17
Wed, Aug
43 New Articles

White Collar Crime Laws and Regulations in Latvia

White Collar Crime Laws and Regulations in Latvia

White Collar Crime Comparative Guide: 2022
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Contributed by Ellex.

1. Legal Framework

1.1. What is the legal framework for bribery and corruption in your jurisdiction?

The legal framework for bribery and corruption in Latvia is based on both international conventions, laws, and regulations, as well as national laws and regulations. At the national level, anti-corruption and anti-bribery related provisions are included in several laws, some of which include:

  • The Law On Corruption Prevention and Combating Bureau
  • The Law On Remuneration of Officials and Employees of State and Local Government Authorities
  • The Criminal Law of the Republic of Latvia
  • The Law On Prevention of Conflict of Interest in Activities of Public Officials
  • The Law On the Prevention of Money Laundering and Terrorism Financing
  • The Operational Activities Law
  • The Administrative Procedure Law
  • The Criminal Procedure Law
  • The Law On Official Secrets
  • The Law On Prevention of Squandering of the Financial Resources & Property of the State & Local Governments
  • The Public Procurement Law
  • The Law On Public-Private Partnership

1.2. Which international anti-corruption conventions apply?

  • The United Nations Convention Against Corruption
  • The Convention Against Corruption Involving Officials;
  • The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions;
  • The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime
  • The Council of Europe The Criminal Law Convention on Corruption;
  • The Additional Protocol to the Criminal Law Convention on Corruption;
  • The Council of Europe Civil Law Convention on Corruption;
  • The Agreement establishing the Group of States against Corruption (GRECO);
  • The Agreement for the Establishment of the International Anti-Corruption Academy as an International Organization
  • The Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime

1.3. What is the definition of bribery?

Article 323 of the Criminal Law defines bribery as handing over or offering of material value, properties, or benefits of another nature, or promising a bribe upon requesting it, in person or through intermediaries in order that the public official, using his position, performs or fails to perform some act in the interests of the giver or person offering or promising the bribe, or in the interests of other persons, irrespective of whether the bribe handed over, offered, or promised is for this public official or for any other person.

1.4. Is private sector bribery covered by law? If yes, what is the relevant legislation?

Yes. Article 199 of the Criminal Law addresses commercial bribery if the bribe is given so that the private person or the company would act in the interests of the briber. Commercial Bribery is defined as offering or handing over, personally or through an intermediary, material goods, property, or benefits of any other nature to an employee of an undertaking (company) or organization or to a person authorized by law or legal transaction to manage another person’s affairs, or to a responsible employee of an undertaking (company) or organization or to a person authorized by the undertaking (company) or organization, or a person authorized by law or by a legal transaction to settle disputes, to act in the exercise of their authority, whether or not material goods, property or other benefits are intended for that person or for any other person

1.5. What is the definition of a public official and a foreign public official? Are employees at state-owned or state-controlled enterprises treated differently? Are there official lists of public officials, offices, or state-owned or state-controlled enterprises?

Public officials are defined in Article 316 of the Criminal Law as representatives of the state administration, as well as any person, who permanently or temporarily holds an office in the state administration or local government, including a state-owned or municipal capital company, and who has a right to pass decisions binding on other persons, or who has a right to carry out supervisory, control, investigation or penal functions, or dispose of the property or financial assets of the public person or its capital company.

The State President, members of the Parliament (Saeima), Prime Minister, members of the Cabinet of Ministers, as well as officials of public authorities elected, appointed, or approved officials by Saeima and the Cabinet of Ministers, heads of the local governments, their deputies and executive directors have deemed public officials holding accountable position.

Officials of the international organizations, international parliamentary assemblies, and international courts, and persons authorized by such agencies, as well as any person holding a position of legislative, executive, or judicial power in a foreign state, or any administrative unit thereof, irrespective of whether such a person is elected or appointed to such position, as well as any person who performs a public function abroad, including in the interests of its administrative unit, government agency or state enterprise.

There are no official lists of all public officials available. Most public officials are obliged to file annual disclosure of income, part of which is publicly available. Most of the public officials’ names and surnames are available on the particular authorities or state or municipality-owned company’s website.

