Businesses are faced with a high risk of corruption when dealing with the judiciary. The institution suffers from inefficiency, politicization, and corruption (ICS 2017). About two out of five companies perceive the independence of Latvia's courts as fairly bad (JS 2017). Nearly half of Latvians perceive bribery and abuse of power as common in the judiciary, but no respondents reported paying a bribe in the court system in the preceding twelve months (EB 2017). Companies report that bribes in return for favorable judgments are perceived as fairly common (GCR 2015-2016). Companies also indicate that the efficiency of the legal framework for settling disputes and challenging regulations is poor (GCR 2017-2018). Enforcing a contract in Latvia takes less time than the average among OECD high-income countries (DB 2018). Latvia is a party to the International Centre for Settlement of Investment Disputes (ICSID), the New York Convention 1958 (UNCITRAL), and the World Bank's Multilateral Investment Guarantee Agency (MIGA).

In a survey, judges in Latvia expressed significantly more concern than their European peers about bribery in the judiciary and threats of disciplinary action based on the way they adjudicate cases (ENCJ 2017). Latvia has also been criticized for delays in the prosecution of complex criminal cases (NiT 2017). This applies in particular to high-level corruption, where only a few cases have been resolved; convictions in corruption cases have generally been reached in cases involving mid-level to low-level officials and transactions of a modest amount (EUACR 2014).

Companies interacting with the Latvian police do not face high corruption risks. Nonetheless, businesses perceive the police forces to be fairly unreliable in protecting them from crime and holding up the rule of law (GCR 2017-2018). More than three out of five Latvians perceive that abuse of power and bribery is common among the police and customs agents (EB 2017). Tolerance for bribery among highway police has been decreasing due to regular public exposure of bribery attempts (NiT 2017). Civilian authorities exercise effective control over security forces, and effective mechanisms to investigate police abuse and corruption are in place (HRR 2017).

The public services sector may carry some moderate corruption risks for businesses. Three out of five companies believe that bribery and the use of connections are the easiest ways to obtain certain public services (FEB 2017), which is an improvement over 2014, when nearly three-quarters of companies agreed with that statement. About one in five businesses in Latvia perceive nepotism as a problem (FEB 2017). Three out of ten Latvians believe it is sometimes or always acceptable to give a gift in order to obtain something from a public service (EB 2017). On a more positive note, petty corruption has been decreasing due to lower tolerance levels among the public (NiT 2017).

Companies believe the burden of government regulations represents a competitive disadvantage, and inefficient government bureaucracy is a problematic factor for doing business (GCR 2017-2018). As a member of the EU, Latvia's regulatory system complies with European standards and norms (ICS 2017). Latvia's government generally acts in a predictable manner, but the legislative environment has been inconsistent and the policymaking process is described by the business community as opaque (SGI 2017, GCR 2017-2018). The cost and the number of procedures required to start a business in Latvia are lower than the regional average (DB 2018).

The head of Latvia's central bank, Ilmars Rimsevics, has been accused of demanding a bribe of over EUR 100,000 from Latvia's third-largest bank ABLV, which is being investigated in a separate inquiry focused on money-laundering (The Guardian, Feb. 2018). Mr. Rimsevics has denied the allegations and has stayed in his post as of the time of review (Reuters, Mar. 2018).

There is a moderate risk of corruption when dealing with Latvia's land administration. Companies express insufficient confidence in the protection of property rights in Latvia (GCR 2017-2018). Three out of five Latvians indicate that passive bribery is common among public officials issuing construction permits (EB 2017). Five percent of Latvian businesses indicate they were asked or expected to give a bribe or a gift when obtaining a building permit (FEB 2017). Foreign nationals may buy real estate in Latvia with some restrictions on agricultural land (ICS 2017). There are no significant problems with land titles in Latvia (ICS 2017). Expropriations are extremely rare and may only happen with due process and proper compensation (ICS 2017).

Registering property in Latvia takes significantly less time compared to averages in other OECD high-income countries, contrarily, dealing with construction permits in Latvia takes significantly longer (DB 2018).

