MoJ Bordāns' favorite court – the Turbocourt of Economic Affairs

© Oksana Džadana/ F64

One court is more dear to the Minister of Justice Jānis Bordāns than all others. So dear that all the public relations forces at the disposal of the Ministry have been mobilized to praise this court. Judges are filmed in amateur theater-worthy sketches about their dreams, hobbies and other non-judicial trivia. And press releases are made for every - even the most mundane routine work. The Minister's favorite court is the Court of Economic Affairs!

In preparation for the next Saeima elections, the big "work we have done" card will be put on it, and therefore it is constantly being talked about, even though it has only been working for four months and no mountains can be moved in such a short time. Such attention and empathy on the part of the ministry have caused some muttering in other courts, as no publicity campaigns are being set up for their work. Even though their work involves incomparably more serious crimes than the financial spats of foreign entrepreneurs or nationalizing money from third-country nationals on the orders from the Financial Intelligence Unit. Also out of all the court websites, the “News” section has been created only for the Court of Economic Affairs. It is reported there that “Judges of the Court of Economic Affairs improve their knowledge”, that “Minister of Justice Jānis Bordāns met with judges of the Court of Economic Affairs”, that “In the first month of operation, the Court of Economic Affairs received 39 cases”. Any other court could distribute press releases on events of major importance to society. On convicted murderers and rapists. On the reduction of accumulated cases. On restored justice and new case law findings. But here - nothing.

Embassy order

Here it is appropriate to recall why such a Court of Economic Affairs was established at all. This was requested by the Foreign Investors' Council FICIL, which mainly represents US business interests in Latvia. “Investors ordered the creation of a Turbocourt of Economic Affairs”, and the government quickly organized it, completely ignoring the fact that there was no support in the Council of Justice and the Supreme Court for such initiative. The interests of American business were more important than the logic of the work of the courts. FICIL argued that the need for a special court was due to the fact that "around 2 billion euros have been frozen in economic disputes and this money must be returned to the economy as soon as possible". In addition, foreigners were particularly interested in the category of cases related to public procurement, i.e., access to state and municipal money.

The Court of Economic Affairs has now been established, and with its exaggerated publicity, Minister Jānis Bordāns is in a hurry to announce the accolades of the work to the US Embassy and the rest of society. A "specialized court for the prompt, high-quality and efficient handling of complex commercial disputes, economic and financial crimes, and corruption cases" has been set up.

Speed is the most important

Thus, on the one hand, this court resolves business conflicts in the fights for public procurement and, on the other hand, implements the practice of seizing money of third-country nationals established after the overhaul of the financial sector, where the original customer is most often the Financial Intelligence Unit. And in both cases, speed is the most important goal. It is not for nothing that FIU Chair Ilze Znotiņa taught at the seminar organized last year for prosecutors, judges and representatives of law enforcement authorities not to call witnesses for defense and not to order accounting examinations in cases initiated by FIU. Whether the judges respect these instructions can only be guessed. It is too early to talk about a consistent and predictable case law of the Court of Economic Affairs. The Court notices contain information on three specific criminal proceedings. In two, the money was confiscated: “The Court, having decided to confiscate EUR 1,374,742 from a capital company registered in Latvia, gained confidence that the money was most likely to have a criminal rather than a legal origin. At the same time, the representatives of the person related to the property were unable to explain the legal origin of the property to the court in a credible manner. Similarly, in a case in which a court decided to confiscate EUR 129,940, the foreign national could not credibly substantiate the origin and use of the funds."

Belief instead of evidence

It should be clarified that the presumption of innocence regarding money laundering and supporting terrorism has been canceled in Latvia, and neither the FIU, nor the police, nor the courts need evidence to confiscate money. Believing or not believing in the owner of the money is enough. Usually, the owner is not believed and money is taken away, thus significantly supplementing the Latvian state budget. Therefore, in the third criminal case reported by the Court of Economic Affairs, the result seems quite unbelievable - the money was not nationalized but returned to the owner. Here is a quote from the court's latest statement:

"In one of the most extensive cases to date, the Court of Economic Affairs ruled in favor of the person related to the property, terminating the proceedings for the proceeds of crime in the amount of EUR 2,547,279.39 and USD 45,513.63. The person conducting the proceedings had initiated the proceedings of criminally obtained property and referred the proceedings to the Court for a decision, considering that the person related to the seized property was a shell company that did not carry out any real economic activity. In examining the evidence submitted, the Court gave greater credibility to the explanations of the person related to the property to the contrary, as well as did not find a criminal offense to which the origin of the seized property could be related."

Deficiencies in a document are not a crime

The reasoning of the court decision is quite interesting. This reveals the negligence with which the police have dealt with the case. Explanations and evidence of economic activity of the property owner in question were received by the State Police already at the end of 2018, but the person conducting the proceedings has not checked the information provided by the property owner for two and a half years and has not sent legal aid requests abroad. He has done nothing at all. Based on such old and incomplete information, the court decided to release the money. Another conclusion in this particular process is likely to be useful to many other third-country nationals currently struggling to recover their money:

"The Court has recognized that the mere drawing up of transaction documents (contracts, invoices, bills of lading, etc.) and sending the payment do not yet prove that the transaction was carried out in accordance with its economic nature, since fictitious transactions are also possible under its guise.

On the other hand, certain deficiencies in the transaction documents are not in themselves a reason to consider the transaction to be fictitious."

In the current practice, the inability of foreigners to provide the documents requested by the Latvian authorities for even ten-year-old transactions or the poor quality of documents has served as a basis for the nationalization of money. The Court of Economic Affairs has not upheld such an approach, at least in the present case.

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