1.6. Are there any regulations on political donations?

Yes, regulations about political donations are covered by the Law On Financing Political Organizations (parties), the Pre-election Campaign Law,  the Criminal Law, the Law On Prevention of Conflict of Interests in Activities of Public Officials, and general laws and regulations applicable to bribery and anti-corruption.

The Law On the Prevention of Conflicts of Interest in the Activities of Public Officials defines donations as the giving of advantages for the benefit of the whole public institution, which are given either based on a public agreement or are provided in compliance with the procedure laid down in Cabinet Regulations. No specific provisions exist with respect to charitable or political donations to government officials, public servants, and the private sector. Given the definition of donations in the Law On the Prevention of Conflicts of Interest in the Activities of Public Officials, other individual charitable or political donations to government officials / public servants shall be deemed as gifts and subject to the statutory acceptance restrictions. Specific law, which limits charitable and political donations to political parties, is in effect.

Article 2 of the Law On Financing Political Organizations provides that political parties may receive donations from natural persons only. Pursuant to Article 3 the maximum amount allowed as a donation from natural persons is in the amount of 50 minimal monthly salaries (minimum monthly salary in 2022 is EUR 500) (for one political party in the period of one year). The Corruption Prevention and Combating Bureau is entitled to request the donor and/or payer of membership fees information regarding their income, origin of the donation/membership fee payment, savings, and liabilities.

In case the political party receives state budget financing different rules apply. State budget financing is provided to any political organization (party) for which more than 2% of voters have voted in the last elections of the parliament.

In case of receipt of the state budget financing, natural persons are allowed to make gifts (donations), and pay membership fees and joining fees from their income, however, the total amount of such gifts (donations), membership fees, and joining fees to all political parties which receive the state budget financing, and which are represented in the parliament may not exceed five minimum monthly salaries.

In case of receipt of the state budget financing, natural persons are allowed to make gifts (donations), pay membership fees and joining fees from their income, however, the total amount of such gifts (donations), membership fees, and joining fees to all political parties which receive the state budget financing and for which more than 2% but not more than 5% of voters have voted in the last elections of the Saeima may not exceed 12 minimum monthly salaries.

If the state budget financing is received by an association of political organizations (parties) or a political organization (party) that joins an association of political organizations (parties) that does not receive the state budget financing, the above-indicated restriction shall apply to the total amount of the gifts (donations) made and membership fees and joining fees paid by one natural person to the association of political organizations (parties) and all political organizations (parties) forming the association of political organizations (parties).

1.7. Are there any defenses available?

There are no limitations to the available defense mechanisms provided by national laws and regulations on bribery. Defenses available depend on the particular conduct and can be different. Please see below with respect to bribery and commercial bribery. Also, it must be noted that the Criminal Law provides circumstances that aggravate or mitigate liability.

1.8. Is there an exemption for facilitation payments?

There are no general exemptions for facilitation payments under the Criminal Law of the Republic of Latvia. However, the prosecutor may exercise its discretion whether to prosecute a facilitation payment, particularly if made under duress.

1.9. What are the criminal sanctions for bribery? Are there any civil and administrative sanctions related to bribery cases?

Criminal sanctions vary from a criminal fine (from EUR 5,000 to EUR 1 million) to community service, probation supervision, or imprisonment of up to 10 years. The applicable sanctions depend on the criminal conduct and its related circumstances. Supplementary sanctions can include confiscations of assets, restrictions to take a particular position for up to five years, and probation supervision.

There are no general civil and administrative sanctions for bribery. However, criminal conduct does not limit the right to bring civil claims for damages against the perpetrator. Also, for breach of statutory provisions on gifts and hospitality, public officials may be subject to administrative fines.

1.10. Does the national bribery and corruption law apply beyond national boundaries?

Yes. Foreign individuals or companies can be prosecuted for bribery if the offense took place within the Latvian jurisdiction pursuant to Article 2 of the Criminal Law. Article 4 of the Criminal Law provides that a person can be prosecuted in Latvia if the offense took place outside Latvian jurisdiction and:

  • the person concerned committed bribery against the Republic of Latvia or its population’s interests; or
  • the offense was committed under international treaties and the person has not been found guilty of the offense or been tried for that offense in another jurisdiction.

