Brazovskis, a board member of the FCMC, Latvia’s banking regulatory agency, where he has worked since 2001.

After the collapse of Krajbanka in November of 2011, the FCMC was criticized for allowing Antonov to come to Latvia.

Brazovskis explains that the bank’s official buyer was the Lithuanian Snoras bank, against “which there weren’t any great objections, the more so when compared with the situation in which the Krajbanka shareholders were at the time.”

The FCMC also knew that Antonov was the true owner of Snoras, behind a chain of indirect companies. But the Lithuanians responded that this promoted a consolidated company, which meant that the parent company’s state regulator also monitored the activities of the subsidiary.
 
The FCMC had the right to adopt an independent and different decision from the Lithuanian one, but the Latvian bank regulator didn’t take up this option.  

“I think that we couldn’t deny it [the entry of Snoras],” says Brazovskis. “We also looked at the facts - the monitoring of a licensed bank in Lithuania operates the same way as here. The shareholders with significant holdings were checked. The information on the Internet is not factual.”

In reality, the entry of the new shareholder made the FCMC’s life much easier, as it didn’t have to monitor a lot of small shareholders, who were continually squabbling among themselves.

Where did the money go?
It looks as if one of the richest Latvian’s, Lembergs, remained a part-owner of Krajbanka even after Antonov’s arrival. Lursoft data shows that after the bank’s sale, the previously mentioned Lembergs’ “person,” Jansons, established the West Investment company with 2.5 million euros of unknown origin. The company’s annual reports lead one to think that its only task was to be a bank shareholder. In 2009, this company owned 4.49 percent of the shares. Jansons never replied about what the aim of the company was, giving the impression that he was just a front for Lembergs. Consequently, it’s possible that even after the sale of Krajbanka he continued to indirectly control a portion of the Krajbanka shares and to also collaborate with Antonov.

Businessman Jansons did not respond as to why Antonov in particular was addressed as a potential investor in Krajbanka either. But Jansons likes to say that, after the purchase of the bank, it was he, specifically, who recommended Martins Bondars, a long time employee of the Chancery of the President of Latvia, for the Krajbanka president’s position. “And Latvia’s Song Celebration gained a sponsor for 1 million dollars,” Janson proudly adds. It’s true that Krajbanka became a sponsor for the Song Festival in 2007, but the bank donated almost one million lats together with two other main sponsors.

Meanwhile, a source who didn’t want his name revealed, said that Antonov was a convenient investor for both Jansons, who earned a good amount as an intermediary for the transaction, and Lembergs, as he’d been able to arrange to receive part of the money for the bank shares in cash from the Russian businessman.

The source revealed that the “collaboration” between Antonov and Lembergs continued after the Krajbanka transaction. Antonov continued to use the “services of a political nature” provided by Lembergs. This allegation is difficult to prove since the parties involved don’t reveal it. There are, however, a number of indicators Re:Baltica found, which confirm the possibility of such collaboration. In addition, Lembergs could have been interested in straight cash income due to charges against him for financial wrongdoings, which prevented him from controlling his own shares.

Publicly, Antonov mentioned Snoras bank’s desire to expand in Latvia as the formal reason for purchasing Krajbanka. Krajbanka, which at the time had a share value above 284 million euros, a loan portfolio of only 213 million euros, but investments exceeding 270 million euros, was specifically selected, as it was similar to Snoras bank in the way it operated. In addition, both banks had a wide network of branches, which offered the typical services of general purpose banks.

Antonov, however, was not a typical banker. He was more interested in involvement in other types of large and risky business dealings. To achieve these, the banks within the Russian millionaire’s control were very useful.

Re:Baltica’s investigation shows that part of Krajbanka’s money was “pumped out” for the private dealings in Latvia of Antonov and his partners, who were connected with manufacturing, transport, media and real estate.  

The schemes for the dealings had a similar model: for example, using offshore companies in Cyprus, trusted partners or investment bankers, Antonov became a direct or indirect co-owner in companies to which “his” banks handed out business loans. In individual cases, these loans were used for the purchases of shares in companies in financial trouble. These transactions were illegal, as the law forbade persons associated with a bank of receiving loans exceeding 15 percent of the bank’s own capital.
 
For example, if Antonov owned at least 25 percent of a company, then Krajbanka was allowed to loan a sum not exceeding 3.7 million euros to his company (which was 15 percent of Krajbanka’s capital in 2005). Three years later, this ceiling was 12 million euros. Off-shore schemes were developed to bypass this restriction.

