UPDATE 4-Latvian defense ministry says corruption claims may be disinformation campaign

disinformation campaign@

* Ministry warns of disinformation from outside

* Cites bribery allegations against suspended cenbank head

* Bank chief Rimsevics rejects claim, says won't resign

* Rimsevics says victim of smear campaign

* PM says still no evidence backing allegation (Releads with defense ministry statement)

RIGA, Feb 20 (Reuters) - Corruption allegations that led to the suspension of Latvia's central bank governor on Tuesday may be part of a disinformation campaign aimed at damaging trust in the country and influencing October elections, its Defence Ministry said.

It did not say who might be behind what it called a "massive information operation from outside," but said it was "identical in structure and execution" to disinformation campaigns that preceded recent French, German and U.S. elections.

Those have been blamed on Russia, which denies meddling in elections in the West. The Kremlin could not be reached for comment on Tuesday and the Foreign Ministry in Moscow said it was unable to comment at this time.

The Latvian defense ministry's remarks, in a statement published in English, followed a string of corruption allegations and counter allegations that rocked the financial sector of the euro zone country with close ties to giant neighbor Russia.

They included accusations by the U.S. Treasury that Latvia's third-largest lender, ABLV Bank, engaged in money laundering and helped breach sanctions on North Korea, as well as the detention of central bank chief Ilmars Rimsevics in a bribery probe.

Citing those events, the defense ministry said: "There is a high possibility that this is a wide information operation from outside and its aim is to show Latvia as (an) untrustworthy ally and to promote the decline of trust in the government."

It said the operation, which it expected to continue, was probably aimed at influencing Latvia's internal affairs and parliamentary elections due in October.

Earlier, the prime minister's office said Rimsevics had been suspended pending an investigation by Latvia's anti-corruption agency into whether he solicited a 100,000 euro bribe.

Rimsevics, who was held in custody over the weekend, said he was the victim of a smear campaign because he has been leading a drive to clean up corruption in the Baltic country's banking sector. He said he would not resign.

"I have not demanded or received any bribes," Rimsevics told a news conference on Tuesday. "I have become the target of some Latvian commercial banks to destroy Latvia's reputation."

Prime Minister Maris Kucinskis said the complaint against Rimsevics was made by small Latvian lender Norvik Bank. Its owner, Grigory Guselnikov, a Russian based in Britain, had not provided evidence of wrongdoing despite being "repeatedly asked," he added.

Norvik Bank did not immediately respond to a request for comment.

Rimsevics said he was a victim of "a coordinated attack by a few Latvian commercial banks" who believed he was behind tough actions by the anti-corruption agency and wanted to see him replaced with someone more compliant.

The agency, whose chief is selected by the central bank governor and the finance minister, has handed out fines in recent years over breaches in money-laundering rules and laws aimed at closing off funding for terrorism.

Kucinskis said he could not rule out that the bribery allegations against Rimsevics, no details of which have been given by police or the anti-corruption authority, were an attempt to damage the reputation of Latvian authorities.

It was not immediately clear whether Rimsevics could continue to represent Latvia on the European Central Bank's Governing Council, which sets interest rates for the euro zone.

A Bank of Latvia spokesman said deputy governor Zoja Razmusa would attend a non-policy ECB meeting on Wednesday.


The confusing, rival claims of wrongdoing will deepen worries about the transparency of parts of Latvia's banking sector, which have close financial links to former colonial master Russia.

The biggest banks, subsidiaries of Nordic heavyweights like Swedbank and SEB, focus on domestic lending, but there are a number of small banks that handle mainly overseas client money.

The International Monetary Fund has repeatedly urged Latvia to be vigilant over non-resident deposits -- mostly held for clients in Russia and the CIS -- and strengthen the enforcement of rules to combat terrorism funding and money laundering.

The U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) has said non-resident banking in Latvia increases the risk that criminals and shell companies could conduct fraudulent transactions or hide their financial dealings.

It called on Feb. 13 for sanctions on ABLV, which it said had "institutionalized money laundering" and helped clients avoid sanctions on North Korea. ABLV has rejected FinCEN's allegations.

The ECB suspended payments by ABLV this week citing liquidity concerns after around 600 million euros worth of deposits -- some 22 percent of all deposits -- left the bank following FinCEN's comments.

ABLV managers were meeting ECB supervisors on Tuesday to outline a survival plan, a key step in removing the payment moratorium.

While the freeze has halted deposit outflows, sources close to discussions said ABLV would be given just days to show it can meet its financial obligations. Without a credible plan, supervisors could declare the bank failing or likely to fail and hand the case over to the Single Resolution Board.

ABLV sought emergency funding from the Latvian central bank, which bought 13 million euros in bonds and has agreed to provide 97.5 million euros in loans.

A number of other small Latvian banks have been fined in recent years for breaching money laundering rules and terrorism funding legislation, including Norvik Bank.

It was one of two lenders fined more than 2.8 million euros ($3.26 million) last year by Latvia's own financial watchdog for allowing clients to violate European Union and United Nations sanctions on North Korea. Three others received smaller fines. (Reporting by Gederts Gelzis; Additional reporting by Balazs Koranyi and John O'Donnell in Frankfurt; Writing by Simon Johnson and Catherine Evans; editing by John Stonestreet)