STT raids State Tax Inspectorate

  • 2009-05-06
  • By Laima Vaiga

FIST OF IRON(Y): The STT suspects the Tax Inspectorate of having undeclared expenses in its anti-shadow economy campaign.

VILNIUS - Mask-wearing officers from the Special Investigation Service (STT), the country's leading anti-corruption agency, searched the central office of the State Tax Inspectorate (STI) on May 4, confiscating bags full of seized documents and other materials.
"We will seek to provide the answers to all raised questions as soon as possible to ensure transparent activities of our institution, upon which a shadow was cast when compromised and disreputed high-rank officials had been fired" said Modestas Kaseliauskas, the head of the State Tax Inspection.

The investigation relates directly to the STI's project "shadow is not an answer," which encourages businesses to become more transparent and to stop concealing VAT and other taxes. Zimantas Pacevicius, the head of the STT, confirmed the fact that the investigation is related to the "shadow" project and that a few searches in premises of unnamed companies were conducted simultaneously on May 4.

STI claimed to have paid almost 1.4 million litas (without VAT) for advertisements proclaiming "shadow is not an answer. Let's look for the solution together." Ironically, Pacevicius claims that the STT has information that "much higher sums could have been spent."

Asked by the press whether the real price could have been twice as much, the head of the social investigation service said "it might have been so."
 "It's too early to talk yet, people have just started the work" said Pacevicius, at the same time admitting that the investigation has been going on for some time prior to the raids.
Prosecutors from the Department of Investigation of Organized Crime and Corruption, a part of the Prosecutor General's Office, are in charge of the pre-trial investigation, which also relates to a few other public procurement cases, failure to perform the duties, and misuse of powers. No charges have been pressed so far.

Kaseliauskas referral to "compromised, disreputed and fired high-rank officials," was likely a reference to his former assistant, Saulius Trecekauskas, who was dismissed in the end of March.
Trecekauskas was suspected of misuse of powers after an investigation revealed his wife, another public servant with the STI, has grown into a millionaire and owner of quite a few real estate objects in prestigious seaside regions over the course of a few years.

Kaseliauskas underlined that the STI warned law enforcement institutions last year, when suspicions arose. The head of the STI also went to the Chief Official Ethics Commission this year and asked the body to investigate whether Trecekauskas had infringed a balance of public and private interests.

STI representative Darius Buta said he cannot confirm the STT's investigation and searches are connected to the State Tax Inspectorate's address to the institutions, including STT, last year.
"We cannot decisively link the address of the STI last year and the present investigation," he said.
Buta claimed that at the time law enforcement institutions did not find any infringements and stressed that those responsible shall face the consequences.

The public procurement of social advertisement "shadow is not an answer" has raised suspicions before. In January 2009, a group of Seimas (Lithuanian parliament) members addressed the Ministry of Finance with a request to investigate whether the procurement procedure had been transparent.
 "I still don't think that broadcasting videos like that is the best and most effective way to fight with underground economy[…] what employer will think 'oh, it's bad what I'm doing' when he sees an advertisement on television?" said Jurgis Razma, a member of the Lithuanian conservative party.
The Ministry of Finance, however, affirmed the reasonableness of employing social advertisement, but at the same time expressed some doubts whether the effect of the advertisement had been adequate to the investments.