Bank guardian Brazovskis says that Antonov was within the law in his dealings with Krajbanka. This contradicts what Antonov himself said on the Neka Personiga (Nothing Personal) TV program after the collapse of the bank. Antonov announced that he was the true beneficiary behind the company Baltijas aviacijas sistemas (BAS), which owned 47.2 percent of the national airline airBaltic.
 
It was only after the Snoras and Krajbanka crisis that it was revealed to the public that airBaltic had become hostage to the scheme created by Antonov. He was the true beneficiary in the offshore company Taurus Asset Management Fund Limited, which at the end of 2010 became a 50 percent co-owner of BAS. Before and after this transaction, banks controlled by Antonov provided huge loans to BAS, exceeding the allowed limits.
The largest fraud – the airBaltic saga
One of the most graphic transactions based on Antonov’s scheme is the airBaltic saga. Here, a number of companies, which were most likely used as fronts for both hiding the true beneficiaries as well as for pumping money from Antonov’s banks, can be traced.

In the case of airBaltic, one of the greatest unknowns was BAS, which was founded by German businessman Bertolt Flick, the now former airBaltic chief. At the end of 2008, Snoras and Krajbanka loaned BAS 20 million euros so that it could buy 47.2 percent of airBaltic shares from Scandinavian Airlines (SAS). In reality, it seems that Flick and BAS represented another Latvian oligarch on airBaltic, Andris Skele, who had previously been prime minister a number of times.

Flick’s and Skele’s paths crossed in the mid-1990s when Flick consulted the Privatization Agency in Latvia. The government, led by Skele at the time, gave Flick, specifically, the task of developing a national airline model, in which SAS was also included as a co-owner. After the establishment of airBaltic, Flick became its chief. From 2008, Skele’s interests at the airBaltic board level were represented by the former Chairman of the Board at Krajbanka, Ilmars Razumovskis, while Skele’s son-in-law looked after BAS’s public image.  

After the collapse of Krajbanka it was revealed that the INPO-13 company, which belongs indirectly to Skele, lent 313,000 euros to airBaltic which lodged a claim in court against BAS.

New heroes of the airBaltic saga, linked with Antonov, appeared on the horizon in 2010. Taurus Asset Management Fund Limited, which was represented by unknown Russian businessman Stanislav Kovtun, became an owner of 50 percent of the BAS shares. Re:Baltica research reveals that he has a joint business with Latvian businessman Sergejs Fiscenko, and both have “worked closely” with Krajbanka for many years.

Kovtun and Fiscenko appear in a number of companies in Latvia which have received loans from Krajbanka after changes in ownership. This leads one to believe that both of them are working in Antonov’s interests. In a similar way, Andrejs Rudesko was presented to the Latvian government and public as the true investor in BAS in October 2011. Later on, according to Antonov, he turned out to be a representative of his business, his best friend and a witness at the banker’s wedding.

In mid-2011, it became clear that airBaltic, which was sinking in debt, was close to bankruptcy. To save the company, the state (which owned 52.6 percent of airBaltic shares) agreed to provide a financial injection of 82 million euros. On October 3, 2011, the Latvian government signed an agreement with BAS putting forward a number of important conditions. The most important was that Flick had to step down from his position, and that the state would take over actual control of the airline. The agreement revealed that in recent years financiers associated with BAS had invested about 70 million euros in airBaltic, not including the initial loan to Flick.

Not only were Krajbanka and Snoras among the financiers, but so was KD Jet (5.7 million euros). The company’s last owner is Lionera, which is registered in Lithuania and belongs to local businessman and former politician Jonas Tamulis, who has connections with Lithuanian political circles. A KD Jet representative revealed off the record that the company wasn’t the true financier of BAS and that Krajbanka was “hiding” behind it.

The bank’s former chief, Ivars Prieditis, told Re:Baltica that Krajbanka had already reached the lending limits allowed by law at that time.
 
It looks as if the lending limit restriction was the reason why Russia’s Investbank, the previous owner of which was Antonovs, also participated in the signing of the contract with the Latvian state. Prieditis signed the agreement on behalf of Investbank. He admitted to Re:Baltica that he’d represented this bank via a power of attorney and only because the representative of this bank hadn’t turned up in Latvia, but that he didn’t have information about the extent to which, and in what way, the mentioned Russian bank had become involved.  

After the crash of Krajbanka, Antonov’s father Alexander admitted on the TV program Neka Personiga that one of Latvia’s oligarchs actually forced them to finance airBaltic, which was sinking with losses.

Otherwise, the Ministry of Transportation would remove its funds from the bank. Antonov senior did not reveal the name of the specific oligarch, but left the impression that the discussion was about the former Minister of Transportation, Ainars Slesers. It appears that the Antonov’s were dealing with all three Latvian “oligarchs” – Lembergs, Skele and Slesers.

