22 May 2012
Latvia may not be a economic powerhouse, or a market of any importance to New Zealand, but last week it named New Zealand as a corrupt jurisdiction and removed it from its European Union corporate and banking white list. New Zealand shared the ignominy with Russia. Yet other seemingly less regulated states like India and Brazil apparently meet the corruption controls and anti money laundering requirements.
The drama involves an Auckland company – already removed from the New Zealand register- laundering $680m at a Riga bank. The irony is that Latvia features as one of seven EU countries where 80% of respondents say that corruption is a major problem; a status Latvia shares with Lithuania, Spain, Malta, Italy, Ireland, and Austria. Latvia seeks to position itself as a trustworthy Scandinavian state, although with New Zealand placed as the least corrupt public administration by Transparency International. Latvia in 61st place and with a marking of much less than half of New Zealand’s, it has some way to go.
The Economist reported last year that after several years of substantive improvements in fighting corruption, circumstances have slipped recently to levels present at the time Latvia joined the EU.
The real embarrassment for New Zealand arising from Latvia’s actions is that it should have been grouped with Russia as having a corrupted banking system.