OREANDA-NEWS. August 03, 2010. Parex banka filed a suit in court against its former board members, Valerijs Kargins and Viktors Krasovickis, seeking to collect compensation for losses caused to the bank when they were in office, reported the press-centre of Parex Banka.

The bank has analysed loan and deposit agreements that were concluded between January 1, 1995, and December 5, 2008, between the bank and its two former board members, who were also the bank’s majority shareholders, as well as with other persons related them. The bank has identified a series of transactions which were concluded in violation of the bank’s interests. Terms applied to the bank were particularly disadvantageous and much different than those which would usually apply to agreements concluded by unrelated parties. Analysis of these transactions shows that during the stated period, the two former board members enriched themselves at the bank’s expense.

These conclusions are based on a legal and financial audit and a detailed and competent analysis of the circumstances which have prevailed. The audit and analysis was done at the bank’s request by financial and legal consultants from Latvia and abroad – the legal firm Herbert Smith LLP (London), the auditing company KPMG LLP (London), and the legal firm of Eversheds Bitans (Latvia).

It is of key importance that according to the information that is at the bank’s disposal, the stated agreements were concluded in a way which represented a conflict of interest for Kargins and Krasovickis while also violating a number of legal norms. Accordingly, the activities of the two former board members can be said to have involved serious violations of the duties of board members, as specified by law, thus leading to serious losses for the bank. The Commercial Law states that board members must be honest and careful in their management of the relevant enterprise. Board members are liable for losses caused to the company by their action or inaction. That is why the bank has the right to file suit against the former board members, demanding compensation from them for the losses that were caused.

As part of the lawsuit, the bank is also seeking compensation from Kargins and Krasovickis for losses related to violations of the Investment agreement that was concluded in November 2008.

The government took over the capital shares of Kargins and Krasovickis on December 5, 2008. At this time, 76.6% of shares in the Parex banka belong to the Latvian Privatisation Agency, while 19.7% belong to the European Bank for Reconstruction and Development.