What did the FCMC and Latvian government know?
From statements made by the former Minister of Economics Artis Kampars, who was involved in the sale of airBaltic shares to Antonov, it emerges that “everybody knew” that Antonov was a real co-owner of BAS. That’s why it was expected that Antonov would make investments in airBaltic directly, without using Krajbanka’s money.

In addition, Anrijs Matiss, the State Secretary of the Ministry of Transportation, which was responsible for airBaltic, pointed out to the daily newspaper Dienas Bizness that the Ministry was obviously informed about who the real signatories and financiers of the agreement were, due to the explanations from the company Prudentia – the consulting company hired by the government.

So, if the government knew who the true financiers of airBaltic were, did the banking regulator, which must have seen the breaching of the lending limit in these dealings, also know this?
 
Irena Krumane, the head of the FCMC at that time, asserted to Re:Baltica that she didn’t know “about airBaltic.” Officially, that could well be the case. The agreement was initially secret, but neither government representatives nor the government’s consultants had informed the FCMC of the details of the transaction, even though they “were suspicious.”

A closer look at the developments of the events reveal how unmotivated both sides were – the bank regulators and government representatives – to dig deeper.

Re:Baltica’s investigation finds that the FCMC’s approach was mostly removed, and they didn’t request important information. Case in point: no one from the FCMC participated in the closed government sessions where the airBaltic issue was discussed. The FCMC didn’t request any information from Prudentia or the Ministry of Transportation.

Krumane says that her schedule was filled with business trips at the time. Her deputy Brazovskis couldn’t answer why no one from the FCMC attended the government hearings.

In defending himself, Brazovskis points out that the FCMC knew who the official beneficiary of Taurus was – an offshore behind BAS. Krumane had asked Antonov at one of their meetings to reveal the names, and Antonov did. But the bank supervisors didn’t go further and check the background of the person, assets, and connections with Antonov. The state entrusted the FCMC with the right to request such information, and the law requires the agency to research people behind Latvia’s largest banks. Andrejs Rudesko, who was later revealed as the real beneficiary during the deal with the government, turned out to be the best friend of Antonov.

Prudentia partners Girts Rungainis and Karlis Krastins, who were leading negotiations between the government and creditors of BAS, also exhibited an irresponsible attitude. Neither informed the FCMC about Antonov’s illegal conduct, although both headed banks themselves in the past and were aware of the banking regulations.

Rungainis rejected Re:Baltica’s suspicions that one of the BAS creditors - KD Jet - was a fictitious company, in which case BAS too could have been considered fictitious. As to the question of whether the government knew that Krajbanka and Antonov were breaking the law by financing BAS, Rungainis insists that the government wasn’t aware of that. Rungainis argues that the signed agreement should be seen as an achievement, as the Krajbanka crash would have taken place regardless.  

The former Minister of Economics, Artis Kampars, disagrees: the possible crash of Krajbanka in the case of airBaltic was one of the main reasons why the government stepped in. According to the former head of Krajbanka, Ivars Prieditis, airBaltic together with BAS was the largest borrower from the bank. In a case of bankruptcy of airBaltic, Krajbanka would collapse too.

It’s worth noting that Prudentia received large fees from the Ministry of Transportation for its consulting work: 16,200 euros per week, and its total fee reached more than 142,000 euros. According to the documents published by Pietiek.com, there was another agreement with Prudentia in November stating if all sides in the airBaltic deal will fulfill their promises, Prudentia will earn around 700,000 euros. If the deal didn’t happen, the fee would be 248,000 euros. Since Krajbanka collapsed a few days later and the government took over control of airBaltic, Prudentia most likely didn’t receive this money. Both sides - Prudentia and airBaltic - refused to comment on this contract. But these documents point to the fact that Prudentia would earn a lot less if they asked too many questions and raised red flags.

Where else did Krajbanka’s millions flow to?
AirBaltic wasn’t the only business project to which Krajbanka’s millions flowed. The bank financed other large projects, and they were all connected with Fiscenko and Kovtun. As a consequence, the possibility exists that Antonov was also the owner of such companies as RAF-AVIA, which was engaged in the transportation of air cargo (currently undergoing an insolvency process) and Rigas vagonbuves rupnica (RVR), a Latvian locomotive factory.

In 2009, 67 percent of the shares of RVR were purchased by a Cypriot company called Mysea Enterprises Limited, which is represented by Fiscenko. A number of sources have indicated to Re:Baltica that Antonov was the true beneficiary at RVR. After the entry of Mysea, Krajbanka handed out a loan of 10 million euros to RVR.

