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Phase 2 Report on Implementing the Oecd Anti-Bribery Convention in Latvia

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Phase 2 Report on Implementing the Oecd Anti-Bribery Convention in Latvia PHASE 2 REPORT ON IMPLEMENTING THE OECD ANTI -BRIBERY CONVENTION IN LATVIA October 2015 This Phase 2 Report on Latvia by the OECD Working Group on Bribery evaluates and makes recommendations on Latvia’s implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 2009 Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions. It was adopted by the Working Group on 14 October 2015. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................................. 6 A. INTRODUCTION ................................................................................................................................. 7 1. The On-Site Visit .................................................................................................................................. 7 2. General Observations............................................................................................................................ 7 (a) Political and Legal System ............................................................................................................. 7 (b) Economic Background ................................................................................................................... 8 3. Overview of Corruption Trends and Recent Measures......................................................................... 8 (a) Corruption Overview ..................................................................................................................... 8 (b) Implementation of the Convention and Legislative Developments ............................................. 10 (c) Cases Involving the Bribery of Foreign Public Officials ............................................................. 10 B. PREVENTION, DETECTION AND AWARENESS OF FOREIGN BRIBERY .............................. 11 1. General Efforts to Raise Awareness ................................................................................................... 11 (a) Overall Anti-Corruption Strategy ................................................................................................ 11 (b) Government Initiatives to Raise Awareness ................................................................................ 12 (c) Private Sector Initiatives to Raise Awareness .............................................................................. 13 2. Reporting and Whistleblowing ........................................................................................................... 14 (a) Duty to Report Crimes and Reporting Channels.......................................................................... 14 (b) Whistleblowing and Whistleblower Protection ........................................................................... 15 3. Officially Supported Export Credits ................................................................................................... 16 4. Official Development Assistance (ODA) ........................................................................................... 17 5. Tax Authorities ................................................................................................................................... 18 (a) Non-Deductibility of Bribes......................................................................................................... 18 (b) Detection of Bribe Payments ....................................................................................................... 18 (c) Post-Conviction Enforcement of Non-Deductibility of Bribes .................................................... 19 (d) Reporting Foreign Bribery ........................................................................................................... 20 (e) Awareness of Foreign Bribery and Training ................................................................................ 20 (f) Sharing of Information and Tax Secrecy ..................................................................................... 20 6. Accounting, Auditing, Corporate Compliance and Ethics Programmes ............................................ 21 (a) Awareness and Training............................................................................................................... 21 (b) Accounting Standards .................................................................................................................. 22 (c) Internal Controls, Supervisory Boards and Audit Committees .................................................... 22 (d) External Auditing ......................................................................................................................... 24 (e) Reporting Foreign Bribery and Sharing Information by External Auditors ................................ 25 (i) Reporting Foreign Bribery to Company Management .......................................................... 25 (ii) Reporting Foreign Bribery and Providing Information to Competent Authorities ............... 26 7. Prevention and Detection through Anti-Money Laundering Measures .............................................. 27 (a) Latvia’s Exposure to Corruption-Related Money Laundering ..................................................... 27 (b) Latvia’s Anti-Money Laundering Measures ................................................................................ 28 (i) Customer Due Diligence and Politically Exposed Persons ................................................... 28 (ii) Suspicious and Unusual Transaction Reporting .................................................................... 30 (iii) Ensuring Compliance by Regulated Entities ......................................................................... 31 C. INVESTIGATION, PROSECUTION AND SANCTIONING OF FOREIGN BRIBERY AND RELATED OFFENCES ................................................................................................................................ 33 1. Investigation and Prosecution of Foreign Bribery .............................................................................. 33 (a) Relevant Law Enforcement Authorities ....................................................................................... 33 (i) Corruption Prevention and Combating Bureau (KNAB) ...................................................... 33 (ii) Public Prosecution Office (PPO) ........................................................................................... 34 3 (iii) Co-operation and Co-ordination between KNAB and Other Investigative Agencies ........... 35 (iv) Training and Expertise within KNAB, the PPO, and the Judiciary ....................................... 35 (b) Operation and Independence of Relevant Authorities ................................................................. 37 (i) Corruption Combating and Prevention Bureau (KNAB) ...................................................... 37 (ii) Public Prosecution Office (PPO) ........................................................................................... 42 (iii) Judiciary ................................................................................................................................ 42 (c) Commencement and Conduct of Investigations and Prosecutions .............................................. 43 (i) Preliminary Investigations ..................................................................................................... 43 (ii) Formal Investigations ............................................................................................................ 43 (iii) Terminating and Suspending a Formal Investigation ............................................................ 44 (iv) Opening and Terminating a Prosecution ............................................................................... 45 (v) Actual Foreign Bribery Investigations .................................................................................. 45 (d) Settlements, Including Effective Regret, Extortion and Plea Agreements .................................. 46 (i) Extortion and Effective Regret .............................................................................................. 46 (ii) Releases from Liability .......................................................................................................... 47 (iii) Plea Agreements .................................................................................................................... 47 (e) Limitation Periods and Delays in Proceedings ............................................................................ 48 (f) Mutual Legal Assistance (MLA) and Extradition ........................................................................ 48 (i) Central Authorities ................................................................................................................ 48 (ii) Mutual Legal Assistance ....................................................................................................... 49 (iii) Extradition ............................................................................................................................. 52 (iv) Article 5 and International
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