Latvia Pay Hacker Risks Jail After Fat Cat Heart Attack Call

Photographer: Ilmars Znotins/Bloomberg

Latvia’s austerity drive won plaudits from European Union officials, who held it up as a model for struggling southern nations, and helped pave the way for euro adoption next year. Close

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Photographer: Ilmars Znotins/Bloomberg

Latvia’s austerity drive won plaudits from European Union officials, who held it up as a model for struggling southern nations, and helped pave the way for euro adoption next year.

After Latvia slashed wages and spending to keep bailout cash flowing in 2009, a Twitter user by the name of Neo published tax data showing the pain wasn’t being shared equally. The Matrix fan behind the leaks now faces jail.

Ilmars Poikans, a researcher at the University of Latvia, revealed some executives at state-owned companies got $50,000 bonuses weeks after public wages were cut amid the world’s deepest recession. He’ll stand trial next year for illegally acquiring private and commercial data, charges he denies.

“You could see in some institutions that the crisis hadn’t touched them at all, or that the cuts hadn’t taken place fairly,” Poikans said last month in an interview in a cafe in Riga, Latvia’s capital. “Belts should have been tightened in solidarity, but some were more equal than others.”

Latvia’s austerity drive won plaudits from European Union officials, who held it up as a model for struggling southern nations, and helped pave the way for euro adoption next year. State wages were cut by a third as part of measures to tame the budget gap after a property bubble burst and foreign loans dried up, prompting a 7.5 billion-euro ($10 billion) rescue.

Poikans, a computer programmer whose alter ego on his Twitter Inc. account was inspired by Keanu Reeves’s character in the futuristic Matrix movies, discovered he could access companies’ income-tax records by changing the combinations of letters and numbers at the end of tax authority web links. He obtained 7.5 million documents, according to his indictment.

Average Wages

The leaked data showed that two unnamed employees of Rigas Satiksme, the Latvian capital’s municipal transport company whose monthly salary was 5,000 lati ($9,500), got 25,000 lati bonuses in August 2009, two months after the budget cuts. Average gross monthly wages in local government institutions in 2009 were 424 lati, central statistics bureau data show.

Leons Bemhens, Rigas Satiksme’s chairman, said through a spokesman that he couldn’t confirm the bonus payments.

Individual monthly salaries didn’t fall over the course of 2009 at the nation’s banking watchdog, according to a spreadsheet published by Poikans, who as Neo asked on Twitter: “Where is the solidarity with other state institutions?” His data showed cuts during the year at other agencies.

Average compensation at the regulator, including insurance and holiday benefits, fell 14 percent in 2009 from the previous year and 20 percent in 2010, spokeswoman Laima Auza said in a Sept. 17 e-mail, without providing further details.

‘Rise Up’

While Poikans downloaded a range of tax records, he only released details of salaries at state and municipal institutions and companies, including those of staff at the Finance Ministry and central bank. His Twitter posts, which were reported on national television and triggered a countrywide scandal, featured lyrics from U.K. rock band Muse.

“Rise up and take the power back, it’s time that the fat cats had a heart attack, you know that their time is coming to an end,” he posted in 2010, citing the band’s ‘Uprising’ song.

Police detained Poikans for two days in 2010 and raided the home of journalist Ilze Nagla, who was reporting the leaks and was in contact with him. While police seized computers and memory drives, they never charged her with a crime.

Nagla sought damages for the raid, which targeted the source of her information, and was awarded 20,000 euros in July by the European Court of Human Rights.

‘Intrinsic Right’

The ruling showed that the “protection of journalist sources is not a privilege but an intrinsic right to information,” Clive Baldwin, a London-based senior legal adviser at Human Rights Watch, said that month via Twitter.

Poikans “willfully gained access to the state revenue service’s automated data-processing system and acquired other people’s declaration data without permission,” prosecutors said in the criminal complaint, according to an abridged version of the document he published on Twitter.

He joins former U.S. security contractor Edward Snowden and Russian legal adviser Sergei Magnitsky in facing prosecution after seeking to expose wrongdoing. His case may only be heard in April, according to the Riga central district court. He faces as long as two years in prison.

“The police work was very time consuming because of the complicated cybertechnical analysis, which required between six months and a year,” Una Reke, a spokeswoman for the prosecutor’s office, said July 24 by e-mail.

EU Model

About 4,300 pages of evidence have been submitted to the court, Poikans said. The case is partly based on allegations made by a bank that complained its data had been obtained illegally. Prosecutors have agreed not to name the bank.

Even after Poikans’s revelations, Latvia’s anti-crisis policies were hailed by EU officials including Economic and Monetary Affairs Commissioner Olli Rehn as a model for struggling nations in the bloc’s south.

“Since the nadir of the crisis in 2009, Latvia has managed a very difficult economic adjustment process,” Rehn said June 9 in a blog post. “I have no illusions about how hard the crisis hit the Latvian people.”

While Poikans faces prison and the country introduced stricter legislation governing online security, his actions also helped improve the transparency of public wages in Latvia, which has switched to monthly from annual publication of state officials’ salaries.

Delna, a Latvian non-governmental organization associated with Transparency International, named whistleblower protection legislation as one of its 2013 priorities.

Public Interest

“What he’s done has been in the public interest and for that reason it’s justified,” said Martins Birks, a Riga-lawyer who’s studied Poikans’s case. “In this instance, the right to know how the tax payer’s money has been used is more important than the people’s interest in whose wages have been revealed.”

Ministries must now list employee pay information online. Following a public vote, Latvia’s European Movement named Poikans European Of The Year in 2010 after his “courageous actions” started a public discussion on transparency.

The public has a right to know how its money is being spent and the outrage at Neo’s revelations highlights that, according to Aleksejs Loskutovs, a member of parliament and a lawyer who’s assisted Poikans’ defense and doesn’t deem his actions hacking.

“Poikans positioned himself as a fighter against injustice,” he said in an interview on Aug. 13. “He put transparency where it needs to be.”

To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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