Meanwhile, a company owned by Fiscenko, Cargo Avio, handed out a little over 995,000 euros for a short term loan to Krajbanka’s subsidiary company Krajinvesticijas in mid-2009, receiving a generous interest rate in return – after rough calculations a little over 16 percent per year, or over 182,000 euros. This transaction lacks logic as Krajinvesticijas could have borrowed from the bank at a much more reasonable rate. It appears as if Antonov loaned the money to himself to remove assets from the bank.
 
At the end of 2009, Krajbanka loaned its subsidiary Krajinvesticijas 8.9 million euros. The bank didn’t actually loan this money to the subsidiary, but rather capitalized the amount, thereby increasing Krajinvesticijas’ share capital.

Re:Baltica’s research also reveals other individual occasions where companies associated with Kovtuna and Fiscenko have been used for pumping out money. This was done by allocating huge loans to “one’s own” companies with minor share capital, obscure business and inadequate incomes.

For example, Krajbanka gave a long term loan of 9.07 million euros to Multikapitals, which had a share capital of 71,000 euros and was engaged as an intermediary in financial services. It appears that this loan “travelled” further, to Montenegrin company Marina AD BAS, which belonged to Multikapitals (54.35 percent), and in which 9.3 million euros was invested, but Multikapitals invested another 63,300 euros in a joint stock company registered in Switzerland (in Geneva) called Multiasset. This company specialized in the development and implementation of complex financial solutions. Kovtuns is a member of its board.  

In 2009, Fiscenko and Kovtun appeared for a short period as participants in the previously mentioned Krajbanka’s shareholder, West Investment, founded by “Lembergs’ “person” Jansons. It happened at the time when West Investment, for a comparatively low price, sold its Krajbanka shares to Snoras bank.
The Lithuanians didn’t trust the Latvians
Commercial banks like Krajbanka take deposits from the public, universities, pensioners and municipalities. When they fail, the loss is not only felt by the lender's owners, but throughout the entire country. In some parts of the country, Krajbanka was the only bank, and because of its role as Latvia’s oldest bank, it distributed the majority of pensions.

According to the FCMC, there are around 32 municipalities among the Krajbanka creditors, with losses altogether of about 20.9 million euros.

Largest of them is the capital city of Riga, which lost around 14.2 million euros. Adding to this, from the state or enterprises (including schools and hospitals), in total losses could be around 90.9 million euros.

Most of the depositors at Krajbanka were citizens of Latvia, especially pensioners. Fortunately, they were able to get compensation from the Deposit Guarantee Fund, up to 100,000 euros; most of the Latvian pensioners’ deposits didn’t exceed this amount. Still, in total 476 million euros had to be paid out in compensation. More than half of this money - 263 million euros – was borrowed from the State Treasury, which hopes to get it back from the liquidation of Krajbanka and the recovery of assets.

In addition, this was the second time taxpayers had to bail out a bank that had gambled with their money, at a time when Latvia is recovering from the world’s deepest recession, in 2008-09, resulting in deep cuts to public services, from education to employment programs.

So, the question remains: could the collapse of Krajbanka have been prevented? Are there any lessons learned? After the scandalous events last November, the head of the FCMC, Krumane, stepped down so as “not to diminish the effectiveness of FCMC.” Meanwhile, she didn’t hide her disappointment that the Latvian media trusted Lithuanian bank regulators more, who blamed Latvians for what they said was inefficient work.

According to Re:Baltica’s investigation, there were problems on both sides. The Latvian regulator was following closely Krajbanka’s activities from the beginning. From 2009-2011, FCMC had done seven audits. From 2010, the regulator didn’t allow Krajbanka to lend money to non-residents. Antonov showed up at the FCMC in Riga almost monthly.

But it wasn’t enough
The events surrounding Krajbanka and its largest owner, Snoras bank, began on November 15, with rumors published in the Lithuanian newspaper Lietuvos rytas about the termination of the parent bank’s operations. The FCMC asked the Lithuanian side for more accurate information, but received the response that those were only rumors. But as early as November 11, Lithuania’s central bank approached their prosecutor’s office with a request to start an investigation on missing assets in Snoras, but they didn’t inform Latvia about it.

Information about possible problems at Snoras reached the Latvians on November 16. A representative from Lithuania’s central bank informed Krumane that they were going to have a meeting to discuss the government takeover of Snoras. Krumane at that time was in Vienna on a business trip. She got in touch with the head of Krajbanka – Prieditis – and informed him what was happening in Lithuania. There was already a representative of the FCMC in Krajbanka, because the Commission was doing an annual audit of the bank. It’s not clear if Krumane called her deputy Brazovskis, as it appears there was a conflict between them and they barely spoke to the other.

