RIGA - Latvia’s Saeima, feeling the pressure from a population that is fed up with widespread corruption and the self-styled immunity politicians have awarded themselves, on July 8 approved amendments to the Commercial Law in the second and final reading, which mandates that the names of actual beneficiaries of offshore company owners must be made known, reports news agency LETA. Eighty-three parliament members voted for the amendments, whilst one MP, Andris Skele (For a Good Latvia), abstained.
Former President Valdis Zatlers on June 16 said that he was pleased that Saeima, in this bill’s first reading, voted for disclosing the names of offshore company owners, saying that MPs have “heard the people’s voice.” MPs had even put the bill on the “fast track” approval process.
The law stipulates that individual company shareholders are considered the actual beneficiaries if, according to the Law on Prevention of Money Laundering and Terrorism Financing, no other individual is considered to be the true beneficiary.
Every shareholder, who officially holds at least 25 percent of a given company’s shares while the true beneficiary is someone else, must report it to the company in 14 days time and reveal the true beneficiary’s name.
However, every legal entity that holds at least 25 percent of a company’s shares and was not established according to the European Union member states’ laws must report its founders, shareholders and/or beneficiaries to the given company in 14 days time. The company will then submit the report to the Commercial Register during the next 14 days.
The amendments will come into force on July 13, 2011.
In a reflection of recent public dissatisfaction with the state of corruption and oligarch control of the levers of the economy, Saeima’s Human Rights and Public Affairs Committee already on June 15 decided that the Law on Press and Other Mass Media will be amended, so that mass media would have to reveal their owners, those who hold at least five percent of their shares.
When the amendments come into force, mass media will have six months to reveal their owners. If the mass media companies’ ownership changes, they must inform about their new owners within a month.
The amendments will also “borrow” several regulations from the British legislation. The media owners, who will want to establish new media companies, will also have to provide information about their connection with bankruptcy or insolvency cases and shares in previous companies.
If the media is established by a company, it will have to submit the scheme of its structure, explaining the founder’s ownership rights, the proportion of shares and the number of a particular company’s shares in different companies.
Even though the 10th Saeima concluded its spring session already on June 21 and the referendum on dissolution of Saeima will be held on July 23, the committee decided to set up a task force to come up with solutions for how to prevent offshore companies from purchasing Latvian media.
Highlighting the country’s active role in massive money laundering schemes, just last month another organized crime group, this time in Ukraine, was uncovered, with ties to Latvia. The group’s members, Latvian citizens, were laundering money through multi-million dollar public procurements. However, they still have not been taken into custody and no charges have been pressed against them.
The TV3 broadcast ‘Neka personiga’ (Nothing personal) reports that panic has spread among high-ranking Ukrainian officials, because the influential energy and oil minister must now explain why the state company Cernomornaftogaz spent 400 million dollars on an oil rig that does not cost more than 248 million dollars.
The purchase of the rig was conducted via a fixed tender. Two offshore companies, headed by Latvian citizens Stanislavs Gorins and Eriks Vanagels, offered the rig at exorbitant prices.
Vanagels is connected with the company Stabu 58, which belongs to former security service employees. The company used to earn money by storage of cars seized from intoxicated drivers.
The Ukrainian press reports that the money laundering scheme included not only 71-year-old Vanagels, but also his 44-year-old son. ‘Neka personiga’ met with Gorins at his office in Riga. The insurance broker claims that he is not familiar with Vanagels and has no idea who is using his signature on the offshore companies’ documents.
Even though it is still not clear whether these persons are capable of implementing such a large-scale money laundering affair, Business New Europe reporters have revealed that there are links between Gorins and Vanagels, and both Latvians also had other successful deals in Ukraine.
It was earlier reported that, according to the information made available after the Corruption Prevention Bureau’s (CPB) searches, Latvian political heavyweights are the ones who benefit from multiple offshore companies, as the state budget loses millions of lats as these persons channel the money into their own pockets, which directly affects everyone in Latvia.
Economy Minister Artis Kampars (Unity) pointed out that “Latvia differs from other countries in that most of the offshore companies abroad are established to hide the true identity of their owners or people who benefit from these companies.
However, information that has become available to the public on CPB’s searches proves that Latvian political heavyweights are the ones who benefit from the multiple offshore companies that are registered abroad,” says Kampars.
Kampars wants to see Europe change the system of hidden offshore accounts.
The amendments were promulgated on July 12.