Numerous warning lights – but who cares?

We mention below three very distinct warning lights that Lithuanian authorities and control bodies should have reacted to long ago. These three are just the tip of the iceberg. There are many, many more...

WARNING LIGHT 1:

THE BRITISH FINANCIAL SERVICE USED STRONG WORDS ABOUT SNORAS BANK ALREADY 2 YEARS AGO

In 2009 the now nationalised Snoras bank applied to the British Financial Services Authority (FSA) to operate in the UK. The FSA refused permission to conduct business in the UK because the bank repeatedly gave “misleading and incomplete” answers to the regulator. These included failing to mention that it had been refused permission to take retail deposits in Russia and had been fined by the Lithuanian banking regulator. The FSA also attacked the record of Bankas Snoras’ largest shareholder and chairman of its supervisory board, Vladimir Antonov, whom it accused of withholding information. “These failures are not an isolated instance but are examples of an ongoing pattern of behaviour by institutions controlled by Mr Antonov,” the FSA said. These comments must have been known by the Lithuanian Central Bank (Lietuvos bankas) already by then. Why didn’t they react? And why didn’t Ernst & Young, Snoras’ auditor, react? The audit company is now conducting an internal investigation about its previous audits at the bank, but shouldn’t such an important investigation be done by a neutral party? We do, after all, talk about a scandal that will have a very negative impact for the economy of the country and its people…

WARNING LIGHT 2:

The new Lithuanian parliament hall.

Irena Degutiene

LITHUANIAN PARLIAMENTARIANS ARE AMONG THE BEST PAID IN THE ENTIRE EUROPEAN UNION!

BALTIC TIMES had an interesting article this week, telling that the Lithuanian parliamentarians’ 2,000 euro salary per month is at the bottom of the list of European legislator pay, but with all parliamentary allowances, benefits and salaries summed up, the entitlements skyrocket, catapulting Lithuanian legislators to a level with an average salary, on par with the very top of the best paid elected officials in the entire European Union, up to 10,000 euro per month!

“To be honest, I have never been aware of such benefits, even when I stayed at the wheel of the parliament. The Labor Party, whose deputy chairman I am now, stands for cutting down the excessive parliamentary benefits. However, I do not think this Seimas will have the guts to cut the fruitful branches it sits on,” Arturas Paulauskas, the former chairman of Naujoji Sajunga (New Union) and deputy chairman of the Labor Party presently, said to The Baltic Times.

The mid-November parliamentary deliberations over the draft on Parliamentarians’ Activity Guarantees have shown that Lithuanian legislators are far from considering any constraints on their lavish parliamentary incentives – the draft has been rejected and sent for improvements.

“I am really surprised by the legislators’ decision. Frankly, I thought the bill, upon introduction, with certain amendments and improvements would be passed. To reject it the way the parliamentarians did, walking out before the crucial vote or abstaining during the vote, means withdrawal from solving the problem. I do not know whether the politicians who voted against the bill, or simply walked out before the vote, will seek a new Seimas tenure next year. If yes, it means they are willing to further traipse in the mud we have all been stomping in so long and tediously,” Irena Degutiene, chairwoman of the Lithuanian Parliament, said with unusually strong words to express her angst.

Degutiene, nevertheless, is hopeful in bringing the revised and supplemented bill for the MPs in spring 2012. “I hope that common sense will prevail and we pass the law,” she said.

Unlike in Lithuania, in the other two Baltic countries MP salaries are recalculated every year, and politicians receive parliamentary activity compensation for transport, office, representation and professional training. In that regard, Estonia has set it such that this kind of compensation cannot exceed 30 percent of the parliamentary salary, which is 3,353 euros.

WARNING LIGHT 3:

LITHUANIA HAS NOW EU’S WIDEST WEALTH GAP AND HIGHEST POVERTY RISK

Lithuania’s austerity measures, which are similar in size to those facing Greece, boosted income inequality to the widest in the European Union.

The CHART OF THE DAY in a BLOOMBERG article this week shows how the proportion of people at risk of poverty in Lithuania surged to the highest level among the bloc’s 27 members after state spending was cut. The lower panel shows the gap between the nation’s highest and lowest earners is the EU’s widest after budget savings hurt the poor.

Lithuania implemented austerity measures equal to 12 percent of gross domestic product in 2009-2010. Pension cuts may be reversed after the economy grew 6.7 percent in the third quarter, the second-fastest pace in the EU. Greece, where GDP contracted 5.2 percent in the same period, is in the midst of budget cuts worth 16 percent of economic output, data from the International Monetary Fund show.

“The blow was very painful to the poor,” said Vilija Tauraite, an economist for SEB Bank in the capital, Vilnius. “Lithuania’s fiscal discipline has been extremely severe in the past three years and it’s now crucial to ease the burden because these people are hanging on the precipice of poverty. Their quality of life is far worse than the situation of pensioners in southern Europe.”

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