Latvian banking: let there be light
For too long, the country has been at the top of the world’s news agenda for all the wrong reasons.
It is easy for journalists to preach transparency. It is, after all, almost always in their interests. For bankers and policymakers, things are often not as clear cut.
In a system where wrongdoing is widespread, a serious clean-up will have far-reaching consequences. Friends, colleagues and contacts could find themselves out of work – or worse.
Precious revenues could be lost to a fragile economy. International investors could take fright. Other institutions could be damned by association.
Much better to keep quiet about it, make sure your own organization is doing the right thing and hope that the rest of the sector sorts itself out. Why draw international attention to internal problems?
Yet while it is easy to understand why people remain silent, in the long run inaction can be worse.
Take the example of Latvia. In February, the tiny Baltic state pulled off an impressive trifecta.
In less than two weeks, its third-largest bank was forced to close after US authorities accused it of institutionalized money laundering. Central bank governor Ilmars Rimsevics was arrested by anti-corruption officials on bribery charges. And another local bank took the opportunity to go public with separate allegations of a campaign of extortion by Rimsevics.