Companies face a moderate risk of corruption when dealing with the Latvian tax administration. Businesses identify tax rates and tax regulations to be among the most problematic factors for doing business in the country (GCR 2017-2018). About two out of five businesses in Latvia perceive tax fraud or non-payment of VAT to be widespread in the country (FEB 2017). About a third of Latvians believe that bribery and abuse of power are widespread among tax officials, but virtually none report having paid a bribe to the tax authorities in the preceding twelve months (EB 2017). A lack of legal certainty in court decisions and tax policy is undermining the investment climate and stalling investment in Latvia (SGI 2017). Paying taxes is slightly more time-consuming on average compared to other OECD countries (DB 2018).

Latvia's State Revenue Service was at the center of a corruption case in 2016. A number of officials engaged in a large scheme of real estate machinations and income declaration fraud, leading to a number of investigations and a number of people being fired or posted in other positions (DELFI TV, Apr. 2016). The head of the State Revenue Service, Ināra Pētersone resigned in May 2016 as a consequence of the investigations (NiT 2017).

Latvia's customs administration carries a moderate to low corruption risk for business. Bribes and irregular payments to facilitate customs procedures are fairly rare (GETR 2016). More than three out of five Latvians perceives that abuse of power and bribery is common among the police and customs agents (EB 2017). Burdensome customs procedures are a problematic factor affecting trade in Latvia (GETR 2016). Companies are moderately satisfied with the efficiency and time predictability of the clearance process (GETR 2016).

The costs and time required to comply with border procedures in Latvia are generally significantly lower than the average among OECD high-income countries (DB 2018).

Latvia's public procurement sector carries a moderately high risk of corruption. Foreign investors perceive a lack of fairness and transparency in procurement procedures in Latvia; bidding requirements are sometimes written in conjunction with potential contractors in a way that practically excludes everybody but the "preferred" contractors (ICS 2017). Companies perceive that diversion of public funds and favoritism in the decision of government officials is common (GCR 2017-2018). Bribes and irregular payments in the process of awarding public contracts and licenses are also perceived to be common (GCR 2015-2016). More than a third of Latvian companies believe that corruption has prevented them from winning a public tender (FEB 2017). Risk factors commonly identified by companies include unclear evaluation criteria, specification tailor-made for particular companies, collusive bidding, and conflicts of interest in the evaluation of bids (FEB 2017). A fairly large number of tenders in Latvia only receive a single bid and/or are advertised for only a short period of time (Opentender 2017). The thresholds at which public procurement processes become mandatory are LVL 3000 for goods, LVL 10000 for works, LVL 3000 for services (EUROPAM 2017). The government has implemented a set of measures to control corruption in the procurement sector, including the compulsory online publication of small contracts and the use of centralized procurement for a range of services (OECD 2015a).

A prominent public procurement case that came to light in 2015, involves Uģis Magonis, president of state-owned railway operator Latvijas Dzelzceğť. Magonis allegedly accepted a bribe of EUR 500,000 from Estonian entrepreneur Oleg Osinovksy to grant a contract to supply several used trains (NiT 2017). Formal charges against Magonis were filed in July 2016 (NiT 2017). Magonis has pleaded not guilty and his trial was ongoing as of the time of review (LSM.LV, Mar. 2018). Companies are recommended to use a specialized due diligence public procurement tool to mitigate corruption risks related to public procurement in Latvia.

The Criminal Law of Latvia criminalizes active and passive bribery, extortion, attempted corruption, money laundering and bribery of foreign officials. The government, however, has failed to effectively implement anti-corruption laws (HRR 2017. The Law on Prevention of Conflict of Interest in Activities of Public Officials strictly regulates the employment of public officials and contains compatibility provisions, which are among the strictest in Europe (EUROPAM 2016). The law also expands the scope of the term 'state official' to include the leadership of state-controlled enterprises, board members and company councils of businesses having government capital over 50% (ICS 2017). Gifts are strictly regulated, and only diplomatic and official gifts are permitted when a public official is performing his/her official duties. The Political Parties Funding Law seeks to limit private sector interference in political party activities. The Law on the Prevention of Money Laundering and of Terrorist Financing (unofficial translation) is another legislation related to combating corruption. The Public Procurement Law regulates procurement and provides for the obligatory use of centralized procurement, the publishing of small procurements and administrative sanctions for the violation of procedures (EUACR 2014). After the amendment of the Code of Administrative Violations, officials can be sanctioned for procurement violations that do not amount to criminal offenses (OECD 2015a). Latvia's cabinet approved a draft law on whistleblowing protection in March 2017, but it has yet to be voted on in Latvia's parliament (LSM, Mar. 2017).

