With Edward Scicluna refusing to step down as Central Bank governor, cabinet is planning to attempt to sack him during a meeting on Tuesday.

Scicluna has repeatedly said that with the Central Bank being an independent institution, neither the government nor the opposition can force him to step down.

The government wants him to step down after a magistrate last week ruled there was sufficient evidence for him and others to stand trial for alleged misappropriation and fraud in the Vitals hospitals case. 

Previous appeals for the European Central Bank to dismiss Scicluna appear to have been ignored. In May, MEP David Casa wrote to European Central Bank head Christine Lagarde, saying it was “beyond obscene” for Scicluna to remain in the post while facing criminal charges.

What Lagarde, who herself was convicted for negligence in a dodgy €400m deal, made of the pleas is anybody’s guess.

But this is not the first time that a government has resorted to drastic measures to have a Central Bank head removed from the post. A previous attempt in Latvia turned out to be far from straightforward, to put it mildly.

What happened in Latvia?

Back in February 2018, Latvian Central Bank Governor Ilmārs Rimšēvičs was arrested as part of a probe by KNAB, the Latvian government’s anti-corruption bureau.

The news shook the European banking community to its core.

Rimšēvičs had been Latvia’s longest-serving governor, serving for almost two decades after being appointed in 2001.

He was widely respected, having been bestowed with the prestigious French Légion d’Honneur for his work in stabilizing Latvia’s economy during the economic crisis and leading the country into the Eurozone.

Ilmārs Rimšēvičs (right) with former Italian PM and then-President of the European Central Bank Mario Draghi in 2013. Photo: Wikimedia Commons/European Central Bank

But Rimšēvičs was suspected of having accepted a €500,000 bribe and a paid holiday in Russia in return for looking kindly upon Trasta Komercbanka, a private Latvian bank believed to be engaged in money laundering activities.

Upon his arrest, the KNAB imposed a series of measures against Rimšēvičs, including a prohibition on leaving the country without authorisation and a ban on him remaining in his post as Central Bank Governor, effectively booting him out of the institution altogether, at least while his criminal case was underway.

European Court of Justice steps in

Rimšēvičs didn’t take that lying down, immediately filing emergency court action in Latvia demanding his removal be declared illegal. The Latvian courts disagreed, turning down his request just four days later.

The European Central Bank was similarly incensed, turning to the European Court of Justice to argue that Rimšēvičs’ dismissal “in the absence of a judgment convicting him delivered on the merits by an independent tribunal” went against article 14.2 of its statute.

Article 14.2 effectively ensures central bankers' independence, saying, “A Governor may be relieved from office only if he no longer fulfils the conditions required for the performance of his duties or if he has been guilty of serious misconduct”.

This, presumably, is the same clause that Scicluna is relying on to argue that “the EU rules are clear for every European governor. A governor is asked to resign only if found guilty of a crime”.

Rimšēvičs' dismissal went against this clause from the ECB's statute.

In February 2019, almost a year to the day since Rimšēvičs’ arrest and dismissal, the European Court of Justice handed down its verdict: Latvia had not shown that Rimšēvičs’ dismissal was “based on the existence of sufficient indications that he has engaged in serious misconduct”, so his dismissal was annulled.

The ruling sent shockwaves through the legal community, with one ECB lawyer describing it as “a revolution with the potential of changing EU law forever”.

Rimšēvičs returned to work the very next day, ultimately serving the remaining nine months of his tenure when he was replaced by new central bank governor Mārtiņš Kazāks in December 2019.

Six-year prison sentence

But Rimšēvičs’ legal woes didn’t end there. He was still facing charges of bribery and corruption back in Latvia.

Rimšēvičs saw his hopes of banking on immunity granted to ECB governors dashed when European courts declared that his immunity was to be waived since his alleged actions did not form part of his official tasks.

“Acts of fraud, corruption or money laundering are thus not carried out by such a governor in his or her official capacity,” the courts said, adding a touch of understatement to proceedings.

Meanwhile, the European Court of Human Rights shrugged off Rimšēvičs’ attempt to have his arrest declared unlawful, finding that Latvia’s law enforcement authorities had acted appropriately.

Things came to a head last December, when Rimšēvičs’ trial came to a close. Rimšēvičs was found guilty of having accepted a bribe, sentenced to six years imprisonment, together with a five-year ban on holding public office.

A fellow defendant, businessman Māris Martinsons who was believed to have acted as the middleman in the bribe, was sentenced to five years in prison.