The Diena newspaper reported Tuesday that Vike-Freiberga illegally appropriated a watch, valued at around $2,200, presented to her while she was in office.
Under Latvian law, presents given to politicians are state property and if an official wishes to keep a gift after leaving office, he is required to pay for it.
The newspaper said the ex-president excluded the watch from the list of presents on the grounds it was broken and could no longer be used.
However, Vike-Freiberga has been seen often wearing the luxury timepiece since leaving office in July 2007.
If the Latvian anticorruption bureau confirms there is a case to answer, the former head of state can be prosecuted.
Luxury presents often cause misunderstanding. In 2005, then-Russian President Vladimir Putin received a diamond-encrusted Super Bowl ring from Robert Kraft, a businessman and the owner of that year's Super Bowl champions, the New England Patriots.
The incident came after a private meeting with US businessmen at Konstantinovsky Palace, near St Petersburg, and sparked controversy in the press.
Some newspapers said that far from presenting the ring Kraft was just showing it off, and that Putin forgot to give back the ring - worth thousands of U.S. dollars - and put it in his pocket by mistake.
Kraft dismissed the rumors in an interview a few days later: "Upon seeing the ring, President Putin, a great and knowledgeable sports fan, was clearly taken with its uniqueness. At that point, I decided to give him the ring as a symbol of the respect and admiration that I have for the Russian people and the leadership of President Putin."
