MP Ļubova Švecova urges KNAB to evaluate the coalition's political market

Member of the Saeima Ļubova Švecova answers the questions of Neatkarīgā.

This week, you submitted an application to the Corruption Prevention and Combating Bureau of Latvia (KNAB) for possible corruption in the work of the government coalition.

Yes, on November 10, I addressed the KNAB with an application to assess possible corruption and trading in influence in the government coalition. On November 8, the TV3 program Nekā Personīga showed a story about the proposals submitted by several Saeima deputies to increase the excise tax on heated tobacco by approximately 190 percent over the next three years. During the program, the creators interviewed the Saeima deputy Ilze Indriksone, who admitted that the real creator and promoter of the proposal is the Advisor to the Prime Minister Imants Parādnieks. In the case of this proposal, it was clear that Members did not understand the proposal they had signed, but both they and Parādnieks tried to hide where it came from, even though it was evident from the presentation shown by Japan Tobacco. As you know, not long ago (September - October 2020) tobacco manufacturer Japan Tobacco International, through its salaried consultant or lobbyist Armands Gūtmanis, organized special meetings with the Prime Minister's Adviser I. Parādnieks and several Saeima Budget and Finance (Taxation) committee members. Analyzing the overall legislative package that comes with the budget amendment and relates to the increase of excise duty, I examined these materials and based on my conclusions prepared my application to the KNAB. I compared the material prepared recently (September - October 2020) by the tobacco product manufacturer Japan Tobacco International with the proposals of Saeima deputies I. Indriksone, E. Zālīte-Grosa, I. Dūrītis, E. Teirumnieks, A. Skride un I. Ikstena for the draft law Amendments to the Law on Excise Duties and the draft law On the State Budget for 2021 and concluded that they are practically identical. Therefore, I have reasonable suspicions, which I also set out in my submission to the KNAB, about possible corruption or trading in political influence in the context of the proposals made by the Members already mentioned. As I understand it, the Ministry of Finance was also very critical of such a sharp tax increase, but coalition politicians did not take it into account.

In my opinion, the Cabinet of Ministers and the ruling politicians supported this proposal, because it was part of a common agreement. Prior to that, proposals of New Conservative Party (Latvian: Jaunā konservatīvā partija, JKP) deputy Eglītis regarding a significant increase in excise tax on gambling were submitted. In order not to increase the excise tax on gambling, it was agreed between the two government parties that the excise tax only on heated tobacco would be sharply increased.

Therefore, I call on the KNAB to assess whether the actions of I. Parādnieks and the representatives of Japan Tobacco International could include criminally punishable actions. Of course, it is worth analyzing this in the context of the JKP's actions, as the JKP also supported a radical increase in excise duty on heating tobacco.

Do you think there was a political market between the government parties? If you support our business interests…

…Yes, then we will withdraw our proposal, which infringes on your party's business interests. That is why I expressed my suspicions in the application to KNAB.

But maybe it can be interpreted as simple lobbying?

In practice, this type of lobbying has a rather bitter aftertaste. First of all, it should be said that in essence lobby organizations or lobbyists are also the Society for Transparency Delna, the Latvian Medical Association, farmers' organizations, patients' organizations, hunters' and fishermen's associations, the Employers' Confederation of Latvia, the Latvian Chamber of Commerce and Industry, etc. Such non-governmental organizations in Latvia are given the widest opportunities to participate in both the law- and decision-making process. The second thing is professional lobbying, that is, when it is a paid job or service performed by individuals or companies. In addition, I have encountered cases where NGOs also involve professional lobbyists.

I would like to say that it would be more correct to use the term “representation of interests” in Latvian, which is more precise and accurate, and which does not have a negative social stratification. Thus, lobbying or interest representation is part of any normal democratic decision-making process. Terminologically, the form of "representation of interests" would probably be more correct.

In my opinion, the most important question for politicians is to know whether the decision is made in favor of an interest group or whether the interests of the whole society are taken into account and whether the views of stakeholders in other institutions are taken into account.

Proposals for the second reading in the budget process are a way to bring about self-interest motivated changes in the law without proper analysis and discussion, because there is only one reading left. Discussions and decisions were made in a closed coalition meeting, which the general public only learned about the next day. This practice is the reason for the big gap and mistrust between the state and society. That needs to change, and that practice needs to end. The government declares on paper that it will work on tax reform, does so for almost a year and then makes a radical, inconsistent decision within a week. For comparison, the excise duty on alcohol was reduced in the spring to be lower than in Estonia, now we are ready to increase it on tobacco almost half as much as in Lithuania and Estonia.

What, in your opinion, is more dangerous, that the interests of a particular business group are being realized, or that what is happening inside the coalition is the so-called political market, namely the mutual exchange of support for business interests, which practically excludes any discussions?

I think that the political market that takes place within the coalition is much more dangerous for the whole society, because it causes a loss of credibility for politicians, the government and the entire political system of the country.

I am in favor of involving entrepreneurs in decision-making, but it must be done in a transparent, fair way, giving everyone equal opportunities and listening to rational arguments. This case only shows that research, conferences, letters and discussions do not matter, it is important to find the right person to take care of everything. Just like in the 1990s... The worst thing is that the above-mentioned proposal to increase the excise tax will not only not have the planned fiscal effect or additional contribution to the state budget - money needed for the care of oncology patients, but will make a smaller contribution than the proposals offered by opposition MPs Dana Reizniece-Ozola, Viktors Valainis and Vjačeslavs Dombrovskis. These are completely rational arguments about the "presence" of an ideology or value.