Democracy Lab

Outfoxing the Oligarchs in Latvia

How a tiny Baltic republic succeeded in taking its oligarchs down a peg.

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. 

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. 

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. 

Before parliament passed the law, it additionally gave KNAB a responsibility unique among anti-corruption agencies: the power to monitor compliance with campaign finance regulations. This decision was impromptu -- parliament had just passed new party finance regulations in response to public outcry, existing agencies did not want responsibility for implementing them, and the KNAB law was open for amendment. But eventually, this power would become a game changer in the fight against corruption, as the bureau sought to stanch the flow of money that expedited state capture. 

An independent committee chose Juta Strike, an experienced police investigator in an elite state security agency called the Constitution Protection Bureau, to be the KNAB's director. However, parliament rejected Strike's candidacy in a secret-ballot vote. Prime Minister Einars Repse, who had campaigned on an anti-corruption platform, contended the vote reflected legislators' fears about having an assertive leader in the position. Incensed by the defeat, Repse appointed Strike as deputy director of investigation and then made her acting director anyway -- a defiant act that prompted the collapse of his government. "This was too much for members of my coalition," Repse recounted. "The three so-called oligarchs made a coalition between themselves that was unthinkable before." Latvia's next three prime ministers all came from oligarch-associated parties. 

Alvis Vilks, former head of the State Revenue Service's anti-corruption unit, joined KNAB as a senior specialist and quickly became deputy director of prevention. Vilks and Strike hired most of their staffers through informal processes. Applicants had to demonstrate commitment against corruption, be university educated, and qualify for a security clearance. Eager for the bureau to become operational as quickly as possible, the leadership team eschewed open competitions in selecting its staff members -- a decision that proved regrettable. 

From the beginning, the agency faced high expectations. Strike lamented the public's beliefs that KNAB would quickly catch "not just one big fish, [but] all the big fish." One of KNAB's early targets was judicial corruption. Strike said judges were too lenient in corruption cases, which often involved oligarchs or their associates. The judges regularly granted suspended or conditional sentences to powerful defendants. Through surveillance and sting operations, KNAB uncovered cases of judicial bribery that reached high-level judges and prosecutors. "When the public saw how the judges were taking bribes to make decisions, it was a very big scandal," Strike later recounted. After a media firestorm, judges began to take corruption more seriously, handing down harsher sentences in corruption cases. 

KNAB also achieved early successes in its prevention efforts, particularly in monitoring party finances. The bureau turned up a large number of violations during the first year. Unaccustomed to oversight, parties expected they could flout the law with impunity. "They were so ridiculous, these violations," Dina Spule, a KNAB member, observed. For example, lists of major party donors included low-income individuals, young children, and the deceased. 

With Repse out of power, oligarch-associated parties consolidated their control over Latvian politics, confronting KNAB with new political challenges. Repse's successor, Indulis Emsis, had to appoint the bureau's first permanent director. An independent committee named Strike, Vilks, and Aleksejs Loskutovs as finalists. Once again, the committee awarded Strike the most votes, but the cabinet rejected her candidacy as untenable in parliament. Lembergs, one of the oligarchs, invited Loskutovs to a secret meeting outside the gates of Lembergs' mansion. A soft-spoken lawyer and police academy professor, Loskutovs appeared inexperienced and complacent. During a short stint on KNAB's preventive staff, Loskutovs had feuded with Strike and earned a reputation for absent-mindedness. "It was obvious," Loskutovs said, "that the [ruling coalition's] advisers proposed my candidacy as a theoretical academician who would be more or less easy to manage." Parliament approved the choice in May 2004. 

Strike and Vilks were wary of working with Loskutovs because of his tacit support from the oligarchs. However, the new director quickly proved his mettle. Just weeks into his term, the prime minister's party implored Loskutovs to override a KNAB decision to fine the party an unprecedented $185,000 for campaign finance violations. "All journalists in Latvia were waiting to see what he would do," Strike recalled. "He said that he trusted KNAB's unit on political party funding control and lawyers. He read [the case] through, and he agreed the party had to be punished. It was the first sign for us that he was trustful." 