Brazovskis says he received the news from his colleague at a Swedish agency who suggested for him to get in touch with his Lithuanian colleagues.  (See a more detailed chronology of events on our time line.)

On May 16, the FCMC received official notification about the decision to nationalize Snoras. In Latvia by that time everything seemed peaceful. On the evening news, the head of Krajbanka, Prieditis, announced that there is no need to worry.

On May 17, Krajbanka registered a 30 percent increase in its customer activity. Money started to flow out. The FCMC imposed restrictions on money transfers, limiting transactions to 100,000 euros.

The FCMC asked Krajbanka’s board what was happening with the correspondent accounts. As was planned, Meinl Bank in Austria had to transfer 20 million euros to Krajbanka, but this didn't happen. Instead, the term of deposit was extended, which then made FCMC nervous. The FCMC asked Krajbanka to transfer 181 million euros (127.6 million lats) from their various accounts to their Deutsche Bank account.

On May 18, at around 13:00, Brazovskis called to Krajbanka board member Martins Zalans, asking about the correspondent accounts and found that the Deutsche Bank transfer was not possible. All agreed to meet in the head office of Krajbanka.

Later, in a video conference, Antonov announced that the money in correspondent accounts was pledged and the documents allowing this to happen had been signed by Prieditis. “Antonov promised me that the money will be available at any time when needed it,” Prieditis told to Re:Baltica. He says he believed this.

The FCMC didn’t stop the bank’s operations until the evening of Nov. 21 This was like a bolt out of the blue at Krajbanka, as customers, believing what the officials had been saying, didn’t hurry to line up at Krajbanka until Nov. 22.

Brazovskis maintains that the long delay was necessary to clarify information. There was still a possibility that the Lithuanians would restart part of Snoras that Monday, November 21. At least that was the message from Snoras administrators when they arrived in Riga.
 
From Latvia’s point of view, it looked, at the time, like the Lithuanian bank monitoring institution, which decided to stop Snoras’ operations, didn’t really understand what had happened.

Both Krumane, as well as Parliamentary Investigation Commission member Janis Reirs, indicate this indirectly. They believe that only after Latvia discovered what had happened with correspondent accounts did their Lithuanian colleagues find the same problem and realize that it was “not the flu, but cancer.”

Latvian parliament member Reirs told Re:Baltica that cooperation with the FCMC from the Lithuanian monitoring institution was not effective. He believes it was not professional that the Lithuanian regulators didn’t inform Latvia about the missing securities in the Swiss banks, which was discovered already in the summer. Krumane maintains that the Commission had not previously been warned by the Lithuanian side about investigations or suspicions about Snoras, neither in September, when there was a meeting of the Latvian and Lithuanian monitoring collegiate, nor in October in Stockholm during a meeting of Scandinavian and Baltic State monitoring institutions.

The Lithuanians argue that they gave a hint to Krumane in Sweden by asking about the liquidity of Krajbanka. Krumane believes that this was not a serious hint, as Krajbanka’s liquidity up until then had always been high, exceeding 60 percent, in place of the 30 percent demanded.  

In addition, in October 2011 in an official letter to Lithuania’s central bank, signed by Krumane, the FCMC asked them to provide additional information about changes connected with Snoras’ capital and its structure, changes which could potentially affect Krajbanka. The FCMC also asked for information to be provided as soon as possible about the results of on-site checks at Snoras, which would give information about the quality of risk control at the bank. In the opinion of the FCMC, the response was generic. Re:Baltica wasn’t able to confirm this information as the FCMC’s response was: “We can’t give you the letter itself.”

No one is saying it out loud, but it seems like Lithuanian officials didn’t trust the Latvian regulators. They were afraid that information would be leaked to Antonov.

After the collapse of Snoras and Krajbanka, both regulators agreed to inform each other more promptly in such cases. Beyond that, there has been very little change in government policies, and the banking regulator Brazovskis wants to keep it that way.

“It was fraud. Very brutal fraud,” Brazovskis argues, in saying why they didn’t notice the irregularities with correspondent accounts earlier. The data in the bookkeeping was falsified. He doesn’t think there should be made huge changes in the banking regulations in the future, except for one thing. “Next time I wouldn’t let persons like Antonov come into the banking sector in Latvia. It was a mistake,” says the regulator, the same one who, at the beginning of this investigation, said that there was no possible option for the FCMC to ban Antonov. “Maybe next time we have to say no, even if it means litigation,” says Brazovskis.

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