"Lithuania's corrupt media hurts everyone," says a 2007 report from the U.S. Embassy in Vilnius, published by WikiLeaks.

Norwegian Aftenposten tells this week that Lithuania, Bulgaria, Mexico and the Philippines are among the countries where one most easily can buy journalists and editors.

The newspaper refers to a four year old report from the U.S. Embassy in Vilnius, published by WikiLeaks. The report presents a very discouraging picture of the way the Lithuanian media works, and gives concrete examples of how politicians and businesses must pay local media to avoid negative publicity.

Click here to read the WikiLeaks document.

Worse after the financial crisis
"You must buy the right not to be attacked," Vilius Kavaliauskas, long-time journalist and former advisor to the Lithuanian Prime Minister is quoted saying to the Embassy people.

Kavaliauskas, who now works as a freelance journalist, tells Aftenposten that the financial crisis has exacerbated the ethical standards among media in Lithuania.

"It has not become any better since 2007. Many editors and journalists sell and monopolize news and opinions, and there are always questionable political alliances between the media and people in power. Two years ago the media in Lithuania lost its tax exemption. Now they pay 21 percent tax as all other businesses. This has increased the culture of corruption, and is a disaster for our country, "he says.

According to Kavaliauskas the new press laws that were introduced in the middle of the 1990s were inspired by the laws of the Scandinavian countries. "We were on good way, but now we see a total setback," he says.

Pfizer declined 'deal' with Respublika
The embassy document from 2007, which is titled "Lithuania's corrupt media harm everyone, including U.S. industry," says the local director of Pfizer's office in Vilnius, explaining in detail how he was contacted by the owner of the large newspaper Respublika, which offered to "kill" the pharmaceutical manufacturer's competitors in Lithuania.

The price would be one million litas ($ 400,000), and the director was given two weeks' time to respond, it says. When the two weeks had passed, he was again contacted by the newspaper's advertising people, but the director rejected the collaboration.

Shortly after, Respublika started to publish a series of negative articles about Pfizer, which among other things, claimed that several had died from using Viagra, that Pfizer was charging too much for their products, taking advantage of poor hospital patients and sick people.

Discontent over the price difference
The WikiLeaks document published by Aftenposten, also tells about a representative of the Lithuania's Labour Party who claimed that placing a positive article about him in the leading newspaper Lietuvos Rytas would cost 25,000 litas ($ 10,000), whereas a representative of the Social Democrat party would have to pay only 5,000 litas ($ 2,000).

"He was not complaining about paying for an article - he accepted that as common practice. He was complaining that his party had to pay more than another party," is the laconic comment in the embassy message.

Worst in Mexico and the Philippines
-Corruption in the media is common in Eastern Europe, Asia, Africa and Latin America, but absolute worst is now in Mexico and the Philippines, "says Eva Stabell, director of the International Federation of Journalists (IFJ) and responsible for the Norwegian Journalist Team's international work to Aftenposten.

"In these two countries there is a total corruption culture among journalists, incorporated as a part of their payments," she says.

In both countries have a large number of journalists have been killed in recent years.

"Many journalists are on the payroll of the mafia, " she says.

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Lithuania's economic crisis leads to crime and social disparities

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A report published by Associate Professor Aurelijus Gutauskas at Mykolas Romeris University's Law Faculty gives a very interesting insight into how the economic downturn has led to increased social disparities, crime, fraud and widespread shadow economy in Lithuania.

These are some of his findings:

The economic decline will have far-reaching negative effects on the most vulnerable groups in Lithuania unless the government takes additional measures
As in many countries worldwide, the economic downturn in Lithuania has had an adverse impact on national, social, and economic development. The economic decline will have far-reaching negative effects on the most vulnerable groups in Lithuania unless the government takes additional measures to promote employment and provide social protection.

The major negative social consequences of the economic decline in Lithuania are job losses and a decrease in income. These result in rising long-term unemployment, growing social exclusion, and an increase in emigration and the shadow economy.

