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Williams in trouble again

  • 2000-10-26
  • Rokas M. Tracevskis
VILNIUS - Dark clouds appeared over U.S.-based Williams International, co-owner and operator of Lithuania's oil concern Mazeikiu Nafta. However, nobody doubts that Williams will stay in Lithuania.

On Oct. 18 the Lithuanian Constitutional Court ruled that the Lithuanian Parliament did not have the right to pass laws enabling the Lithuanian government to accept basic property liabilities and commit itself to covering losses incurred by Williams during privatization of Mazeikiu Nafta.

Some provisions of the laws violated the constitution, according to the court. The court's decision might force the Lithuanian government and Williams to revise the privatization agreement of 1999.

The Constitutional Court's ruling followed a petition from MPs in the Social Democratic Party and the Democratic Labor Party. They were represented by attorney Gediminas Bulotas.

"It is possible to raise questions about the legality of the agreement [with Williams] itself now. Any agreement can't contradict the laws of Lithuania and Lithuania's constitution," said Bulotas, commenting on the verdict of the Constitutional Court.

However, he could not comment on whether Lithuania's property liabilities to Williams would cease to exist after the Constitutional Court's ruling. The court pronounced its judgment on the Lithuanian Parliament's laws, passed especially for Williams, but not on the agreement between Williams and the Lithuanian government itself. "The wording of the agreement had not been analyzed and is almost unknown to the public," Bulotas said.

"The opposition was saying [before signing the agreement] that it would be the wrong step. There was no reaction [from ruling Conservatives]. We have no joy that a bad job was done and now we won in court," said Ceslovas Jursenas, leader of the Democratic Labor Party.

He said that the new Parliament and government should investigate the agreement with Williams. "However, we should be very cautious and not harm the investment climate in the country," Jursenas said.

Acting Prime Minister Andrius Kubilius said that lawyers would investigate the deal with Williams again. "If something contradicts the constitution, we can't live with it," commented President Valdas Adamkus.

On Oct. 29, 1999 Williams and the Lithuanian government signed an agreement, calling for Williams to purchase 33 percent of Mazeikiu Nafta for 600 million litas ($150 million). The Lithuanian government remains the main shareholder of Mazeikiu Nafta, but Williams gained operational control of the oil refinery, pipeline system and an offshore import-export terminal.

Then the Conservative Party's Prime Minister Rolandas Paksas handed in his resignation in protest against the financial commitments of Lithuanian state in the deal. Two non-party ministers, Economy Minister Eugenijus Maldeikis and Finance Minister Jonas Lionginas, also decided to step down in solidarity with Paksas' opinion.

In October 1999, Paksas said he objected to the part of the deal that requires Lithuania to cough up 1.4 billion litas in long-term financing to help pull Mazeikiu Nafta out of its economic slump. Paksas could not disclose details of the secret agreement.

After the scandal, Paksas left the Conservative Party and joined the Liberal Union. Maldeikis and Lionginas followed him.

Now, after the Liberals' successful parliamentary election in October, Paksas is expected to become the prime minister and wants Maldeikis and Lionginas back at their ministerial posts too.

Paksas and Maldeikis said that the agreement with Williams might be revised, but the agreement itself will survive.

Randy Majors, the director general of Williams Lietuva, the Lithuanian subsidiary of Williams International, said that it was too early to predict what effect, if any, the Constitutional Court's decision might have on the agreement between Williams and the Lithuanian government. Majors urged the Lithuanian government to think about "the 4,000 employees of the Mazeikiu Nafta" before coming to any conclusions about the Constitutional Court's ruling.