Why is the Media ignoring this clearly-evidenced, multi-billion-euro fraud that threatens to bankrupt a European Union country?

                               Parex Bank



New evidence has emerged that the EBRD purchase of Parex Bank shares from the Latvian government was a fraud, probably committed for the dual purpose of covering-up Oligarch crimes and defrauding the IMF, EU, and World Bank.

Here are quotes from the Parex Bank 2009 annual report:

“Among Parex banka’s top priorities in 2009 was concluding the deal with the European Bank for Reconstruction and Development about its involvement in the shareholder structure, signalling about the vitality and development potential of the institution.”

“In January and February 2009, the EBRD performed a complete due diligence of Parex banka”

“On 7 April 2009, the EBRD Board of Directors approved a financial package for Parex banka, including the acquisition of 25 percent plus 1 of ordinary shares of Parex banka for LVL 59.5 million (EUR 84.2 million) and a subordinated loan of EUR 22 million.”

“On 16 April 2009, the Share Purchase Agreement was signed providing that following the increase of equity capital the EBRD will purchase 57,506,825 ordinary shares comprising 25 percent and one share of Parex banka’s equity capital.  On 23 July 2009, the European Bank for Reconstruction and Development signed the subordinated loan agreement with Parex banka.”

“Finalising the deal, on 3 September 2009, 25 percent and one share of Parex banka were transferred from the Privatisation Agency to the European Bank for Reconstruction and Development.  In this initial transaction, the EBRD acquired 51,444,325 ordinary shares with voting rights.  As part of a future capital increase at Parex banka, the EBRD plans to purchase a further 6,062,500 shares, thus maintaining its stake of 25 percent and one share.”

“The signed agreement indicates not only the stabilisation of the Latvian financial system and gives a positive signal about the investment environment in Latvia, but also evaluates Parex banka’s future development potential and increases the Bank’s value.”

On 29 October 2009, the Latvian government put more capital into Parex Bank.  The EBRD did not increase its “investment” and therefore the EBRD ended 2009 with 22% rather than 25% of the shares.

In 2010, Parex Bank was split into a New Bank (Citadele Bank) and a Resolution Bank (Reverta).

The 2011 Youtube video titled “Latvia versus EBRD” informed the public that the EBRD refused to communicate with the Parex Bank whistleblower (John Christmas) when supposedly conducting “complete due diligence” on the 2009 purchase of Parex Bank shares and that the EBRD already knew that Parex Bank was worthless and criminal prior to purchasing the shares.  The purchase was apparently carried out not because of “vitality and development potential” as stated in the Parex annual report, but rather because of a secret, and therefore illegal, put option revealed in the leaked Nomura document.

The 2012 Youtube video titled “Latvian Financial Crisis – the multi-billion-euro Parex/EBRD/Ernst&Young fraud” repeated the same information and received many more views because it was professionally produced.  As of today it has over 119,000 views, making it one of the most popular videos ever about Latvia.

Finally, a journalist has begun to ask questions to Reverta and the EBRD about the crimes.  This journalist wrote two emails addressed to the whistleblower evidencing more frauds.

26 October 2012:  “I’ve heard from sources that it was normal for the Kargins and Krasovitskis to take a personal cut / kickback from the loans the bank made, is this something you heard about when you worked there?  According to the Reverta lawyers, K and K also destroyed much of the documents pertaining to loans before nationalization.”

The EBRD apparently did not conduct “complete due diligence” or else it would be aware that Parex had transferred a huge amount of money to cronies, booked the transactions as “loans,” and then destroyed the documents so that the “loans” would not have to be repaid.  Or else, the EBRD did conduct “complete due diligence” and therefore already knew this but anyway co-conspired with the Latvian government to cover up the crimes.

4 December 2012:  “The EBRD say they cant comment on the specifics of the transaction (taking a stake in Parex) but say they sometimes use put options.  They also say that the 22% figure you mention refers to the stake in Parex bank they took, not the profit.”

Since, the EBRD refuses to deny that they have a put option on the Parex shares, we can conclude that they are guilty of fraud.  And, even worse, the EBRD claims to have committed the same fraud multiple times with different deals.

Regarding the 22%, they are referring to this quote from the leaked Nomura document, “Compensation of EBRD, 22%, Resolution Bank 2014E BV 38,164, Compensation for nominal investment 57,569.”  Now we know that the 22% number refers to the EBRD’s percentage stake.  The other numbers appear to be amounts in Latvian lats:  38,164,000 and 57,569,000.  What those numbers mean is still unclear.  The term “compensation” suggests that there is a “put option,” as stated earlier in the same report, because otherwise there would be no reason why the EBRD would receive “compensation” from the Latvian government.

The EBRD can be prosecuted in many jurisdictions for its crime.  Most obviously, prosecution could take place in London or Latvia.  But also, all of the 61 countries that fund the EBRD could commence prosecution.  The secret put option is a material fraud on (1) the EBRD financial statements, (2) the Republic of Latvia financial statements, and (3) the Parex Bank financial statements.  The scope of the crime in Latvia is already huge, and according to the EBRD the same fraud has been committed in other deals as well, thus indicating an absolutely enormous criminal racket affecting millions of people in multiple countries.

Let’s hope law enforcement somewhere will take action.  The EBRD has lost its “plausible deniability” excuse by sending an email in which they confess that they know about their fraud.  They have not been covering their eyes and plugging their ears carefully enough.  The Latvian people deserve large compensation from the EBRD and the Parex auditors.