Cyprus Mail

Latvia broke EU law in removing central bank chief

The European Court of Justice

LUXEMBOURG, Feb 26 (Reuters) – Latvia broke European Union law by barring its central bank governor, who is also a European Central Bank policymaker, from office, the European Court of Justice ruled on Tuesday in a widely expected decision.

The Court ruled that Latvia has not produced the “slightest evidence” of corruption by Ilmars Rimsevics, who was suspended as governor early last year. That also left Latvia without a vote at ECB policy meetings and challenged a key plank of central bank independence.

“It may be necessary to decide to suspend the governor concerned temporarily from office for the purposes of such an investigation,” the Court said.

“But such a suspension is only permissible if there are sufficient indications that the governor engaged in serious misconduct, and Latvia has provided no evidence to back its accusations of bribery,” the Court said.

The court’s decision comes after Advocate General Juliane Kokott argued in December that Latvia had failed to provide evidence of corruption — which Rimsevics denies — and that suspending him from office during the investigation amounted to his removal.

In a case without precedent for the ECB, Rimsevics was detained last February and was even prevented for months from appointing a deputy to represent Latvia in ECB policy meetings.

Rimsevics and the ECB both took Latvia to court, arguing that removing a central bank chief without proving guilt in a case of serious misconduct violated central bank independence.

While the ruling is a victory for Rimsevics, he is unlikely to resume his office. Latvian authorities have revoked his security clearance and barred him from leaving the country, preconditions for work.

Rimsevics, whose term of office ends later this year, has yet to face trial and no trial date has been set yet. During his absence, Deputy Governor Zoja Razmusa is representing Latvia at ECB meetings.

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