1.11. What are the limitation periods for bribery offenses?

Limitation periods in the Criminal Law depend on the gravity of the crime. Bribery and its related offenses are defined as serious crimes or gravely serious crimes, depending on the circumstances of the conduct. Limitation periods for bribery offenses, depending on the particular circumstances can be either 10 years (serious crime) or 15 years (gravely serious crime).

1.12. Are there any planned amendments or developments to the national bribery and corruption law?

At the moment, there are not any significant planned amendments or developments to the national bribery and corruption laws. The Corruption Prevention and Combating Bureau is regularly preparing plans for combatting corruption-related crimes and invites public and private authorities in contributing to legislative initiatives.

2. Gifts and Hospitality

2.1. How are gifts and hospitality treated?

The Law On the Prevention of Conflicts of Interest in the Activities of Public Officials provides that public officials are not allowed to accept any gifts and hospitality with the specific exceptions provided in the law. Public officials are allowed to accept souvenirs, diplomatic gifts, and gifts by foreign officials or officials of an international organization. However, such gifts do not become the property of the receiving public official, but the government institution, which the public official represents.

2.2. Does the law give any specific guidance on gifts and hospitality in the public and private sectors?

General bribery provisions in the Criminal Law regulate the prohibition of giving gifts or hospitality to government officials and/or public servants with a corrupt intent. The object of a bribe/illegal giving of goods under the provisions is referred to as material value, properties, or benefits of other nature.

General bribery provisions in the Criminal Law regulate the prohibition of giving gifts or hospitality to persons in the private sector with a corrupt intent. The object of a bribe under the provisions is referred to as material value, property, or benefits of other nature.

While on duty, public officials are permitted to accept flowers, souvenirs, books, representative articles, and other values (not exceeding one minimum monthly salary in value) provided that the goods are given without corrupt intent. Such goods are not deemed as gifts within the Law On the Prevention of Conflicts of Interest in the Activities of Public Officials.

There is no specific restriction on the acceptance of gifts while off duty, insofar as the conflict-of-interest rules are complied with. Public officials are forbidden to receive gifts from individuals or entities, in relation to which the public official has participated in decision making or entering into a contract on behalf of a public entity for a period of two years before the gift is received. Also, officials are forbidden to participate in decision-making and signing of contracts with individuals and entities from whom they have received gifts, while off-duty, for two years after receipt of such gift.

There are no specific limits or restrictions for gifts in the private sector, but such gifts should be provided without corrupt intent and not expecting anything in return.

2.3. Are there limitations on the value of benefits (gifts and hospitality) and/or any other benefit) that may be given to a government/public official? If so, please describe those limitations and their bases?

There are no specific limitation values for benefits and gifts provided in the law. With respect to souvenirs, books, and representative articles, which are not deemed as gifts under laws, the overall value within one year period cannot exceed one minimum monthly salary.

 

2.4. Are there any defenses or exceptions to the limitations (e.g. reasonable promotional expenses)?

Yes, it is possible to provide reasonable hospitality/promotional expenses. All such expenses should be coordinated in advance and should not be provided with corrupt intent and with the particular public institution and must be official and traceable.

3. Anti-corruption compliance

3.1. Are companies required to have anti-corruption compliance procedures in place?

No, there are no specific provisions in national law that oblige companies to generally have anti-corruption compliance procedures in place. Companies, their representatives, and employees must comply with laws and regulations that govern corruption. The existence of such a policy can be deemed as a mitigating factor when criminal liability is imposed for crimes related to corruption but will not release from liability.

3.2. Is there any official guidance on anti-corruption compliance?

There is no official guidance on anti-corruption compliance that would generally apply to companies. At the same time, the Corruption Prevention and Combating Bureau provides public materials, teaching aids, information, news, updates, guidance, and tests on anti-corruption compliance. Such materials are available publicly and there is specific guidance for compliances that can be used by companies and entrepreneurs.

