LUXEMBOURG (Reuters) - The European Central Bank accused Latvia in Europe's highest court on Wednesday of illegally removing its central bank governor earlier this year and asked for at least some of his powers to be reinstated.
In a case without precedent for the ECB, Latvian central bank chief Ilmars Rimsevics was detained in February on accusations of corruption and has been barred by Latvian authorities from working as governor, preventing him from taking part in ECB meetings, including interest rate decisions.
Rimsevics has denied any wrongdoing.
In a first hearing at the European Court of Justice, the ECB argued that the absence of Rimsevics risked damaging the reputation of the bank, could infringe on its independence and threatened to hold up decision making as a member country is now without a vote.
It also argued that Rimsevics was still formally a member of the Governing Council since he has not been convicted of any crime, so only he could appoint an alternate, an impossible task since he is barred from work.
The ECB asked the court to reinstate the powers of the governor with relation to ECB duties, including over monetary policy decisions and banking supervision, with the possible exception of supervisory cases related to Latvia.
Accused of soliciting a bribe of 'no less' than 100,000 euros (87,556 pounds), Rimsevics has also been prevented of leaving Latvia and had his security clearance revoked, even though no formal charges have yet been filed and investigation is still in its preliminary stages.
Rimsevics has also filed case against Latvia at the European Court.
The legal case may also be a test for the ECB as Slovenia is now also without a vote since local authorities have not yet appointed a new central bank governor after the Bank of Slovenia's previous head resigned to take another job.
Lawyers for Latvia meanwhile argued that national law designates Deputy Governor Zoja Razmusa as acting governor and she was already attending ECB meetings as an observer before the governor's detention so there should be no issue of legal continuity or risk of disruption.
But the ECB rejected this argument saying that national legislation could not supersede European law on membership in the Governing Council.
The European Court said it would aim for an expedited ruling but did not provide a deadline.