When the prime minister's chief of staff wanted to fire Strike, Loskutovs insisted he could only take that action if "there was a legal basis to do so. [And] of course, they had nothing." For the KNAB staff, the incident showed  that Loskutovs was dependable. "It's not a secret that when Loskutovs was selected, politicians thought that he would be sleepy and ineffective," Spule said. "Then it turned out he made a good team with both deputy directors." The trusting relationship between the three leaders eased staff cooperation and encouraged an open, collegial culture. 

Loskutovs next had to earn public trust. KNAB communicated regularly about its activities, achievements, and Latvia's corruption problems. Under Loskutovs' leadership, KNAB conducted a series of high-profile investigations from 2004 to 2007, implicating the three most powerful oligarchs in high-level corruption. The first case involved bribery charges related to the March 2005 municipal elections in Jurmala, an upscale beachside suburb outside the capital of Riga. The case resulted in three convictions, including a former Jurmala mayor. (Trial evidence leaked to the media showed all three major oligarchs' involvement, although prosecutors found insufficient evidence to bring charges against them.) 

A second case that dominated headlines involved the introduction of digital television in Latvia in 2003; the case charged 20 defendants with fraud totaling tens of millions of dollars. Former Prime Minister and oligarch Skele sat as a witness and many of his close associates were defendants. While the case did not directly implicate the oligarchs, it pointed to lurking corruption. 

Most significant was a third case directly targeting Lembergs. Beginning in October 2005, KNAB and other agencies investigated accusations against him including bribery, money laundering, and misuse of his mayoral authority in the town of Ventspils -- charges associated with $15 million in ill-gotten wealth. Police briefly arrested Lembergs in March 2007 and courts in Latvia and the United Kingdom froze $200 million of assets tied to him and his close relatives. 

These courtroom successes won KNAB support from the public and high-level figures like President Vaira Vike-Freiberga and Prosecutor General Janis Maizitis, limiting the government's ability to rein in Loskutovs. By 2007, however, Prime Minister Aigars Kalvitis -- coming off the heels of a resounding reelection victory after years of economic growth -- sought to scale back KNAB, which had fined his party $1.9 million for campaign finance violations. Kalvitis called for Loskutovs' dismissal, citing an audit report that found weaknesses in KNAB's internal controls in managing assets and human resources. "These were problems you would find in any public office," contended Liga Stafecka of Delna. "[Kalvitis'] response was very disproportionate." 

Kalvitis instructed Prosecutor General Maizitis to investigate the issue, who found no evidence of corruption or serious lapses of duty. Still, Kalvitis submitted Loskutovs's dismissal to parliament, prompting a series of mass anti-corruption protests drawing celebrities, public intellectuals, and business leaders. Confronted by post-communist Latvia's largest protest, Kalvitis' cabinet collapsed. Parliament suspended its vote on Loskutovs, Kalvitis resigned, and the popularity of the oligarch-associated parties began to flag. 

Although Kalvitis' effort to oust Loskutovs had failed, the agency soon encountered internal problems that threatened its operations. In March 2008, KNAB discovered it was missing seized assets worth $300,000. Two staffers were found responsible and convicted, but the funds were never recovered. Maizitis' report faulted Loskutovs for failing to set strong internal controls, spurring parliament to dismiss Loskutovs in June 2008. KNAB adopted several internal regulations in response to the incident, such as new protocols on the management of classified materials, a code of ethics, and an open recruitment process for new hires. However, the episode still tarnished the bureau's reputation. 

In January 2009, outgoing Prime Minister Ivars Godmanis appointed Normunds Vilnitis as Loskutovs' replacement, with parliamentary approval. A former law professor and law enforcement official, Vilnitis quickly aroused controversy. KNAB Deputy Director Vilks cited "rumors [that Vilnitis] was sent by politicians simply to make the work of KNAB worse." Vilnitis exerted authority over long-time KNAB staff, issuing formal complaints against Strike and Vilks for insubordination and incompetence, and accusing them of foreign espionage. Both Prosecutor General Maizitis and Delna lobbied to remove Vilnitis, but the new prime minister, Valdis Dombrovskis, was reluctant to intervene. 

Seeing Vilnitis as an internal threat to KNAB, bureau veterans defied his orders and cut him out of sensitive operations. Under Vilnitis' nose, they pursued their high-level investigations, despite security threats such as the discovery of a Russian smuggling syndicate's assassination plot against Strike, which briefly forced her to leave the country. 

