A Baltic Striptease?(Latvia)

The elaborate courtship between the European Union and tiny Latvia concluded last month with a resounding "yes." Throughout, the bigger suitor kept pressing one irksome issue: corruption. "They were always saying, 'You need to deal with this problem in order to enter these organizations'," recalls Diana Kurpniece, from the spiffy new offices of Latvia's just-opened Corruption Prevention and Combating Bureau.

In the next six months Latvia is set to join both NATO and the EU. When it does, the financial largesse of Western Europe and the United States will rain down, to the tune of more than $500 for each man, woman and child in this country of 2.5 million. Where that money ends up and how it is spent is part of the Corruption Bureau's work--and right now it's focused squarely on the port city of Ventspils, a one-man fiefdom of ex-communist Mayor Aivars Lembergs. His income last year: more than $1 million. His official city salary: $7,112. He's never been convicted of any wrongdoing. But if one believes the clamor in the Latvian capital of Riga, that day may not be far off. Either way, the Corruption Bureau's investigation in Ventspils will be a bellwether for most of the young democracies being embraced by the EU.

In a recent interview with NEWSWEEK, the self-assured, affable Lembergs defended himself. The allegations of fiscal impropriety swirling about him are political, he said, designed to break his hold on the city and its 44,000 voters. He testily refused to answer published charges that his wife and children can be found prominently in the maze of offshore companies controlling one of Latvia's fattest corporate cows, Ventspils Nafta, which has, in some years, accounted for up to 15 percent of Latvia's GDP.

If nothing else, Lembergs is a survivor. He has pulled off the supreme feat of staying mayor for 15 years, weathering a time when Latvian nationalists swept out former communists, like him, with a vengeance. Lembergs's political future depends on whether government investigators uncover corporate "shells within shells" that may hide the true ownership of Ventspils's companies, according to a top editor with Latvia's leading daily newspaper, Diena, whose reporters still are unable to unravel it after years of trying.

No matter how disapproving reformist politicians and editorial writers in Riga may be, the people of Ventspils still love their mayor. Driving through the quaint, 700-year-old city, it is not hard to see why. Many of the litter-free streets and sidewalks are ...