February 26, 2019 / 10:26 AM / 7 months ago

UPDATE 2-Latvia broke EU law in removing central bank chief, court rules

(Adds Latvia, ECB comment)

LUXEMBOURG/RIGA, Feb 26 (Reuters) - Latvia broke European Union law by barring its central bank governor from office, Europe’s top court ruled on Tuesday, saying there was no evidence to prove corruption allegations against Ilmars Rimsevics, who is also an ECB policymaker.

Continued restrictions on Rimsevics mean he is for now unlikely to be able to fully resume his duties, however, including his role at the European Central Bank.

The European Court of Justice ruled that Latvia had failed to meet legal conditions to remove Rimsevics from office and said it had not produced the “slightest evidence” to prove corruption allegations against him.

Rimsevics was suspended as Latvian Central Bank Governor early last year on allegations of soliciting a bribe, challenging a key plank of central bank independence and leaving euro zone member Latvia without a vote at ECB policy meetings.

Latvian officials said they would respect the ruling but confirmed that Rimsevics, who has denied all wrongdoing, is unable to get his security clearance back and remains subject to travel restrictions that would affect his ability to do the job.

Rimsevics must ask prosecutors for permission to leave Latvia and must justify any travel request.

In a case without precedent for the ECB, Rimsevics was prevented for months after his detention in February 2018 from attending its policy meetings and even from appointing a deputy to represent Latvia in his place.

He and the ECB both took Latvia to court, arguing that removing a central bank chief without proving guilt in a case of serious misconduct violated institutional independence.

The ECB said on Tuesday that it took note of the court’s decision.

The ECJ said that in some cases it may be appropriate to suspend a central bank governor but that prosecutors must then supply ample evidence to support their accusations.

“It may be necessary to decide to suspend the governor concerned temporarily from office for the purposes of such an investigation,” the Court said.

“But such a suspension is only permissible if there are sufficient indications that the governor engaged in serious misconduct, and Latvia has provided no evidence to back its accusations of bribery,” the Court said.

Rimsevics, whose term of office ends later this year, has yet to face trial and no trial date has been set yet. In his absence, Deputy Governor Zoja Razmusa has been representing Latvia at ECB meetings. (Reporting by Michele Sinner and Gederts Gelzis Writing by Balazs Koranyi; Editing by Catherine Evans)

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