Criminal offences against the financial system have increased by 47%
The statistical data analysis has shown that during the economic decline the crime rate increased while unemployment rose and household income decreased. Since 2008, the number of recorded criminal offences has been increasing by 6 to 7 per cent annually and reached 83,200 in 2009.

In 2009, the number of recorded criminal offences against the financial system increased by 47 %, and criminal offences related to the possession of narcotic or psychotropic substances increased by 19 %.

The production of counterfeit currency and securities increased by 258.6 % (from 237 to 613 cases) and cases of fraud grew by 59.1 % (from 915 to 1456 cases). Furthermore, the unlawful production of alcoholic beverages and the number of crimes committed by intoxicated persons nearly doubled in 2009. Based on Lithuanian and foreign experience, an increase in crime is expected to continue until 2012–2013 as restraints on economic crimes take longer to implement and are related to a rise in the standard of living in the country.

Lithuania's shadow economy will account for more than 20% of the GDP by 2015
The economic downturn has resulted in an increasing number of businesses experiencing financial difficulties, and some of them turn to the shadow economy as a means of salvation. This is particularly the case in the area of labor relations and in regard to failure to pay taxes (such as income and social insurance taxes). According to official Lithuanian statistics from 2004 and 2008, the shadow economy in Lithuania accounted for about 15 per cent of the GDP. The declining profitability of business entities, the rise in tax rates, and the worsening macroeconomic environment may increase the scope of the shadow economy to 20-22% by 2015.

Younger criminals are taking over the organized crime
The most significant trend within the Lithuanian organized crime community is the shift in power between the older and younger generations. The younger generations are gaining ground and seeking to increase their influence at the expense of older members. Lithuanian OCGs (organized criminal groups) are also aiming to become more interregional within Lithuania.

Smuggling and distribution of drugs and excise good are the most important means for OCGs to gain power. These groups have created an infrastructure in the drug trade and developed channels of supply, as well as networks of distributors, in almost all regions of Lithuania. Even group members who are in prison remain in the drug trade and control it. Smuggling is a strong factor encouraging the creation of new OCGs that specialize in this function.

Free movement of people and commodities inside the EU facilitates the shipment of illegal cargoes, and flawed external border security allows smuggling. The increasing trade in used vehicles in Lithuania has become a factor in the infrastructure for handling stolen property, with vehicles stolen in Western countries being exchanged for drugs. This made it possible for Lithuanian OCGs to play an influential, international role in heroin smuggling from the East to the West. The proceeds of crime are laundered through businesses in the financial and construction sectors.

In Russia in 2009 and 2010, Lithuanian OCGs used opportunities related to the acquisition of excise goods to engage in smuggling goods into the West, and then into the Netherlands. The goods smuggled included cocaine, hashish, cannabis, amphetamines, methamphetamines and ecstasy (MDMA), heroin (in the region of Kaliningrad), stolen vehicles.

Lithuanian criminal groups now operate all over Europe

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The EU's criminal intelligence agency EUROPOL has in its Organized Crime Threat Assessment for 2011 defined Estonia, Latvia, Lithuania and the Russian Federation exclave of Kaliningrad as the northeast criminal hub, singling out the prevalence of crime groups in Lithuania. Europol Assesses Baltic Organized Crime Hub | News | ERR

A report published by Associate Professor Aurelijus Gutauskas at Mykolas Romeris University's Law Faculty gives a very interesting insight into how the economic downturn has led to increased social disparities, crime, fraud and widespread shadow economy in Lithuania.

VilNews is presenting some of Professor Gutauskas' findings over three issues. This is our article number two:

23 active organized criminal groups (OCGs) in Lithuania
In 2010, there were 23 active organized criminal groups (OCGs) in Lithuania. Over the last two years, the number has remained much the same. Higher level OCGs are characterized by long-term activity or are recomposed from the members of broken or dismantled OCGs. The leadership is constantly renewed by young, new members or criminals who have already served prison sentences.

The geographical location of Lithuania encourages the international activity of OCGs. Lithuania is located at the crossroads of illicit commodities traffic in both internal and external directions. The locality of OCGs preconditioned their specialization when it came to control of regions of the external European Union border. Some of them use their influence at the Belarusian border, others at the Russian border.

