Eager to advance its accession to NATO and the European Union, Latvia established the Corruption Prevention and Combating Bureau (KNAB) in 2002 to take on government corruption, a legacy from decades of Soviet rule. KNAB had a tough task ahead; many of the people who enjoyed power and privilege did not want a strong anti-corruption agency -- only the appearance of one. Despite leadership turmoil within the agency, clashes with parliament, and a worldwide financial crisis, KNAB proved its effectiveness in nabbing high-level suspects and spurring popular support for a wave of anti-corruption reforms.
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After independence from the Soviet Union in 1991, Latvia rapidly transitioned toward European-style free-market democracy. This abrupt transition opened opportunities for individuals and firms to subvert key state institutions for private advantage, using state assets, the provision of government contracts, and the design of financial regulations, to lock out competitors and cement their own economic advantage. Through such "state capture," these power brokers undermined democratic processes and citizen trust in government.
Accusations of state capture in Latvia centered on the so-called "oligarchs," successful business leaders known for their power and wealth, but reputedly tied to corruption. Most prominent were three men -- Aivars Lembergs, Andris Skele, and Ainars Slesers -- who were leading power brokers within major right-leaning political parties. Until 2011, nearly all of Latvia's governing coalitions included at least one of these parties. Skirting opprobrium, the oligarchs skillfully parlayed their private-sector success into public respect and support. They built extensive networks of influence and intelligence within government, media, and business that intimidated officials and journalists into turning a blind eye towards their dealings.
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Recognizing Latvia's problems with state capture, the World Bank released landmark studies highlighting Latvian corruption and setting back their membership process to the European Union and NATO. To demonstrate its commitment to tackling corruption, the government embraced the World Bank's recommendation to follow the model of Hong Kong's Independent Commission Against Corruption by empowering a single agency to handle corruption investigation, prevention, and education. But when they unveiled KNAB in 2002, many reform advocates were skeptical, seeing it as a paper tiger designed to impress the international community rather than achieve real progress.
Designed by a working group under the justice ministry, KNAB had full investigative powers, including the authority to carry out special police activities like undercover work, sting operations, and telecommunications surveillance. "It had to be strong or it wouldn't work," explained Inese Voika, a member of the working group and founder of Delna, Latvia's Transparency International chapter.
The draft law put the bureau under the leadership of a director and two deputy directors, for investigation and prevention respectively. The bureau was responsible to the prime minister, but had broad authority to carry out its mission with limited political interference. The cabinet's primary lever of control over KNAB would be the ability to appoint and, upon legal cause, remove the head of KNAB, with parliamentary confirmation. KNAB would report semiannually to the cabinet and parliament, and make annual budget requests to the finance ministry.
Parliament passed the KNAB creation law in May 2002 without controversy; preoccupied by upcoming elections, politicians did not want to appear soft on corruption. Moreover, foreign governments made clear their support for KNAB. "When the law got to parliament, the Americans played a major role in pushing the committees of the parliament to leave it like it is," Voika said.
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