Banka Baltija liquidator resigns

  • 1999-02-18
  • Anastasia Styopina
RIGA - Following conflicts with the Bank of Latvia, the liquidator of the bankrupt Banka Baltija resigned Feb. 5 but promised to start paying compensations to depositors on March 29.

David Barrey, who works for the international audit and accounting firm Deloitte & Touche, became a public figure in Latvia when he became Banka Baltija's liquidator in 1996. The bank went bust in 1995, whitch touched off a nationwide banking crisis.

As liquidator, Barrey was often accused of delaying compensation. He also gained notoriety through his involvement in the now infamous Latvenergo affair. While trying to recover money for the bank, he signed a deal that transferred the state energy company's debt to Banka Baltija to an offshore company. Somewhere in between, 3 million lats ($5.26 million) disappeared.

At a Feb. 10 press conference to announce his resignation, Barrey said his frustration with the Bank of Latvia's lackluster support has finally bubbled over.

"Taking into account the actions of the Bank of Latvia, I will no longer be Banka Baltija's liquidator," he said. "Let me emphasize: I resigned."

He also distributed a statement claiming that the Bank of Latvia blocked Banka Baltija's accounts without informing him and refused to make certain payments for Deloitte & Touche's work.

"The Bank of Latvia's actions make further liquidation impossible," he said.

Edzus Vejins, a spokesman for Latvia's central bank, said the bank did not block the account but refused to make certain payments because they were not supported by the proper documents.

"We have to point out that it would be right to talk not about Barrey's resignation but about an expression of no confidence in him," the bank's statement reads.

Though Barrey stepped down Feb. 5, he waited five days to announce his resignation. In the meantime, the Bank of Latvia filed a court claim Feb. 8 that expresses no confidence in the liquidator and calls for his dismissal.

"David Barrey, as a liquidator, is incompetent," Vejins said.

The Bank of Latvia came to this conclusion after it audited the liquidated Banka Baltija and found numerous administrative violations.

"We did not quite like what we found out," said Bank of Latvia President Einars Repse.

The central bank accused Barrey of not carrying out the liquidation according to accounting standards and of not having contracts with companies and lawyers with whom he worked.

Barrey only shrugged his shoulders at accusations.

"I guess an accounting firm wouldn't know how to do accounting," he noted sarcastically.

He explained that the Bank of Latvia is mainly upset because he did not prepare a balance sheet, in which he said he "sees no point" because it's needed only for "statistical purposes."

The central bank also said the liquidator has broken the law because the fees drawn by Deloitte & Touche are not supported by an agreement between the audit company and Banka Baltija.

Since Deloitte & Touch undertook the liquidation, it has received 1.6 million lats, and Barrey said these fees were drawn on the basis of the contract between the Bank of Latvia and the audit firm signed in 1996.

Although the central bank found various administrative violations in Banka Baltija's liquidation, Vejins said it's not going to sue Deloitte & Touche for any compensation.

The bank will have to appoint another liquidator before the Riga District Court approves Barrey's resignation. The court hearing is scheduled for Feb. 23.

While the central bank did not reveal a possible candidate, Barrey said he doubts any international audit company would undertake this hard job.

Until a new liquidator is appointed, Barrey will continue his job and promised the first 107 depositors will get their checks by March 29. He said a total sum of 9.5 million lats will be repaid.