Smuggling and distribution of drugs and excise good are the most important means for OCGs
Smuggling and distribution of drugs and excise good are the most important means for OCGs to gain power. These groups have created an infrastructure in the drug trade and developed channels of supply, as well as networks of distributors, in almost all regions of Lithuania. Even group members who are in prison remain in the drug trade and control it. Smuggling is a strong factor encouraging the creation of new OCGs that specialize in this function.

Human trafficking
Human trafficking has taken a new form as some victims agree to travel to countries with higher standards of living and engage in voluntary prostitution. The women's social vulnerability (unemployment, absence of income) and absence of other information results in their allowing others to take half of their income. Human trafficking is organized and committed not only by OCGs but also, in some regions of Lithuania, by individuals with no direct connections with OCGs.
Human trafficking involves recruiting people (by deception or telling the truth), organizing transportation (by finding ways to forge documents and arrange transport), and searching for locations in which to sell and receive profit. Payment is sometimes extracted from the person's earnings. Victims of human trafficking are usually women aged 18 to 24. They are recruited through modeling agencies, radio shows, online dating, social networks such as Facebook and other websites, and often voluntarily leave their home countries. Cases are known in which women are offered legal jobs (as waitresses and dancers), but once transported abroad they are forced to provide sexual services. Violence is also often used to make them work and to intimidate others. Search and recruitment is conducted by low-level members of the OCGs. Women are not only recruited by procurers but also by working prostitutes who receive rewards of up to 600 Euros for a new woman.

The European police service Europol has recently wound up an investigation into child pornography which lasted two years. Raids were made on houses in 20 countries. A total of 221 suspected pedophiles were discovered and 115 of them were arrested. Some of the suspects had jobs working with children. Victims of various nationalities were identified in the course of the investigation. The youngest was five.

Increased fraud, corruption and money laundering

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A report published by Associate Professor Aurelijus Gutauskas at Mykolas Romeris University's Law Faculty gives a very interesting insight into how the economic downturn has led to increased social disparities, crime, fraud and widespread shadow economy in Lithuania.

VilNews is presenting some of Professor Gutauskas' findings over three issues. This is our article number three:

Fraud
In 2009, 4229 cases of fraud were registered by law enforcement agencies, and 2494 more were registered between January and July 2010. In comparison with 2008 (when there were 2773 cases of fraud), there is an obvious increase in the commission of this kind of crime.

The economic crisis has affected many fields of business. Payments among the participants in an economy in disarray and a massive increase in mutual debts raise the probability of an increase in fraud crimes. Business difficulties stimulate the rise of new ways of perpetrating fraud, manipulation, shady financial transactions, and other forms of misappropriation. An increase of insurance fraud is also predicted. Companies that are going bankrupt, receiving no bank loans, and short of liquid assets will easily be attracted by offers of financial assistance or investment and will not investigate the source of the money. Analysis of investigations shows a trend of OCGs working to create favorable environment for acquiring legal businesses. By taking over insolvent companies and using them to launder the proceeds of crime, criminal groups would more easily be able to control a legal business. There has also been an increase in the number of fraud cases among legal entities. Companies are established or purchased in order to commit fraud, and commodities are purchased on the grounds of consignation. There are also cases of fraud in the recovery of VAT. Companies of this kind later go bankrupt or are illicitly sold to other persons, and further activity is undertaken. The persons who acquire them are usually antisocial, and trade is conducted using lost or stolen identity documents.

Corruption
Many law enforcement officers, prosecutors, and lawyers, at all levels and ranks, particularly those who specialize in tax cases, become corrupt. They set out to receive unlawful rewards from persons suspected of crimes against the financial system, who can avoid prosecution by paying bribes. If the bribe fails – that is to say, if the pre-trial investigation is not dismissed or the criminal act is not downgraded to a milder article of the criminal code – these persons make up charges and pay officers to intimidate or financially weaken their business competitors.