3.3. Does the law protect whistleblowers reporting bribery and corruption allegations?

Whistleblower protection is ensured pursuant to a special Whistleblowing Law. Whistleblower protection became effective in 2018 when national law to protect whistleblowers was adopted. In 2022, a new draft law was passed, due to the implementation of the EU Directive 2019/1937. The Whistleblowing law provides that it is strongly encouraged to report bribery and corruption allegations in the interests of the society. Such whistleblowers are provided protection as provided in the law.

4. Corporate criminal liability

4.1. Can corporate entities be held liable for bribery and corruption? If so, what is the nature and scope of such liability?

Corporate entities cannot be prosecuted in Latvia. The subject of criminal liability is a natural person only. In accordance with the Criminal Law, it is possible to apply coercive measures against corporate entities, such as 1) liquidation, 2) limitation of rights, 3) confiscation of assets, 4) cash collection.

Article 70 (1) of the Criminal Law provides the grounds for applying coercive measures against a corporate entity and does not differentiate, whether the natural person is a regular employee or a senior employee (executive) of this corporate entity. The main criteria to impose coercive measures against the corporate entity is that the criminal offense is committed:

  • in the interests of the legal entity;
  • the legal entity has benefited from the crime; or
  • the offense is committed as a result of insufficient supervision or control of the employee by a legal entity.
  • The criminal offense can be committed individually or as part of a collegial authority of the corporate entity:
  • on the basis of the right to represent the corporate entity or to act on behalf of it;
  • on the basis of the right to take a decision on behalf of the corporate entity; or
  • by exercising control as part of the operation of the corporate entity.

4.2. Can a company be liable for a bribery offense committed by an entity controlled or owned by it? Are there requirements for the parent to avoid liability in these situations?

The Criminal Law does not provide such liability, however, there is a risk that individuals in the company which own or control the company subject to coercive measures could be subject to criminal liability.

4.3. Can a company be liable for corrupt actions of a third-party agent engaged to help it obtain or retain business or a business advantage (such as government or regulatory actions or approvals)? If so, are there measures recognized in law, enforcement, or regulatory guidance to mitigate this liability?

Please see Section 4.1. There is a risk that the company may be held liable if the criteria established in Article 70 (1) of the Criminal Law are triggered.

4.4. What are the sanctions for the corporate criminal entity?

The coercive measures that can be applied against corporate entities are (1) liquidation; (2) limitation of rights; (3) confiscation of assets; and/or (4) cash collection. Different coercive measures can be applied against the corporate entity simultaneously, except for the liquidation.

Liquidation: Liquidation is applied only, if the corporate entity was founded for the sole purpose to commit crimes or if serious crimes or gravely serious crimes have been committed. Serious crimes are criminal offenses, for which imprisonment from three to eight years can be imposed and include bribery. A gravely serious crime is defined as a criminal offense, for which imprisonment for more than eight years can be imposed, which includes bribery committed in an organized group. If the liquidation is imposed, all property and assets of the corporate entity are expropriated in favor of the state.

Limitation of rights: The limitation of rights means annulment of rights or permissions of the corporate entity and applying restrictions against the corporate entity prohibiting the corporate entity from participating in tenders, receiving state aid or benefits; or restricting engaging in other activities as imposed by the court from one to ten years.

Confiscation of assets: If the confiscation of assets is applied against the corporate entity, the property and assets of the corporate entity are expropriated in favor of the state. The assets, which are to be expropriated, are determined by the court. The respective assets/to be expropriated shall be explicitly provided in the decision. It is possible to confiscate assets of the corporate entity delivered to other natural persons or corporate entities if the owner is not lost. When confiscation of all assets and property is applied, the assets required to fulfill obligations against the employees, state, and creditors are retained.

Cash collection: Cash collection is a coercive measure against a corporate entity imposing an obligation to pay established amounts of cash to the state in 30 days’ time. Depending on the severity of the criminal offense, the corporate entity may be ordered to pay:

  • for a serious crime (where imprisonment from three years to eight years can be applied against a natural person) – from EUR 10,000 to EUR 37.5 million; and
  • for a gravely serious crime (where imprisonment exceeding eight years can be applied against a natural person) – from EUR 15,000 to EUR 50 million.