KNAB's efforts paid off in May 2011 with the first search raids and arrests in a massive operation that the press dubbed the "Oligarchs Case." The case ensnared 26 companies and 11 defendants, including six officials, in a complex web of kickbacks and hidden assets. All three oligarchs faced serious charges. The case added fuel to public fury over state capture, becoming a public symbol of oligarchic excess against the backdrop of a painful economic crisis. 

When KNAB's investigations reached Slesers, his parliamentary immunity protected his property from search and seizure. Public outrage exploded. On May 28, President Valdis Zatlers called for a referendum to dissolve parliament, specifically naming the three oligarchs as threats to Latvian democracy. "In a sense, everyone knew it, but it was brave that he said it so decisively," said Rasma Karklina, a Latvian parliamentarian. Delna organized a rally outside of parliament that attracted thousands to protest the oligarchs, and proposed a list of "The First 10 Steps to Recover the Stolen Country." The first step was to dismiss Vilnitis as KNAB director. 

Parliament conceded and dismissed Vilnitis. According to Karklina, "parliament was getting dissolved, so deputies who previously had been reluctant [to dismiss him] were trying to position themselves as good guys before the [September 2011] election." Election results gave Lembergs' party 13 percent of parliament; Slesers' party won no seats; and Skele's party was bankrupt after losing court battles with KNAB over campaign finance violations. For the first time, a government coalition formed that involved none of the oligarchs' parties. 

The anti-oligarch wave that began in 2010 opened a window of opportunity for KNAB to push long-stalled legal reforms, including the criminalization of campaign finance violations, judicial reforms to expedite trials, whistle-blower protections, and the lifting of parliamentary immunity for administrative offenses. Perhaps the most ambitious reform was the 2012 passage of the Zero Declaration Law, which required all residents of Latvia to declare all assets valued at more than $18,500 (including assets abroad), to curtail the underground economy, and prevent public officials from hiding tainted assets by transferring ownership to friends and relatives. 

KNAB's successes depended on a strong leadership team. The agency performed best, and built its strongest public credibility, when the leadership team worked in an atmosphere of harmony and mutual trust. This trust required strict controls and management of internal corruption risks, preventing the lapses that led to Loskutovs' dismissal and blemished KNAB's reputation.

KNAB's experience showed the important roles played by the public and by powerful allies like the president and prosecutor general. KNAB won this support by strengthening media relations, achieving tangible results, and demonstrating independence and integrity. Ultimately, KNAB's survival and entrenchment within the Latvian state helped curtail high-level corruption and drive a broad-based wave of reform that helped level the playing field of Latvian democracy.


Democracy Lab

Policing Electoral Violence in India

How India's elections administration used “vulnerability mapping” to stop trouble before it happened.

Meeting in 2007, officials from India's elections administration, the Election Commission of India, sought a new approach to dampen conflict during campaign periods. At polling places throughout the country, thugs (known as "gundas" in local parlance) hired by campaigners often intimidated, harassed, threatened, or bribed citizens -- preventing them from casting their ballots. In one example, non-registered voters descended on polling stations to deliberately lengthen lines and frustrate legitimate voters into going home. Not only did such activities disenfranchise many voters, they also resulted in violence and sometimes death. 

S.K. Mendiratta, a longtime member of the commission, recalled: "We were thinking, ‘How can this situation [the fraud and violence] be controlled so that people are encouraged to come out and vote?'" Mendiratta said the public was increasingly aggrieved that "in an independent India, we are not free to vote." 

The stakes were high. Roughly 714 million registered voters were eligible to cast ballots in the up-coming 2009 national parliamentary elections. Limited police resources intensified the problem; there were not enough uniformed personnel to guard every one of the country's 828,000 polling places. The problem was further exacerbated by ruling parties that chose to send security to where it would suit their candidates, as opposed to where it was needed to help citizens. But chief electoral officers had legal authority over the heads of police in each state, and as a result, the commission decided to focus its efforts on those areas where violence was most likely. 

The commission worked on a new technique: "vulnerability mapping," designed to help identify which polling places would be most prone to thuggery. Using their knowledge of sensitive areas, country-level officials developed vulnerability mapping to efficiently allocate police and paramilitary forces to states and polling districts that were more susceptible to fraud and violence. 