The appointment of a new director of KNAB, Latvia's national anti-corruption agency, has led to increased prosecution of corruption offenses, including a number of high-profile cases (NiT 2017). Most Latvian companies do not have specific compliance measures in place to deal with corruption and foreign bribery risks; only one in seven companies visited by OECD inspectors had a code of ethics in place that dealt with these risks (OECD 2015b).

Latvia is a party to the Council of Europe Criminal Law Convention on Corruption and the Council of Europe Civil Law Convention on Corruption. Latvia has also ratified the United Nations Convention against Corruption and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Freedoms of speech and of the press are guaranteed by Latvia's constitution, and the government generally respects these rights (HRR 2017). The media covers a large sphere of political ideas in a competitive media environment (HRR 2017). There are concerns about the independence and viability of local newspapers (HRR 2017). Although libel is criminalized, cases in which journalists face criminal charges, are rare (FitW 2016). The Freedom of Information Law stipulates public accessibility to government information, and the government usually respects this right and provides information upon request (FotP 2015). Journalists have occasionally faced attacks or harassment, and the case of journalist Grigorijs Nemcovs' murder in 2010 remains unresolved (FotP 2015). Latvia's press environment is described as 'free' (FotP 2017).

Latvian law provides for freedoms of assembly and association, and these rights are generally respected by the government (HRR 2017). Latvian civil society has limited capabilities to make policy proposals and engage in sustained advocacy (SGI 2017). However, civil society in Latvia is continuously developing and improving (NiT 2017). Civil society organizations struggle to obtain funding (NiT 2017).

• World Bank: Doing Business 2018.
• LV: "Bijuťā LDz ĹĄefa tiesa: Magonis apsĹŤdzÄŤbu noliedz, Osinovskim — neskaidrÄŤbas", 2 March 2018 (in Latvian).
• Reuters: "Latvian Central Banker in Bribery Probe Returns to Work", 1 March 2018.
• The Guardian: "Latvian Representative at ECB Detained in Bribery Case", 19 February 2018.
• World Economic Forum: Global Competitiveness Index 2017-2018.
• US Department of State: Investment Climate Statement 2017.
• Freedom House: Freedom of the Press 2017.
• Freedom House: Nations in Transit 2017.
• Opentender: Latvia Profile 2017.
• EUROPAM: Latvia Profile 2017.
• Bertelsmann Stiftung: Sustainable Governance Indicators - Latvia Report 2017.
• European Network of Councils for the Judiciary: Independence, Accountability and Quality of the Judiciary, Performance Indicators 2017.
• US Department of State: Human Rights Practices Report 2017.
• European Commission: EU Justice Scoreboard 2017.
• European Commission: Eurobarometer 470 - Corruption - 2017.
• European Commission: Flash Eurobarometer 457 - Businesses' Attitudes towards Corruption in the EU - 2017.
• LV: "Government Approves Draft Whistleblower Protection Law", 7 March 2017.
• World Economic Forum: Global Competitiveness Report 2015-2016.
• World Economic Forum: Global Enabling Trade Report 2016.
• Freedom House: Freedom in the World 2016.
• DELFI TV: "VID skandāls: NegodprātÄŤgos darbiniekus rotēs uz amatiem ārpus dienesta". 6 April 2016 (in Latvian).
• Freedom House: Freedom of the Press — Latvia 2015.
• OECD: Improving public sector efficiency for more inclusive growth in Latvia 2015a.
• OECD: Phase 2 Report on Implementing The OECD Anti-Bribery Convention in Latvia 2015b.
• European Commission: EU Anti-Corruption Report - Latvia 2014.