An attempt by the Finance and Capital Market Commission, Latvia's financial market regulator, to curtail the rights of a new shareholder in Latvijas Krajbanka was struck down by a local court on June 26.
Though the attempt failed, it underscored the continuing conflict between the government and nontransparent, offshore entities that have penetrated the board rooms of many of Latvia's largest corporations.
The FCMC had tried to prevent Doxa Fund Limited, registered in the British Virgin Islands, from using its voting rights to make changes to both Krajbanka's board and charter capital.
FCMC declined to explain the exact basis for its decision, saying it does not comment on individual market players.
Doxa Fund, which in May bought 25.01 percent of Krajbanka at an open auction, was seemingly prepared for the FCMC's ruling and immediately appealed to a Riga court, where a judge the same day reinstated the new shareholders' voting rights until the case could be heard in its entirety.
For Doxa Fund the court's ruling was crucial, as Krajbanka shareholders had called for an extraordinary meeting to elect a new bank president.
At the June 27 meeting shareholders elected former board member Andris Natrins as the bank's new president.
According to reports, a vote to increase the bank's charter capital from 9 million (15 million euros) to 11 million lats failed, with only 66 percent of the required 75 percent backing the motion.
Krajbanka, the former state-owned Sberbank during the Soviet era, is Latvia's seventh largest financial institution and boasts a welldeveloped retail network.
Control over the bank is a murky issue, with some 29 percent of bank shares under indirect control of the Netherlands-registered Macasyng Holding and another 25 percent belonging to Doxa Fund of the British Virgin Islands, which was incorporated in 2001.
The two entities, however, appear to be directly related.
Sylvain Imperiale, director of Doxa Fund and director general of Luxembourg Investment Bank, at one point represented Macasyng during the latter's efforts to buy TsSKA, one of Russia's leading soccer clubs.
The soccer club was bought by England-registered Bluecastle Enterprises, which is in turn owned by Macasyng, according to press reports from Russia.
Strangely enough, Macasyng pulled out of the May auction for 25 percent in Krajbanka after claiming it was pressured by the bank's Ventspils-based circle of shareholders, who at the time had attempted to prevent the auction from going forward.
The stake was subsequently sold at a minimal price to an unknown investor - Doxa Fund - and many observers were quick to criticize the government for both a lackluster and nontransparent privatization.
Prime Minister Einars Repse at the time expressed dismay with the auction's results but put a positive spin on it by saying that, regardless of origin, at least now Krajbanka would have a strategic investor activity involved in the bank's long-term development.
Doxa's Imperiale told the Baltic News Service last week that the FCMC's decision would not influence the company's plans regarding Krajbanka, nor was it not planning to sell its shares.
"We did not acquire Krajbanka's shares to make profit fast. We have long-term plans regarding Krajbanka, and we have now launched talks on cooperation with the rest of the bank's shareholders," he said.
He said the decision of the FCMC was an issue of technical nature which the company would solve.
However, the FCMC's decision comes at a time when the government is attempting to improve transparency on the eve of the country's accession to the European Union.
In a similar scenario, the U.S. Ambassador to Latvia Brian Carlson said in June that American investors were interested in helping develop Ventspils Nafta, the oil terminal on the Baltic and one of Latvia's most strategic enterprises, but were reluctant to given the lack of transparency in the company's ownership structure.