Those who participate in corruption in public tendering are persons who in the administrative field (officials of ministries, budgetary institutions, and municipalities), employees of public institutions, and managers of private companies or companies run by the state and municipalities. Aspects of corruption are noticed in all fields and stages of public tendering. Corrupt activity manifests itself most in the organization of public tendering regarding constructions, refurbishment, and information technologies.

Different corruption mechanisms are employed at each stage of public tendering. The initial stage includes one type of fraud. Representatives of companies participating in this procedure come to an informal agreement on a winner in a certain town, region, or ministry, and fix the price for services, commodities, or work. Agreements of this kind maintain high prices and stable income (the company knows how many tenders it will win each year). They also exclude possible competitors.

Money laundering
In order to launder money, foreign companies transfer their money to the accounts of fake foreign or Lithuanian companies that are usually established in Lithuanian banks by foreign citizens. Money is then transferred from one country to another through Lithuania financial institutions using the accounts of these fake companies. The proceeds of crime acquired in Lithuania may be transferred to foreign states, or the proceeds of crime in foreign countries may be transferred to Lithuania.

Lithuanian companies transfer money to the fake company or non-profit (usually fitness clubs), and the money is cashed immediately after it has been transferred. After the money has been cashed, fake accounts are opened and managed by antisocial citizens of both Lithuania and foreign countries who often have connections with criminal groups.
It is assumed that the major reason for transferring assets to Lithuania is to conceal the illegal origin of the assets. Nevertheless, cases have been discovered in which Lithuanian nationals used accounts in foreign countries while engaging in similar criminal activity.

Lithuanian companies increasingly use companies registered in foreign countries and foreign nationals to transfer money to the accounts of fake companies or offshore companies in foreign banks. More cases occur in which money is cashed in neighboring countries and in which the citizens of that particular country are involved.

Former director of Lietuvos Pastas (Lithuanian Post) and Swedbank (Hanza) Leasing, Andrius Urbonas, was last year arrested for fraud. Urbonas was accused of having used his high position and connections in banking institutions to make loans to clients whose applications for loans were previously rejected. Authorities claim that he laundered money through the scheme. He denies the charges. A criminal case against him and other directors from Swedbank Leasing started in Vilnius District Court last week.

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This weekend Klaipeda’s new Mayor, Vytautats Grubliauskas, greeted guests from Lithuania’s international community with jazz trumpet virtuosity, also singing Louis Armstrong’s ‘What a wonderful World’ very convincingly.

'The Singing Mayor' has introduced a completely new and refreshing sound into Lithuania's political life. A human face with a good ability to communicate with the audience through song and music. This bodes well and should be a source of inspiration for many!

Former U.S. President Bill Clinton became the world's most famous ‘jazz politician’, when he already during the election campaign in 1992 hit new tunes for U.S. politics, playing his tenor saxophone in a very convincing manner.

Lithuania has its own jazz politician through Klaipeda's newly elected mayor, VytautasGrubliauskas, who sings  and plays trumpet in a top professional manner, latest for a large group from Lithuania's international community at an event in Klaipeda this weekend, when members of the British Chamber of  Commerce in Lithuania took the road to the coast to a joint programme with the coastal city's international business organization.

The truth is that Mayor Grubliauskas for many years was one of Western Lithuania’s leading jazz musicians, known as the principal soloist of the Doudi Jazz Band from Klaipeda, famous for his trumpet playing and singing with a raspy voice that gave him the nickname ‘Lithuanian’s Louis Armstrong’. For many years Vytautas Grubliauskas shared his time and energy between performing and wide-ranging public activities, as a long-time president of the Klaipėda Jazz Club, Associate Professor and Head of the Jazz Department at the Klaipėda University, artistic and executive director of the Klaipėda Jazz Festival (now as a patron), and finally as a member of Seimas (Lithuania’s parliament) before winning the latest municipal elections and taking the post as Mayor of Klaipeda last month.

