Government doubts LISCO privatization

  • 2000-12-07
  • Rokas M. Tracevskis
VILNIUS - The Lithuanian government will decide on further steps in the process of privatizing the Lithuanian Shipping Company (LISCO) in several weeks, officials said after a Cabinet meeting on Dec 5. The ministers asked the Lithuanian State Property Fund to look into legal consequences that might result from canceling the deal to sell 75.16 percent of shares in LISCO to B.B. Bredo B.V., a company registered in the Netherlands, before making any decisions.

Robertas Dargis, chancellor of the government, told reporters it was necessary to examine legal consequences in order to know how much a cancellation of the agreement might cost the state.

"It was the buyer who breached the agreement. Our government did not make obstacles for Bredo to pay the money on time," Dargis said.

The government is considering further steps in LISCO's privatization process after Bredo failed to pay 188.64 million litas ($47.6 million) for the 75.16 percent stake in LISCO by the deadline, Dec. 1. The Dutch company was to invest 304 million litas in LISCO within the next few years, according to the agreement with the Lithuanian SPF of Oct. 19.

Bredo explained its refusal to pay by referring to actions by LISCO's minority shareholders, which allegedly limited Bredo's rights to the management of the company, as the reason for the withdrawal.

According to the daily newspaper Lietuvos Rytas, a group of small shareholders appealed to the court, asking it not to allow Bredo to sell or put up as collateral the LISCO's 10 best ships to offshore companies in the Marshall Islands.

Small shareholders said that Bredo is a paper dragon, lacking sufficient funds for managing LISCO. They accused Bredo of plans to sell LISCO's 10 best ships and to meet in this way certain requirements of the agreement with the Lithuanian SPF.

"Maybe Bredo was acting in a less than clean way if Bredo is afraid to pay. The Dutch consortium would pay and leave Lithuanian politicians to fight among themselves if their deal with the state property fund were clean," independent MP Julius Veselka told The Baltic Times.

The agreement was signed by Stasys Vaitkevicius, then director general of the state property fund, on Oct. 19, the last day in power of the conservative-led administration. The media and the new liberal/social liberal government expressed doubts about the deal, saying that LISCO was being sold suspiciously cheap and the terms of the deal were not favorable for te the state. The new government forced Vait-kevicius to resign from his post.

Viktoras Uspaskich, an independent MP and chairman of the parliamentary economics committee, also expressed no regret at Bredo's withdrawal.

"It is necessary to announce a new tender. The way of selling LISCO was disgusting," Uspaskich told The Baltic Times.

Gintaras Striaukas did not reject the idea of a new tender. "It would be good to restructure LISCO by separating its ferry and tramp vessel operations before putting them up for sale. We would get bigger price in this way," Striaukas said.