The inspiration for "vulnerability mapping" originated from West Bengal's 2006 state assembly elections. In 2006, Debashis Sen, the state's chief electoral officer, had been in his post for only three months when he approached R. Balakrishna, the head of India's election commission's planning division. Sen explained to Balakrishna that the majority of West Bengal's citizens had little faith in the national commission. In past elections, the state -- India's fourth most populous -- encountered widespread fraud and political party violence, complicated by a 30-year-long Maoist insurgency. Maoists, more commonly referred to as Naxalites, often boycotted Indian elections, and targeted election officials and polling places with shootings and bombings. Meanwhile, a coalition of left-leaning parties had held power in the state for 30 years; that a coalition could hang on to power for so long provoked suspicion that the coalition parties were rigging the elections and that the commission was "merely applying its stamp of approval." 

West Bengal's state assembly elections, scheduled for May 2006, offered an opportunity for a new approach to election management that could sway public opinion about the fairness of the electoral process. Sen and Balakrishna began to brainstorm "how to make it so that on the day of elections everything would be absolutely fair and proper -- [and also] appear to be fair and proper," The two men drew up a strategy paper that, among other things, proposed that members of India's Central Reserve Police Force (CRPF) be assigned to each of the 45,000 designated polling places. Typically, states never received enough CRPF personnel to cover every polling place because the agency needed to cover the whole country. But because states scheduled elections for their own legislatures at varying times, Sen was granted his full request. 

As election day neared, and with CRPF police at each polling station, Sen and Balakrishna deployed the state police to detain people with existing arrest warrants. They also brought in observers from outside the state to monitor voting. 

Sen described the 2006 experiment as a resounding success. "There was not a single serious complaint or even a substantiated non-serious complaint that said that any of the 45,000 polling stations were rigged." He shared the story with senior election officials in New Delhi. The officials were impressed. Sen's presentation came at a time when the commission was seeking a way to limit fraud and violence. Balakrishna's planning department began developing specific guidelines for limiting fraud and violence in preparation for the 2009 national parliamentary elections. 

But there was a major problem: The national demand for police would greatly exceed the supply. Efforts to allocate security personnel would need to be greatly finessed. Balakrishna proposed distributing the CRPF to specific polling stations based on the area's history of election-related violence. 

In October 2007, the commission issued instructions for "vulnerability mapping" to the chief electoral officer in each state. The officers were to conduct the mapping in three stages. 

In the first stage, elections officers compiled a list of all polling places in their states and ranked them by level of vulnerability relative to violence or suspicious activity in the last election. Based on those criteria, each polling place would be classified as normal, sensitive, or hypersensitive. The commission believed the criteria captured the telltale signs of voter intimidation, fraud, and incipient violence. Chief electoral officers would then allocate state police based on these rankings. 

In the second stage of vulnerability mapping, chief electoral officers deployed the limited number of CRPF personnel at their disposal. Members of the CRPF were widely seen as politically neutral because they had no direct ties to the local state governments. Knowing how many polling places were vulnerable helped the chief electoral officers determine how many CRPF personnel to request. 

In the third and final stage of vulnerability mapping, chief electoral officers and the director general of the state police carefully created a roster of potential troublemakers likely to commit acts of fraud or violence during the elections, based on past experience and current intelligence.  They then tracked those people who were potential threats. Targeted individuals were asked to pay bonds of guarantee, reimbursed after the election upon good behavior. In extreme cases, suspicious persons were subject to arrest. Individuals with pending arrests were rounded up prior to the election. Mendiratta justified these measures under Indian law. (Sections 107 and 110 of the Code of Criminal Procedure allowed district magistrates -- the head civil servant in a given district -- to require persons whom they suspected might stir up trouble during the election period to pay a bond. Section 151 gave the police the authority to make a preemptive arrest if they believed that a person was about to commit a crime.)  

Back in West Bengal, where more than 52 million voters were expected to cast ballots at 48,900 polling places, officials began the mapping exercise five months before the 2009 national parliamentary elections. (Voters in the state would go to the polls on one of three days between April 30 and May 13, depending on what district they lived in.) To rank the vulnerability of polling places, the commission dispatched election officers to cover about a dozen polling places each in their respective constituencies. The officers met with party candidates, voters who lived near the polling places, and local election staff, and then classified a polling place's vulnerability level. The officers deemed a polling place sensitive if a high percentage of voters' names appeared on the electoral roll without accompanying photographs -- indicating a higher risk of voter fraud; if more than 75 percent of votes cast in the past election were for one candidate; if a violent act had been committed there in the previous election; if a revote had been ordered there in the most recent parliamentary contest; or if conversations with local villagers revealed perceptions of threats or intimidation. District magistrates forwarded the list of vulnerability rankings to Sen, who submitted a formal request to the state government for CRPF support and developed a detailed plan for deploying security personnel. 

