TM indicates that intensive work is currently underway to finalize the draft law and eliminate previously identified problematic issues. Currently, it is planned that work on the draft law could be completed by January next year.
The chairman of the legal commission Andrejs Yudins (JV) emphasized that the commission will return to examining this issue at the beginning of next year.
It has already been announced that the draft law will be considered in the Saeima in three readings without urgency. The Ministry of Finance, the Ministry of Economy and the Ministry of the Interior advocated for the amendments to be reviewed as a matter of urgency. However, the Legal Commission of the Saeima agreed that, due to objections, the changes will not be considered as a matter of urgency.
The amendments developed by the TM previously provided for a manager authorized by the government to entrust the management of capital shares of companies arrested in criminal proceedings.
In mid-November, an agreement was reached on the transformation of the institute for the management of seized capital shares and shares into a monitoring institute in accordance with the proposal of the Latvian Board of Sworn Advocates (LZAP), the scope and procedure of monitoring being determined in a separate law.
It is planned that the state will delegate the manager’s duties to the public asset manager “Possessor”. The legal regulation of the supervision of seized capital is included in the amendments to the Law on Criminal Procedure and the Law on Enforcement of Confiscation of Criminally Acquired Property.
Work on the amendments began at the beginning of 2022, when the government considered in a closed session the report on the management and evaluation of the property seized in the case of former Ventspils mayor Aivars Lembergs (“For Latvia and Ventspils”). At that time, the police had started criminal proceedings for the conduct of Rudolf Meroni in managing Lemberg’s property.
However, over the course of several years, the Ministry of Justice (MoJ) failed to achieve inter-institutional agreement on the developed regulatory act so that it could be reviewed by the Cabinet of Ministers and forwarded to the Saeima in the usual manner. Therefore, TM has invited Saeima Legal Commissions to forward the amendments as their proposal.
TM explains that the amendments are necessary to eliminate loopholes in the laws related to the seizure of capital, shares or shares. Currently, the law allows the initiator of the process, imposing a seizure on capital shares, to demand that the company or cooperative transfer all funds to the specified account. It also prohibits the alienation or encumbrance of the seized equity.
However, in the absence of a way to manage the seized capital shares, which can lead to a decrease or loss of their value, explains TM. In the future, this may make it difficult to recover procedural costs and compensation for damage, return of criminally obtained property to the owner, confiscation of criminally obtained property, and confiscation of property as an additional penalty.
Therefore, it is proposed to introduce a new article in the Criminal Procedure Law, which will determine that the seized capital shares, shares or shares will be transferred to management in order to monitor them and preserve their value.
The new article provides that the initiator of the process, imposing the seizure of capital shares, can transfer its supervision to the manager appointed by the Cabinet of Ministers. In the pre-trial process, this decision would be approved by the investigating judge.
It is intended to establish that the manager of the seized capital shares must inform the initiator of the process about the risk that the shares could lose their value. On the other hand, the initiator of the process, upon receiving such information, could, with the consent of the owner or legal possessor of the seized capital shares, make a decision on the sale of capital shares in accordance with the procedures established by the Cabinet of Ministers.
The Cabinet of Ministers will also have to determine the procedure for managing seized capital shares and the procedure for calculating and covering management expenses, as well as the extent of the manager’s responsibility.
The amendments are also intended to determine the cases when capital shares are not transferred to management, in order to avoid situations where management costs would exceed the value of seized capital shares.
It is proposed to stipulate that capital shares are not transferred for management if the company was created or used for criminal purposes and does not carry out real economic activity. This point would apply where the company is set up, for example, to launder the proceeds of crime. The criteria are cumulative, that is, the company must be both related to criminal activity and not perform real economic activity.
What key changes are proposed in the new amendments to capital management laws regarding seized assets?
Interview between Time.news Editor and Legal Expert on New Amendments to Capital Management Laws
Editor: Welcome to Time.news! Today, we have the pleasure of speaking with Dr. Kristaps Valters, a leading expert in legal reform and asset management. Dr. Valters, thank you for joining us today.
Dr. Valters: Thank you for having me! I’m excited to discuss these crucial amendments.
Editor: There’s been significant talk about the amendments to the laws related to seized capital shares and their management. Can you give us a brief overview of why these changes are so vital?
Dr. Valters: Absolutely. These amendments are focused on addressing persistent loopholes that have hampered the effective management of seized assets. The existing legal framework allows for the imposition of seizures on capital without a clear plan for their management, often risking a decrease in their value. This not only affects recoveries but can also complicate the return of assets to rightful owners.
Editor: That sounds like a complex challenge. The government, particularly the Ministry of Justice, has been working on this since early 2022. Why has it taken so long to reach this point?
Dr. Valters: The delays largely stemmed from a lack of inter-institutional agreement. Legal reforms like these require consensus among multiple stakeholders, and differing views can complicate the path to finalization. It’s also important to ensure that any changes proposed are viable and align with broader legal principles.
Editor: And now it appears the draft law is expected to be finalized by January next year. What does this timeline signify for the ongoing process?
Dr. Valters: The January deadline is optimistic but necessary. It signals a commitment to improving the legal landscape regarding asset management and reflects a push for accountability and efficiency. The sooner we resolve these issues, the better prepared we will be to manage seized assets responsibly.
Editor: The proposal involves transforming how the state manages seized capital shares. Can you explain the role the ‘Possessor’ will play in this new structure?
Dr. Valters: Certainly. The ‘Possessor’ is poised to take on the responsibilities of managing seized shares, acting as a public asset manager. This shift is crucial as it centralizes management under a designated body, which should ideally enhance oversight and maintain the value of these assets. Importantly, this approach allows for better risk management and strategic decisions that can affect the financial health of the seized assets.
Editor: You mentioned risk management—how will the new regulations ensure that the value of seized assets is preserved?
Dr. Valters: The new amendments propose that the manager of the seized assets must actively inform the initiator of the potential risks that could lead to a decline in value. This proactive communication is essential, as it keeps all parties involved aware of the current state of the assets and enables timely decisions to mitigate any losses.
Editor: The legal commission has decided to review this draft law without urgency, despite some ministries pushing for expedited consideration. What implications does this have for the legislative process?
Dr. Valters: This decision reflects a cautious approach by the legal commission, prioritizing thorough examination over speed. While this might slow down the process, it is critical for ensuring that all objections and concerns are adequately addressed before moving forward. It’s better to take the time to prepare a solid regulatory framework than to rush and risk creating further issues down the line.
Editor: what can we expect in the coming months as this draft law progresses through the legislative stages?
Dr. Valters: We can expect increased discussions and possibly amendments as stakeholders provide feedback. The legal commission’s return to this issue at the beginning of next year will be pivotal. Once the draft is scrutinized and finalized, it will serve as a benchmark for how seized assets are managed moving forward, fostering greater transparency and efficiency in the system.
Editor: Thank you, Dr. Valters, for your insights today. It’s clear these amendments could bring significant changes to asset management in the context of criminal proceedings. We look forward to seeing how this develops in 2024!
Dr. Valters: Thank you for having me! I’m looking forward to it as well.