Last year 4 out of 10 executives of state and municipality-owned enterprises were connected to political parties

Published March 1, 2018

In 2017, 4 out of 10 executives of state and municipality-owned enterprises were connected to political parties, mostly to social democrats, liberals and conservatives. It was revealed by Transparency International Lithuania analysis that can be accessed at www.manovalstybe.info.

Following the elections of Seimas and municipality councils, largest state and municipality-owned enterprises have undergone changes within senior leadership. For example, after 2015, heads of municipality-council electoral commission changed at 37 municipality-owned enterprises. After 2016, heads of Seimas electoral commission changed at 27 state-owned enterprises.

For the most part, this situation is not any different than what followed after the previous elections of Seimas and the municipality councils. For example, after 2007, heads of municipality council electoral commission changed at 37 municipality-owned enterprises, after elections in 2011 – at 31 enterprises. Following the elections in 2008, heads of Seimas electoral commission changed at 37 state-owned enterprises, after elections in 2012 – at 42 enterprises.

Some of the enterprises tend to change their executives after every election, sometimes even more than once. For example, following the elections in 2007, heads of Vilnius city municipality-owned UAB “Vilniaus vandenys” changed twice; after elections in 2011 – once, and after elections in 2015 – twice. Heads of Kaunas city municipality-owned UAB “Kauno gatvių apšvietimas” changed after 2007 municipality council elections; after elections in 2011, they changed three times, and after elections in 2015 – once.

TI Lithuania study shows that state and municipality-owned enterprises are not resistant to influences coming from political and business spheres. It is rarely that members of state or municipality-owned enterprises will publicly declare their interests, i.e., activities or other circumstances that could possibly influence their decision-making. Out of 25 largest state-owned enterprises with established boards, only one in five (5 enterprises) publishes the private interests of their members. Out of 30 municipality-owned enterprises, only every tenth (3 enterprises) does so as well. Meanwhile, information regarding board composition is published by 21 state-owned and 27 municipality-owned enterprises.

The study results reveal that often members of the boards are not aware of how to declare their interests or when exactly to refrain from participating in decision making by the board. A part of them also states that private interests are not controlled by their boards.

The study also evaluates how transparent is the board’s distribution of financial support. According to participants of the investigation, politicians are trying to influence the boards’ decisions regarding distribution of financial support, especially if they do not have clear criteria or regulations regarding the matter. After checking the websites of the largest enterprises, it seems that information regarding procedures of financial support distribution was published by two-thirds of the state-controlled enterprises (9 out of 14), and slightly more than one third of municipality-controlled enterprises (11 out of 29).

During the research, TI Lithuania conducted confidential, half structural qualitative interviews with heads of state and municipality-owned enterprises, current and past members of the boards, institutions with ownership rights and representatives of supervisory authorities. Interviews were taken during the period of November 2017 – January 2018. TI Lithuania also analyzed what purposive information regarding management of private interests and political influence resistance is published by 30 largest state-owned enterprises based on 2016 income and 30 largest municipality-owned enterprises. Connections between company heads and political parties were determined based on data provided by Centre of Registers and the Central Electoral Commission of the Republic of Lithuania.

The study was financed by the Nordic Council of Ministers.

For more information: Sergejus Muravjovas, sergejus@transparency.lt, +370 689 97579