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.
SUBJECTS:
