Par Korupcijas Novēršanas Un Apkarošanas Biroja Darbību No 2013.Gada 1.Jūlija Līdz 31.Decembrim

Informative report

«About activities of the Corruption Prevention and Combating Bureau (KNAB) from 1 January 2016 to 30 June 2016» 2

General information

Informative report about activities of the Corruption Prevention and Combating Bureau (hereinafter – Bureau) from 1 January 2016, to 30 June 2016, is prepared for submission in the Cabinet of Ministers and Saeima in compliance with the Paragraph 13 of the Regulations on Corruption Prevention and Combating Bureau1. As to 30 June 2016, 140 employees worked in the Bureau. 5 new employees were hired during the accounting period, but employment relations were ended with 9 employees. During the accounting period 577 applications were received in the records department of the Bureau, of which 315 applications were from physical entities, 73 applications from legal entities, and 189 applications from anonymous applicants. Probably, in result of successful communication with the public (maintenance of Bureau's Website, social networks, as well as active information for the public on reporting options), the number of people who provide information on possible corruptive practices to the Office through phone by calling to the Information centre (67356161, 67356173 ) or toll- free hotline 80002070 has increased. In the first six month of 2016 3499 calls were received in the Information Centre of the Bureau that is by 2648 more than in the first six month of 2015, and 30 visitors were received and listened to in person. Number of applications received in the Bureau is pictured in Image 1.

Applications received Image 1. Applications received in the Bureau (during time period from 1 January 2016 to 30 June 2016).

During the first six month of 2016 state budget financing allocated to the Bureau was EUR 4,932,713, while EUR 2,494,464 were used during the accounting period actually.

113. Bureau at least once every six months submits report on the Bureau's activities, performance of functions, and use of budget resources in the Cabinet of Ministers and Saeima in accordance with set procedures. KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 3

1. Corruption prevention 1.1. Anti-corruption politics coordination, Development of the legislation projects and corruption risk analysis

During the accounting period Bureau have developed and on 29 January 2016 submitted to the Cabinet of Ministers the informative report "On the assessment of anti- corruption internal control system in the institutions of public figures" (2016-TA-102). Informative report was adopted in the Cabinet of Ministers for information without envisaging further action, as Corruption Prevention and Combating Guidelines for 2015-2020 has already set a number of tasks (activities) for strengthening internal control in the institutions of public figures, and their execution will solve also issues identified in the informative report. As well as in the first six month of 2016 with the order of Head of the Bureau J.Streļčenoks inter-institutional working group was established, which have to develop by September 30 of this year Draft Regulations of the Cabinet on basic requirements of internal control system for preventing corruption and conflict of interests in the institutions of public figures. During its development not only information and proposals provided in above informative report, but also deficiencies of anti-corruption control system identified in other laws and regulations will be assessed. In order to ensure fulfilment of resolution of the Prime Minister L.Straujuma by which the task to develop and submit in the Cabinet of Ministers draft legislation identified in the Bureau's Informative report "About the implementation of the legislation of the lobbying transparency securing in the existing regulatory acts" was assigned to the Bureau in cooperation with the Ministry of Justice, in the first six month of 2015 inter-institutional working group was established and it continued to work also in the accounting period. At the same time representatives of the Bureau participated in the discussions on direction of the legal regulation development of lobbying in the meeting of Parliamentary Investigation Commission (Parliamentary Investigation Commission on the impact of corruption, lobbying, organized crime and smuggling on tax collection and investigation of economic and financial crimes, as well as assessment of the personal responsibility of the officials from the Ministry of Interior, Ministry of Justice, Ministry of Finance and other state institutions in compliance with public interest and the principles of good management) and Corruption prevention sub- commission of the Saeima. Thus, in the light of the foregoing, in May of 2016 in the meeting of State Secretaries the following draft legislations, developed by the Bureau, were announced: - Draft law "Amendments in State Administration Structure Law" (VSS-490), amending section of public participation by including the definition of lobbying, the obligation to register lobbying activities and lobbying prohibitions; - Draft law "Amendments in the Rules of Procedure of Saeima" (VSS-491), stating that, if the proposal of deputies results from communication with lobbyist, this fact must be recorded, published in the website and identified in the annotation of the proposal, as well as supplementing Parliamentary Code of Ethics in the Annex of law with the rules for communications with lobbyists. Executing what is determined in the Law on Corruption Prevention and Combating Bureau (amendments took effect on 5 April 2016) the Bureau in the first six month of 2016 has developed the following draft legislations (in May of 2016 they were announced in the meeting of State Secretaries):

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 4 - Draft Regulations "Regulations on Reporting of Results of the Corruption Prevention and Combating Bureau Performance to the Cabinet of Ministers and the Saeima" (VSS-488) , which provides the content for the information that has to be provided to the Cabinet of Ministers and the Saeima, informing them on performance of the Bureau in the previous calendar year; - Draft Regulations "Requirements and Procedure for Application of Candidates to the Post of the Corruption Prevention and Combating Bureau Director, as well as Procedure for Selection and Evaluation of the Candidates" (VSS-413) , which provides requirements and procedure for application of candidates to the post of Bureau director, as well as procedure for selection and evaluation of the candidates. During the first six month of 2016 the Bureau had prepared 42 resolutions about legislation projects developed by other institutions and announced in the meeting of State Secretaries with an attempt to extirpate legislation promoting corruption and conflict of interest in this legislation, reviewing 76 objections and 34 proposals, including: - Draft Regulations "Amendments in the Regulations of the Cabinet of April 7, 2009 No.300 "The Rules of Procedure of the Cabinet of Ministers"" (State Chancellery); - Draft Recommendations "Code of Ethics for Public Administration Employees" (State Chancellery); - Draft Regulations "Amendments in the Regulations of the Cabinet of 1 February 2011 No.109 "Procedure for Alienation of the Property of Public Figures"" (Ministry of Finance); - Draft Law "Law on European Political Parties and European Political Foundations" (Ministry of Justice); - Draft Regulations "Licensing Regulations for Railway Carriers" (Ministry of Transport); - Draft Regulations "Amendments in the Regulations of the Cabinet of January 6, 2004 No.21 "Regulations on Protection of the State Secrets, the Information Classified by the North Atlantic Treaty Organization, the European Union and Foreign Institutions"" (Ministry of Justice); - Draft Order "On the Authorization of the Acquisitions in Capital for the Limited Liability Company" Riga Eastern Clinical University Hospital" 9Ministry of Health). During the accounting period representatives of Bureau actively participated in the coordination meetings organised by other institutions, including: - In the Ministry of Finance on Draft Law "Public Procurement Law" (VSS-1231; prot.no.45 6.§). In order to reduce the risks of corruption in public procurement and devastation of financial resources of the institutions of public figures the Bureau paticipated in the harmonization process of new draft law, and expressed and maintained objections, eg., - on planned rights of customer not to apply procurement procedures provided in the law where the estimated value of the contract is less than contract price limits specified by the Cabinet of Ministers, and if it is concluded on audit services provided by sworn auditor;

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 5 - regarding contract price limit of which the Public Procurement Law is applied; - on counselling during preparing specifications, which may be provided by suppliers after customer's invitation, and transparency of these consultations; - on investigation of the deposit regulation complaints (applications) in the Procurement Monitoring Bureau; - on required additional construction works, services or supplies as an exception to the relevant amendments to the contract and the contract price by the potential increase in the maximum threshold, a.o. issues. - In the Ministry of Finance on Draft Law "Amendments in Credit Institutions Law" (VSS-230; prot.no.12 3.§). The Bureau participated in the preparation of draft law norms and annotations with the aim to develop a legal framework for natural persons - residents of the Republic of Latvia - for establishment of unified register of requests and payment accounts, and access to it will be provided not only to the registry holder, i.e., the State Revenue Service, but also to other institutions for performance of their statutory functions (including the Bureau).

During the accounting period representatives of Bureau provided participation in the range of work groups in relation to amendments in legislation, including: - Development of Draft Regulations of the Cabinet on basic requirements of internal control system for preventing corruption and conflict of interests in the institutions of public figures by the work group created by the Bureau; - Work group of the Ministry of Justice about amendments in the Law on Insolvency about state official status of the insolvency administrators, amendments and enforcement of the Law "On Prevention of Conflict of Interest in Activities of Public Officials" (hereinafter - Law on Conflict of Interest); - State Chancellery work group about amendments in the Law on Corruption Prevention and Combating Bureau (amendments entered into force on 5 April 2016); - Work group organized by the Saeima State Administration and Municipality Commission (hereinafter – SAMC) about the amendments in the Law on Conflict of Interest and Pre-Election Campaign Law; - Development of Draft Law "Whistleblower Protection" by work group organized by State Chancellery. During the accounting period representatives of Bureau actively participated in several meetings of Saeima commissions, including: - In the meeting of Parliamentary Investigation Commission of the Saeima (Parliamentary Investigation Commission on the impact of corruption, lobbying, organized crime and smuggling on tax collection and investigation of economic and financial crimes, as well as assessment of the personal responsibility of the officials from the Ministry of Interior, Ministry of Justice, Ministry of Finance and other state institutions in compliance with public interest and the principles of

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 6 good management) on jurisdiction of public officials' declarations veracity checks and direction of the legal regulation development of lobbying. - Working meetings organized by Legal Bureau of the Saeima on: - Draft Law "Amendments in Law of the Conflict of Interest"; - Draft Law "For Amendments in the Law on Corruption Prevention and Combating Bureau". - Meetings of Saeima State Administration and Municipality Commission on: - Draft Law "Amendments in Law of the Conflict of Interest"; - Draft Law "Amendments in Law on Confiscation of the Property of Public Figure"; - Draft Law "Law on Termination of Legal Relationship of Forced Shared Ownership in Privatized Apartment Buildings"; - Draft Law 'Amendments in Law "On Privatization of State and Local Government Residential Houses""; - Draft Law "Amendments in Pre-Election Campaign Law". - Meeting of Saeima Education, Culture and Science Commission on: - Draft Law "Amendments in Law on Institutions of Higher Education"; - Draft Law "Amendments in Law on Confiscation of the Property of Public Figure". - Meeting of Saeima Social and Employment Matters Commission on: - Draft Law "Amendment in the Law on the Service Pension of Corruption Prevention and Combating Bureau Officials". - Saeima Defence, Internal Affairs and Corruption Prevention Commission on: - Draft Law "Amendments in the Law on Corruption Prevention and Combating Bureau"; - Lobbying legislation; - Draft Law "Whistleblower Protection". - Saeima Public Expenditure and Audit Commission on the Report of State Audit Office "Are the declarations of public officials effective tool for ensuring the rule of law and transparency in the operation of public officials?" - Meeting of Saeima European Affairs Commission the Latvian position regarding the European Commission Proposal to the European Union Council Recommendations for Latvia. - Meeting of Saeima Mandate, Ethics and Applications Commission on: - in relation to extradition of Saeima deputy for administrative punishment; - Report of European Council Group of States against Corruption (GRECO). - Meetings of Saeima Legal Commission on Draft Law "Law on Administrative Offences Procedure".

1.2. International cooperation Accession to the Organisation of Economical Cooperation and Development (hereinafter – OECD) has been one of the most important economic and foreign policy priorities of Latvia for a long time. Timely and quality execution of the priority recommendations identified in the evaluation report for the second phase2, the OECD Combating Bribery in International Business Transactions Working Group (hereinafter - Working Group on Bribery) in April of 2016 was able to give a positive opinion, which was

2Ministry of Justice is the responsible institution in representation of the interests of Latvia in OECD Working Group on Bribery. In this area evaluation of Latvia is distributed in two stages - stage 1 (legislation) and stage 2 (implementation). Latvian evaluation report for stage 1 was approved on 6 June 2014, while evaluation report for stage 2 - on 14 October 2015. KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 7 one of the conditions for accession of Latvia in the organization. Accordingly, on 11 May 2016 OECD Council decided to invite Latvia to join the OECD. During the process of joining a very large contribution in execution of recommendations of the Working Group on Bribery was done by representatives of the Bureau, who took an active part in two meetings of the Working Group on Bribery in order to achieve positive evaluation for Latvia regarding implementation of anti-corruption measures, thus ensuring compliance with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (hereinafter - Anti-Bribery Convention). Anti-Bribery Convention is considered as the most efficient international anti- corruption tool. Latvian accession to the OECD Convention significantly improves both the Latvian statutory framework in respect of combating and prevention of international bribery, as well as the practical application of that legislation. After the ratification of the Treaty on 16 June 2016 regarding accession to the OECD the Cabinet of Ministers on 21 June 2016 approved the plan of tasks and actions by October of 2017 with regard to fulfilment of recommendations made for Latvia in combating bribery and money laundering. Representatives of the Bureau actively took part in the development of the plan by determining specific tasks and their deadlines. As well as in early 2016 the information was prepared for informative report on accession to the OECD made by the Ministry of Foreign Affairs. During the accounting period the Bureau continued implementation of Anti-Bribery Convention recommendations by training heads of Altum regional departments and members of the general meeting of the Latvian Association of Certified Auditors on bribery signs of national and foreign public officials. By executing one of the recommendations included in the evaluation report of stage two of the OECD Working Group on Bribery in relation to accounting, external audit and internal control in companies, the Bureau organized transfer of informative materials to the State Revenue Service for distribution in Customer Service Departments, as well as for sending to 1 265 taxpayers (legal entities). Informative booklet is developed in Latvian and English, in order to encourage entrepreneurs to assess the risks of corruption and implement measures for their prevention by elaborating ethical standards, developing internal controls and reporting mechanisms, as well as by educating and training of employees there is also provided information on applicable coercive means for legal entities, if the bribery is performed in interests of legal entity, on its behalf, or in result of improper supervision or control. In addition to above mentioned themes also the publication was prepared in the Internet portal delfi.lv in section "Bizness". During the accounting period the European Council Group of States against Corruption (GRECO) adopted IV evaluation phase compliance report about fulfilment of recommendations for the prevention of corruption in the courts, parliament and prosecutors office. In March of 2016 the commentaries regarding information mentioned in the compliance report were prepared and sent. As well as during the accounting period the representatives of the Bureau together with other responsible institutions have prepared comments and participated in bilateral negotiations with European Commission on fulfilment of European Union (EU) Council recommendations and on Report published by European Commission on Latvia. In the first six month of 2016 the implementation of the cooperation agreement with Estonian Ministry of Justice was ended in the project "Reduction of corruption: concentrating on the combating of corruption in the private sector" which was performed with partnering services of Estonia, Denmark and Spain. Representatives of the Bureau coordinated events of project implementation in Latvia, including participation of Latvian delegation (representatives from the Bureau, Internal Security Bureau, Economic Police, Prosecutor General Office) in the project final conference in Tallinn. Within framework of the project

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 8 also informative booklet "11 steps against corruption in business and in direction towards fair business environment" was prepared. During the accounting period the final report on implementation of project co-funded by European Anti-Fraud Office (OLAF) within the frameworks of the Hercule III program was prepared and sent. project was implemented from 2013 to 2014 with purpose to improve operative and analytic capacity of the Bureau. During first six month of 2016 were organized six foreign guest delegation visits in the Bureau (from Lithuania (2), Morocco, Ukraine, Uzbekistan, the Czech Republic) in order to present formation of anti-corruption policy, public information activities, control of public officials' activities and prevention of conflicts of interest, as well as investigation of corruptive criminal offenses.

1.3. Education and public information During the accounting period about the anti-corruption, prevention of conflict of interest, lobbying, internal control (in corruption prevention issues) public administration ethics issues 71 educating class was organised and held (during the first six month of 2015 – 61 educating class, number of participants – 1,891), in total covering 3,723 persons audience. Public figures in the institutions and those employed in capital entities, including state officials and employees, auditors, insolvency administrators, local government deputies participated in those educating classes. The Bureau organizes training not only for those who are employed by public figure institutions, but also actively participates in education of pupils and students. Number of the events held and number of participants during the accounting period accordingly to educating themes: 1) Prevention of conflict of interest and professional ethics of state officials – 31 event and 2,271 educated persons; 2) Corruption, its reasons and consequences, forms of expression, corruption and fraud risks – 5 events and 336 educated persons; 3) Corruption risks in public procurement procedures - 3 events and 191 educated person (2 of these events were organized along with Competition Council); 4) Internal control events of institutions for preventing corruption risks – 3 educating events and 231 educated person; 5) Corruption prevention in medicine (for medical students of RSU, year 1) – 18 educating events and 393 educated persons, incl. 173 foreign students; 6) International corruption, its signs, recognition, role of Latvian private law subjects in its prevention, the role of credit institutions and their participation in this process (JSC ABLV Bank) - 1 event and 38 educated persons.

Education events and number of participants is shown in Image 2.

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 9

Number of workshops Number of participants First six month of 2016 Image 2. Education events and number of participants

During the accounting period Bureau continued testing of the knowledge of public officials and employees of the public institutions commenced in the previous year about corruption and interest conflict prevention issues. Testing of the knowledge was commenced not only with the purpose to determine level of knowledge of the officials about the anti- corruption issues and identify weak sides of the knowledge, but also measure and analyse how the knowledge of the target audience changes during the years and determine priority audiences of state officials to be educated. Analysing the testing results Bureau concluded that in total knowledge of public officials about issues of the conflict of interest and anti-corruption can be evaluated as good as on average public officials have provided correct answers to 83.5% questions (in 2015 in the respective period the public officials tested provided correct answers to 81% questions). Only 3.6% of the public officials tested gave less than 60% of correct answers (in respective period of 2015 - 4.1%). Public officials had weaker knowledge as to issues about identifying of conflict of interest in various work situations. The new officials (service as a public official up to 1 year) on average responded correctly to 84% of questions, but officials with experience as public official for more than one year - to 83% of the questions. But the heads of public figures institutions and their deputies correctly answered on average to 64% of questions. Public officials had weaker knowledge as to issues about identifying of conflict of interest in various work situations. In the first six month of 2016, subject to priorities defined in the education plan 2016, seminars were held in local governments - for officials and employees of Daugavpils local government institutions and capital entities, public officials of Salaspils, Jurmala, Saulkrasti, Kandava, Rezekne, Jekabpils local governments and their capital entities, as well as seminar for executive directors of Latvian local governments. In total 746 public officials and employees employed by local governments were educated. During the accounting period, in collaboration with the Prison Administration, in Riga Central Prison 2 seminars "Corruption consequences: punishment inevitability and the consequences of freedom" were held, which educated 71 official of public person institutions and capital entities on corruption issued and their consequences. KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 10 During the accounting period Bureau provided participation by giving explanations to the seminar organised by Association of Executive Directors of Latvian Local Governments on tasks identified in Corruption Prevention and Combating Guidelines 2015-2020, as well as on most commonly identified violations of the Law on the Conflict of Interest and to educating workshop organised by the Insolvency administrators for insolvency administrators about the public official status and limitations, prohibitions and duties determined for the public officials in the Law on the Conflict of Interest. In April of 2016 the Bureau organized competition for young people in schools "Es savai skolai" (Me for my school) where it invited young people from schools to sent drawings, photos or texts with aim to promote fairness and ethical standards among young people. Drawings sent by students for competition after the end of the competition were placed in schools of the young people. During the accounting period the Bureau launched a social campaign "Ar korupciju nav nākotnes!" (The corruption has no future!), which will continue until the end of 2016. Within the framework of this campaign, the Bureau invites the public not to allow corruptive activities and corruptive decision-making in any area of life. During the campaign the posters were placed in various institutions, as well as outdoor advertising was placed in Riga and Latvian regions and intercity buses. The video "The corruption has no future!" can be seen in social networks Facebook.com, YouTube.com, as well as in the Website of the Bureau, public Lattelecom WiFi points and video screens of several public institutions customer service centers. Video clip was created in cooperation with students from Professional Education Competence Center of Ogre Technical School - future video operators. Continuing the successful commenced cooperation, in June 2016 the Director of the Bureau, J.Streļčenoks, and Headmistress of Professional Education Competence Centre of Ogre Technical School, I.Brante, signed a cooperation agreement, along with which it is intended to involve teachers and students of Ogre Technical School in creating audio-visual advertising materials. During the accounting period the Bureau organized Informative day for residents of Kurzeme region. This was already the sixth regional Informative day of the Bureau in framework of which the residents and media representatives had the opportunity to obtain information on corruption trends in recent years in the Kurzeme region, as well as the opportunity to obtain information about the negative consequences of corruption and how to report on violations. As well as during the accounting period the Bureau organized four press briefings where it: 1. Presented the results of the latest public opinion survey "Attitude towards the corruption in Latvia"; 2. informed of results of Bureau activities in 2015; 3. Informed on amendments in the Law on Corruption Prevention and Combating Bureau"; 4. Informed on compliance with funding provisions by the political parties in 2014; Informing public about corruption development tendencies and discovered corruption cases, as well as performed events for the prevention and combating of corruption, during first six month of 2016 the officials of the Bureau have prepared and published 553 announcements for mass media and more than 200 times provided answers to the questions of the representatives of media.

1.4. Control of the activities of Public Officials To secure operation of the public officials on behalf of the society, preventing impact of any personal or property related interests of any state official, their relatives or business partners to the operation of state officials, Bureau controls fulfilment of the "Law on Prevention of Conflict of Interest in Activities of Public Officials", as well as observing of additional limitations determined in other regulatory acts for state officials.

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 11 Performing statutory functions related to the controlling of the activities of public officials, during the first six month of 2016 Bureau completed 218 departmental inspections (during the first six month of 2015 – 224 inspections). Within the framework of performed inspections at the same time the Bureau evaluated also information specified by the public officials in their declarations in order to establish whether the public officials have observed limitations and prohibitions set in the "Law on Prevention of Conflict of Interest in Activities of Public Officials". By performing above mentioned inspections 519 public officials were inspected (in first six month of 2015 - 481), in total evaluating information specified in 822 declarations of public officials (in the first six month of 2015 - 662 declarations). In connection to the non-observing of limitations, prohibitions and duties indicated in the "Law on Prevention of Conflict of Interest in Activities of Public Officials" during the accounting period in 107 cases record keeping in administrative violation case was commenced. During the accounting period 118 decisions in administrative violations case have been adopted (during the first six month of 2015 – 104 decisions). Fine is imposed to 77 public officials (during the first six month of 2015 – 56 public officials) (with the total amount of EUR 6845), but in 39 cases information about the administrative violation was sufficient for the Bureau to establish that the violation is insignificant and adopt decision not to begin record keeping of the administrative violation and express only verbal reprimand. Adopted decisions and imposed fines are provided in Image 3. During the first six month of 2016 six persons were asked to repay losses incurred to the state in the total amount of EUR 2,350.41. On the basis of the decisions adopted by the Bureau, during the accounting period public officials have transferred EUR 6,995 to the state budget (in the first six month of 2015 - 6,590).

2012 2013 2014 2015 First six month of 2016 Number of decisions Money penalties Amount of penalties Image 3. Adopted decisions and fines imposed.

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 12 During the first six month of 2016 the Director of the Bureau reviewed 25 complaints on decisions adopted by the officials of the Bureau in administrative violations cases in relation to the non-observing of limitations and prohibitions indicated in the "Law on Prevention of Conflict of Interest in Activities of Public Officials". In all cases the Director of the Bureau did not change the decisions taken by the Control department of the activities of public officials. Fulfilling the duty indicated in the Article 31 of the "Law on Prevention of Conflict of Interest in Activities of Public Officials" to inform the public about public officials in relation to which decisions in administrative violation cases have been adopted, during the accounting period the website of Bureau published 43 descriptions about persons having administrative penalties in the area of conflict of interest. But information about minor violations is summarized and published in the website of the Bureau, in total 106 records are made.

2. Combating of corruption During the first six month of 2016 for the prosecutors’ offices for the beginning of criminal prosecution 12 criminal procedures have been commenced against 31 suspected person, as well as the decisions on commencement of procedure for application of compulsory measures against two legal entities were made (in the first six month of 2015 6 criminal procedures against 15 persons). The result achieved in the first six month of 2016, the number of criminal proceedings sent for the prosecutors' offices for beginning of criminal prosecution, is the best since 2010. Whereas, by investigating corruptive crimes during the accounting period the Bureau commenced 11 criminal procedures. Number of criminal procedures sent for beginning of prosecution and criminal procedures commenced in the Bureau is reflected on Image 4. During the first six months of 2016 the public officials of the Bureau reviewed applications of 103 persons (during the first six month of 2015 – applications of 74 persons). In accordance with gained operative information of 11 criminal procedures commenced during the accounting period there were commenced five procedures, two criminal procedures were separated from criminal procedures existing in the records, whereas, four criminal procedures were commenced in result of departmental inspections. At the same time 17 decisions on refusal to commence criminal procedure were taken. In total during the accounting period the officials of the Bureau commenced 128 departmental inspections and finished 92 departmental inspections. As of 30 June 2016, in the record keeping of the Investigation department there were 37 criminal cases.

Number of cases sent to the criminal prosecution Number of persons Criminal procedures commenced

Image 4. Number of files and people sent to criminal prosecution, as well as criminal procedures commenced.

During the accounting period the Bureau has commenced several criminal procedures such as: - In March of 2016 the bureau has commenced criminal procedure against employee of State Police on accepting a bribe offer in amount of EUR 10,000 EUR. - In May of 2016 the Bureau has commenced criminal procedure for allegedly occurring criminal offenses committed in public institution service (taking bribes). Within framework of criminal procedure the action of the official of the Riga municipal joint stock company "Riga Central Market" will be investigated. In this criminal procedure one person was identified as a suspect, and suitable custodial security means were applied to him. - Whereas, in June 2016 the Office by implementing priority set in the strategy regarding procurement control and by performing recommendations of international organization OECD on combating foreign bribery in cooperation with the Lithuanian Special Investigation Service (STT), through agreeing and coordination of mutual actions by implementing information gained over a long period of operational activity initiated two criminal procedures. One criminal procedure was commenced in Lithuania, where Lithuanian public official and Latvian businessman were involved. Latvian businessman gave a bribe to Director of Infrastructure Department of Klaipeda Port for procurement in the construction sector. The second criminal procedure was commenced in Latvia, where through a series of procedural actions, including more than 20 searches, computer equipment, telephones, money (several hundred thousand euros) were removed and several persons were

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 14 detained. Criminal procedure is initiated in connection with the procurement made by Traffic Department of Riga City Council in the construction field. Case involves one of the leading Latvian construction companies. For persons involved in criminal procedure a number of criminal offenses in public institutions service, including for abuse of office, service counterfeits, giving bribes and accepting bribes, are incriminated. Also during the accounting period the Bureau has sent 12 criminal cases to prosecutor’s offices for criminal prosecution, including: - The Bureau has sent materials of criminal case to the Prosecutor general office by asking initiating criminal prosecution against the judge of Riga Regional Court, on taking bribe, and against a businessman on giving a bribe. During the pre-trial investigation the Bureau found out that the businessman, whose companies were involved in various legal proceedings, in order to achieve court decision favourable for him repeatedly gave bribes to public official holding a responsible position – judge in the Riga Regional Court. Criminal procedure established that a public official took the bribes repeatedly, as well as embezzled the bribe in total for more than EUR 45,000. - In May 2016 the Bureau has sent to the Riga Vidzeme District Prosecutor's Office the materials of criminal procedure initiated in 2015 against the employees of the diagnostic radiology division of the State-owned Riga Eastern Clinical University Hospital Diagnostic Radiology Centre Hospital Latvian Oncology Centre and State-owned Riga Eastern Clinical University Hospital Diagnostic radiology centre hospital Gaiļezers for asking of illegal and receiving of illegal benefits. During pre-trial investigation made by the Bureau it was established that several employees of medicine by using their powers asked and received illegal benefits from the patients after previous agreement within the group of persons and provided magnetic resonance examinations bypassing the “first come, first served”. Evidences at the disposal of the Bureau suggests that in the period from October 2013 to April 2015, the medical staff, using their powers, systematically requested material value and accepted them from the patients for ensuring magnetic resonance imaging examinations, bypassing the specified queue, and in such a way the interests of other persons (patients) guaranteed in the article 111 of the Constitution - the right to receive timely state-funded health care services - were harmed. Investigator of the Bureau asked initiating criminal procedure against seven persons for 22 episodes of the crime in total. - In June 2016 the Bureau has sent to the Prosecutor of Especially Important Matter Investigation of the Prosecutor General Office the materials of criminal case initiated in 2015 by asking to initiate criminal prosecution against four public officials − officials from Finance and Economic Crimes Prosecutor's Office and Forensics division of the State Police. During the pre-trial investigation the Bureau found out that public officials using official position, carried out illegal activities with data of natural person in the form of unlawful collection of DNA samples and the their use from more than one person. - In June 2016 the Bureau has to the Prosecutor General Office the materials of criminal case by asking to initiate criminal prosecution against Head of the Board of State JSC “Latvijas Dzelzceļš” (hereinafter ̶ LDz) on acceptance of bribe in large amount - around EUR 500,000. During the pre-trial investigation the Bureau found out that public official accepted the bribe from private person in relation to procurement of subsidiary of LDz "LDz ritošā sastāva serviss". Investigator of the Bureau asks to prosecute the Head of the Board of LDz on acceptance of bribe in large amount (Criminal Law, section 320, part three), but the private person on giving a bribe to public official for taking decision in the interests of company (Criminal Law, section 320, part two).

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 15 Because during the investigation it was found out that giving a bribe possibly was done in the interests of legal entity within framework of this proceedings the process on application of compulsory means for legal entity was commenced. Simultaneously, we point out that in order to secure acquiring and strengthening of evidence in the criminal cases existing in the records of Bureau during the first six month of 2016 the Bureau had prepared nine requests for judicial assistance (by 8 requests of judicial assistance more than in the first six month of 2015), and 9 requests for judicial assistance received from foreign countries were fulfilled what is by 4 requests for judicial assistance received from foreign countries more than in first six month of 2015.

3. Control of the fulfilment of financing provisions of political parties and their associations Aim of the control of the financing provisions of political parties and their financing is to secure openness, legitimacy of the financial operations of the parties, as well as their compliance to the parliamentary democracy system. Performing functions stipulated in the legislation in the fields of controlling of the financing of political parties and election campaign agitation, during the accounting period the public officials of the Bureau have completed range of significant tasks. In the first half of 2016 the officials of the Bureau completed checking of the annual reports of parties about 2014 (inspected 21 annual report out of 64 annual reports submitted by the parties) and for results of inspections of reports of 2014 in accordance with requirements of Law on “Financing Political Organizations (Parties) the public was informed and above mentioned information was posted in Website of the Bureau3. In the first six month of 2016 there are received and published annual reports of parties for 2015, and inspection of procedure of their submission is commenced. As of 30 June 2016 10 parties of 67 have not submitted above mentioned reports (Association Residents, Made in Latvia (for which the proceeding is initiated in administrative violation cases); Party Our Land, Latvian movement Solidarity, People’s Control (with which ones the proceeding on failure to submit annual reports continues); A8 party, For Native Language!, Social Justice Party, Osipov’s party, For Good Latvia (for which the liquidation proceedings are commenced). As well as during the accounting period claim application was submitted in order to terminate operation of the political party Latvian movement Solidarity due to failure to submit the annual report. In accordance with competence the Bureau continued inspections of 2014 and inspections of applications and complaints received in 2016 related with potential violations of advertising and funding of parties. In result of completed inspections the violations were not established. In the first six month of 2016 the inspections of fairness of annual reports submitted by the parties for 2015 and usage of funding paid out from state budget in 2015 were commenced (annual reports of 12 parties were inspected). In total officials of the Bureau have commenced 34 administrative violation cases for parties and other natural persons (in first six month of 2015 – 31 administrative case) about breaches of Law on Financing of Political organisations (parties) and Pre-election Campaign Law. During the accounting period 11 decisions were made in administrative violation cases of which money penalty was applied in 7 cases in the amount of EUR 350 (in 7 cases decision about the penalty was applied to the parties), but in three cases the violation was admitted as insignificant and verbal warning was expressed, in 1 case the decision to

3http://www.knab.gov.lv/lv/finances/control/offences/article.php?id=511524 KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June" 16 terminate proceedings was taken, and in 1 case the protocol was prepared on non-performance of statutory requirements of officials and it was sent to the court.

Number of the decisions adopted and number of the applied money penalties are provided in Image 5.

Number of decisions Money penalties Image 5. Number of adopted decisions and applied money penalties

During the first six month of 2016 239 lists about donations and member fees received by the parties were published in the website of the Bureau that is by 25 mote lists than in first six month of 2015. During accounting period in result of inspections there was taken decision on (on party National UNITY association) paying of the unlawful financing in the amount of EUR 1,452.08 in the state budget about year 2014. Whereas, by performing inspections of donations, member fees and joining fees, the officials of the Bureau took 6 decisions (on parties From Heart to Latvia, Concordance, United for Latvia) on repayment of unlawfully received funding in 2014 into the state budget in amount of EUR 28,086.94. In the first six month of 2016 the inspections on legality of funding received by parties in 2015 and 2016 are continued. Funding of state budget paid out to six parties in first six month of 2016 (Latvian Regional Alliance, the National Association “All for Latvia!” - For Fatherland and Freedom / LNNK, From the Heart to Latvia, Party UNITY, Concordance, Union of Greens and Farmers) in total was in amount of EUR 306,198.83. During the accounting period the parties and their associations have repaid illegally received funding into the state budget in amount of EUR 48,664.08 and fines in amount of EUR 572.30.

Director of the Corruption Prevention and Combating Bureau J.Streļčenoks

29.07.2016 4 709 Vitenburgs, 67356165-306 [email protected]

KNAB_01082016_InfoZinojums.docx; Informative report "About activities of the Corruption Prevention and Combating Bureau from 1 January, 2016, up to 30 June"