If the cash collection is applied, the payment can be made only from the assets of the particular corporate entity. If the cash is not paid within the 30 days term, the decision is enforced by a bailiff.

5. Criminal proceedings into bribery and corruption cases

5.1. What authorities can prosecute corruption crimes?

Pursuant to Articles 386 and 387 of the Criminal Procedure Law, the Corruption Prevention and Combating Bureau is the investigating authority in cases related to corruption crimes of public officials. In the case of bribery and corruption cases in the private sector, the investigating authority is the State Police. The authority to prosecute in both cases is the Prosecutor’s office pursuant to Article 2 of the Public Prosecutor’s Office Law.

5.2. Is there a legal obligation to report bribery and corruption cases? If so, to whom does it apply and what are the sanctions for failing to meet such an obligation?

Article 315 of the Criminal Law provides for criminal liability if a person has not reported a serious crime (a crime for which sanction provides for imprisonment from three to eight years) or gravely serious crime (a crime for which sanction provides for imprisonment for more than eight years). Irrespective of the obligation to self-report, Article 324 of the Criminal Law provides that the briber or intermediary of bribery can be released from liability if they report the bribery and aid the investigation proceedings.

Article 33 of the Audit Service Law provides that an external auditor is obliged to report indications of suspected bribery to the Corruption Prevention and Combatting Bureau within three working days after the fact is established.

Articles 3, 30, 38, and 40 of The Law On the Prevention of Money Laundering and Terrorism Financing provide that the following are obliged to abide by the provisions of money laundering prevention rules:

(1) financial institutions, (2) credit institutions, (3) notaries, attorneys, and other independent providers of legal services when they, acting on behalf and for their customer, assist in the planning or execution of transactions, participate therein or carry out other professional activities related to the transactions for their customer concerning the following: a) buying and selling of immovable property, shares of a commercial company capital; b) managing the customer’s money, financial instruments, and other funds; c) opening or managing all kinds of accounts in credit institutions or financial institutions; d) establishment, management, or provision of operation of legal persons or legal arrangements, as well as in relation to the making of contributions necessary for the establishment, operation, or management of a legal person or a legal arrangement, (4) outsourced accountants, auditors, tax consultants, other persons undertaking to provide assistance in tax issues or acting as an intermediary in the provision of such assistance regardless of the frequency of its provision and existence of remuneration, (5) providers of services relating to the creation and maintenance of the operation of  legal entities, (6) persons acting as real estate agents or intermediaries in real estate transactions (including in cases when they are acting as intermediaries of real estate lease in relation to transactions for which the monthly lease payment is EUR 10,000 or more), (7) organizers of lotteries and gambling, (8) persons providing encashment services,(9) other legal or natural persons trading in means of transport, cultural monuments, precious metals, precious stones, articles thereof or trading other goods, as well as acting as intermediaries in the abovementioned transactions or engaged in providing other services, (where payment is carried out in cash, whether in euros or another currency, and on the day of the transaction is equivalent to or exceeds EUR 10,000), (10) debt recovery service providers, (11) virtual currency service providers, (12) administrators of insolvency procedures, (13) persons operating in handling of art and antique articles by importing them into or exporting them from the Republic of Latvia, storing or trading in them, including such persons who carry out these actions in antique shops, auction houses, or ports, if the total amount of the transaction or seemingly linked transactions is EUR 10,000 or more,

These entities/persons are under an obligation to pay extra attention to and exercise due care in respect to circumstances that may refer to potential money laundering or terrorism financing, including complex transactions with a high value and unusual nature that do not appear to have any justified financial purpose, which would also include cases of bribery and corruption. This obligation may not apply when the attorney or lawyer is defending or representing a client in a litigation matter or criminal proceedings or advising on the commencement of a trial or litigation or avoidance of a trial or litigation.

5.3. Is there any civil or administrative enforcement against corruption crimes?

Consequences against corruption crimes may involve administrative and civil issues, including claims for damages. In case of breach of gift and hospitality limitations provided in the laws governing conflicts of interest, administrative fines may be imposed on public officials.