Observers drawn from the Indian civil service began monitoring the areas around polling places two to three weeks before the elections. Cognizant of India's strong state-based ethnic ties, the commission required that observers could not work in the states where they were born, where they were married, where their spouse was from, or where they were currently working or living in order to promote neutrality. Meeting with the district magistrate and superintendent of police, the observers were able to familiarize themselves with the issues in their constituencies.  Observers were required to revisit all of the polling places labeled as hypersensitive or sensitive, host public discussions, and find out more about the local problems. District magistrates and police superintendents were also supposed to make similar visits to bolster voter confidence in safety at the polls.  

With a formal roster of potential troublemakers, the district magistrate sat with the chief of police and decided which individuals to monitor, which individuals to require a bond from, and which individuals to arrest preemptively. Preemptive arrests were considered an act of last resort. Individuals targeted for monitoring were subject to video surveillance in accordance with relevant laws regarding privacy and freedom of expression. A committee of local government officials reviewed the footage. If they saw a possible electoral offense, they forwarded the footage to the chief electoral officer for another committee inspection, and then to commission headquarters in New Delhi if action was necessary. The national commission made a final ruling on whether to arrest or fine the person who committed the offense. Nationwide, state election commissions had designated 86,782 villages and hamlets as either sensitive or hypersensitive; the police and the election commission monitored, bonded, or arrested 373,861 people in accordance with existing laws. 

The CRPF personnel arrived in West Bengal a day or two before the polling places opened, bringing their own tents and food. The CRPF operated under the command of the director general of police, who took orders from the chief electoral officer. Sen addressed the CRPF staff when they first arrived in West Bengal and used the opportunity to assert his authority. "You report to me, not to the state police," he recalled telling the security personnel. Sen also briefed the CRPF on the specific security concerns in the state and offered advice on how to avoid being viewed as partisan, such as "never accept the offer of a cup of tea or a sweet from a civilian." Most polling places received just one officer from the state police; those classified as sensitive or hypersensitive received as many as a dozen state police officers.  

On election day, junior government officers visited polling places and reviewed lists showing how many voters had cast ballots. If voting was unexpectedly slow, the officers informed district magistrates, who would then call upon the CRPF reserve teams to visit the specific villages and check for anything that would hinder voter movements or hamper voter participation. Central observers were also critical to ensuring that vulnerability mapping promoted openness and transparency: Observers' telephone numbers and assigned polling places were published in newspapers, and voters were able to call in anonymous complaints. If illegal activities were suspected, the commission directed the local police and election officials to take whatever action was needed. Without any complaints however, the CRPF was required to stay at least 200 meters from the building where voting took place. 

The election commission declared that the 2009 balloting was one of the most peaceful in the country's history. West Bengal experienced its highest voter turnout ever, with 81.4 percent of registered voters casting ballots. Because no one maintained a count of violent incidents surrounding Indian elections, it was hard to know the exact magnitude of the change. The new tactic did not eliminate all violence. For example, three election officials stepped on a lethal landmine in a Naxalite area of West Bengal during the first phase of elections, while two voters were killed during the second phase of elections. Voters who had cast ballots despite threats and intimidation may have faced retribution days or weeks later.  

Although the 2009 elections were largely peaceful, the experience also highlighted limitations in the design, implementation, and transferability of vulnerability mapping. The compatibility of the procedures with civil rights norms was a potentially sensitive matter. Another limitation was that unexpected violence could change the vulnerability ranking of a polling place at a moment's notice, and because security personnel were limited in number, beefing up security at one location required weakening security at another. Finally, the mapping did not address the issue of dependence on the central police force, the CRPF, and public lack of trust in the local state police. Thus future vulnerability mapping would continue to rely on the CRPF, which was already thinly stretched across the country. Regardless of such obstacles, Debashis Sen reflected: "I deeply and sincerely believe that this mapping exercise was a key to peaceful free and fair elections in 2009."