I have the suspicion that Mr. Grubliauskas will become internationally known as 'Lithuania’s Singing Mayor', after he introduced a completely new and refreshing sound into Lithuania's political life to the country’s international community this weekend. A human face with a good ability to community with the audience through song and music. This bodes well and should be a source of inspiration for many!

VilNews will revert with a comprehensive coverage of Klaipeda later in June, including an interview with the new Mayor, where we will be discussing politics, society, business, energy, tourism, culture and new visions for the coastal city and the region it is the capital for.

And for all of you who love jazz, please note that Klaipeda’s world famous Jazz Festival takes place the weekend of 3 – 5 June. If you are lucky also you may then be able to listen to ‘Lithuania’s Singing Mayor’!

Read more about the Jazz Festival at http://www.jazz.lt/festival/index.php?lang_id=2

A boat trip is a must when you visit Klaipeda. So also when members of the British Chamber of Commerce in Lithuania this weekend took the road to the coast for a joint programme with the coastal city's international business organization.

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Energy infrastructure in the Baltic areas

By Aage Myhre, Editor-in-Chief

We described in yesterday's VilNews how the big powers France, Germany, Poland, and Russia now seem to be moving into a better climate of cooperation among themselves. We suggested in this context that Lithuania and the other Baltic States once again could become victims of the great powers' actions, and we recommended a much closer cooperation with the Nordic countries (Scandinavia) as the best and safest solution for Lithuania, Latvia and Estonia in the future. See also articles below.

The Baltic countries should, in my opinion, cooperate closely on a common approach to Scandinavia, and they should do their utmost to become independent of gas, oil and electricity from Russia – as soon as possible.

Lithuania already pays 40% more for gas bought from Gazprom than what Germany pays for the same gas, and there is little doubt that Russia is doing everything possible to prevent the Baltic States from developing their own energy sources. Russia has already taken a number of worrisome, significant steps to maintain and enhance its energy monopoly here.

The Baltic States may soon be even more squeezed and caught in a trap if the Nordic countries and the EU do not do more to help in achieving a much higher degree of independence from Russian energy.

The aspect of altered safety and balance in this region could easily be the next step, and we think the Baltic States, the Nordic countries and EU should look very carefully into this situation.

Here are two of the comments we have received to our yesterday's issue of VilNews:

The true export of Russia is wholesale corruption, all-out cynicism

Aage, greetings. While in no way disputing the main thesis of your piece, I would like to supply a quick comment on its opening posit, concerning the "potential new alliance between France, Germany, Poland and Russia." Russia, I am afraid, is the odd man out in that suppositional constellation. It is, at present, a less than benign autocracy, and its economic model can only be described as unmitigated kleptocracy. 60-70% of its hard-currency revenue is due to oil and gas export, it is the world's third-largest international supplier of mineral resources, and so some of the more energy-dependent European countries, willy-nilly, exercise a cravenly "pragmatic" approach in their bilateral relations with Russia's ruling regime, agreeing to turn a blind eye even to some of its more blatant violations of human rights and economic freedoms. This is a country with no free elections, no freedom of press, no opposition figures ever allowed access to television; this is one of the most dangerous places on earth to be an independent journalist: the murder incidences among that category of people is very high indeed.

According to the Transparency International annual state-corruption ratings, Russia currently occupies the 154th spot out of the total of 178 on their: still ahead of Somalia, yet -- just as an example -- lagging behind Nigeria. And that's the true export of Russia, in the grand scheme of things: wholesale corruption, all-out cynicism. It is, in all, a shameful, thoroughly failed place, right now, I'm sad to say.

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The president of Lithuania, Dalia Grybauskaite,
and president of the United States of America, Barack Obama.

USA's president, Barack Obama, visits Europe this week. Ireland, England, France and Poland are on his programmer on this trip to Europe, the 9th as U.S. president.

Obama's weeklong tour is all about tending to old friends in the Western alliance and securing their help with daunting challenges, from the political upheaval in the Mideast and North Africa to the protracted war in Afghanistan.

A priority for the president and his allies will be to more clearly define the West's role in promoting stability and democracy in the Arab world without being overly meddlesome and within tight financial limitations.

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