5.4. What powers do the authorities have generally to gather information when investigating corruption crimes?

Article 10 of the Corruption Prevention and Combatting Bureau Law provides that, when investigating corruption crimes, the bureau has the legal right to request and receive documents, information, and other material regardless of their secrecy regime free of charge from state administration and municipal institutions, enterprises (companies), organizations, officials, and other persons. The bureau and State Police also have all the rights provided in the Criminal Procedure Law to request information, documents, and materials as investigating authorities in the criminal proceedings. Rights to receive information are also provided in special laws, e.g. Article 62 of the Credit Institutions’ Law and others.

5.5. Is there any form of leniency law in your jurisdiction, allowing a party to a bribery or corruption crime to voluntarily confess to the crime in exchange for a release from liability or reduction of the penalty?

Article 324 of the Criminal Law provides that the person who gave the bribe may be exempt from criminal liability if the bribe was extorted or if, after the bribe was given, he or she voluntarily reports and actively contributes to the investigation of the offense. A person who has promised or offered a bribe may be exempt from criminal liability if he or she voluntarily discloses the conduct and actively contributes to the detection and investigation of the offense.

Article 199 (1) of the Criminal Law provides that disclosure to law enforcement institutions of committing an illegal offer of goods in the private sector may serve as grounds for avoiding liability in the event the reporting person actively participated in the investigation and contributed to solving the case.

For corporate entities, leniency can be partially reached by an agreement between the prosecutor and the corporate entity on coercive measures. Such an agreement is possible, if:

  • the circumstances regarding the subject matter of the proof are clarified.
  • the corporate entity acknowledges the fact that there was a criminal offense/crime committed.
  • the corporate entity agrees to the qualification and the assessment of the harm/damages caused.
  • the corporate entity agrees to conclude the agreement to apply coercive measures.

It is possible to mitigate the liability of a corporate entity by agreement since the corporate entity can propose the type and scope of the coercive measure, provide its explanations, and receive legal aid. If an agreement is reached, the prosecutor submits it for approval to the court.

5.6. Can a person plea bargain in corruption cases? If so, how is such a process conducted?

Plea bargaining is possible if the circumstances relating to the subject matter of the corruption case and the evidence have been clarified and the accused agrees to the scope of the offenses charged, the qualification, the assessment of the damage caused, and the application of the plea bargain procedure.

The plea-bargaining procedure may not be applied where there are multiple accused in one criminal proceeding and the plea bargain and sentence cannot be applied to all of the accused. If the public prosecutor considers a plea bargain in the proceedings, it shall be explained to the accused about the possibility of settling the case by concluding an agreement, its consequences, and the rights of the accused in the agreement proceedings.

Upon receipt of the consent of the accused, the public prosecutor prepares a draft agreement and enters into discussions with the accused and their defense counsel. If the accused agrees to the charges brought and issued, the qualification of the offense, and the assessment of the damage caused, negotiations are held on the type and measure of the sentence that the public prosecutor will ask the court to impose.

The agreement shall include: 1) the place and date of the agreement; 2) the position, name, and surname of the person who carried out the procedural action; 3) identification data of the accused, as well as the name, surname, and place of practice of the defense counsel; 4) the place, time, and a brief description of the offense; 5) the qualification of the offense; 6) the amount of the damage caused by the offense and the agreement on compensation; 7) mitigating and aggravating circumstances; 8) particulars of the person of the accused; 9) the sentence which the prosecutor asks the court to impose, 10) information on the counting of the custodial measure imposed on the accused, as well as the period of detention, against the term of the sentence.

The agreement is signed by the accused, the defense counsel, and the public prosecutor and a copy is served on the accused or their representative. After the conclusion of an agreement, the public prosecutor sends the materials of the criminal case together with the agreement to the court, proposing that the court approve the agreement concluded.

The hearing of the case in the court is scheduled no later than 21 days after receipt of the agreement and case materials. If there are no procedural issues and the agreement is upheld the court can render a judgment to impose criminal liability based on the agreement.

Guide Contributors For Latvia

Andris Lazdins

Associate Partner

andris.lazdins@ellex.legal 

+371 673 50542

 

Kristers Toms Losans

Associate

kristers.losans@ellex.legal

+371 678 03378

 

Download Guide PDF