(Bloomberg) -- Mario Draghi is holding what might be the most awkward European Central Bank policy meeting in his tenure.

The two-day Governing Council session in Riga -- a critical discussion that could result in a decision to end the ECB’s bond-buying program -- will have a notable absentee. Latvian Governor Ilmars Rimsevics, who as host would normally sit alongside President Draghi at Thursday’s news conference, is instead fighting corruption allegations and is barred by national authorities from the building. The ECB is challenging restrictions on him in court.

The governor’s absence isn’t the only reason for unease. Scandals over dodgy clients in the former Soviet Union have plagued Latvian banks and the ECB shut the country’s No. 3 lender in February after the U.S. accused it of breaking North Korea sanctions.

“It’s no doubt an awkward situation,” Fredrik Erixon, director of the European Centre for International Political Economy, said by email. “The only thing we know is that the saga reflects badly on everyone and erodes the credibility of central banks in Europe.”

The ECB holds one meeting a year away from its Frankfurt base, and Latvia was planned long ago. The external gatherings often prove colorful. Four years ago in Naples, Italy, security amid anti-globalization protests was so strict that policy makers could barely hear each other speak over the roar of helicopters. In Cyprus the following year, a journalist seized the floor to harangue the ECB president in Greek. Several months later in Malta, the event took place in a hotel complex that also housed a lavish gambling hall.

Legal Battle

This meeting comes after a rocky few months for the Baltic nation of 2 million people. Rimsevics, 53, was detained in February on suspicion he’d solicited bribes from a local lender, just days after the U.S.’s money-laundering accusations emerged against the now-defunct ABLV Bank AS. He was released on bail, denying wrongdoing. Regulators are dismantling the nation’s non-resident banking business.

While Latvia represents just 0.2 percent of the euro-area economy, it’s become a focal point for questions about financial oversight and central-bank independence.

The ECB has sued the country over limits on Rimsevics performing his duties and a travel ban that’s kept him away from Governing Council meetings. His deputy, Zoja Razmusa, who’s been attending as an observer, will probably appear alongside Draghi at Thursday’s 3:30 p.m. news conference in Riga.

There’s still a chance Rimsevics, who joined the Governing Council when Latvia adopted the euro in 2014 and is its longest-serving national bank chief, could make an appearance. While investigators will pursue formal charges within “a few weeks,” the European Court of Justice could rule at any time to reinstate him or soften the restrictions he faces.

One ECB Governing Council member, who asked not to be identified discussing his colleague, said Rimsevics -- not the first official to face controversy -- would be welcomed with “open arms” should he be cleared for future meetings. Latvia’s political establishment is decidedly more hostile. The president, government and parliament all say he should resign.

--With assistance from Ott Ummelas.

To contact the reporters on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net;Alessandro Speciale in Frankfurt at aspeciale@bloomberg.net

To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Andrew Langley

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