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Sunday 24.06.2018 | Name days: Jānis
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Lithuania: municipal companies remain haven for ruling party cronies

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULinas Jegelevicius for BNN

Municipal companies in Lithuania have long been havens for the ruling parties’ high-ranking members and «necessary people» who, for some reason, are left without a post in the highest echelons of power. Mindful of the situation, Lithuanian President Dalia Grybauskaitė has bristled against the Social Welfare Ministry-crafted amendments to law on Budgetary Companies envisioning limitless terms for heads of local utilities.

«Perennial stay guaranteed»

The bill, among the other things, foresees that the director’s term can be extended without any competition after the first four years are served if the performance is evaluated very well or good. According to the draft, the director would be entitled to stay on top of company after the second term too, but would be required to go through competition with other candidates.

The Government has endorsed the draft, but the head-of-state warned that the motion embeds «perennial stay in the post.»

«The draft, which seemingly received «go» in the last hearing of the Government, to me sounds like a travesty because it erases necessity for limitation of terms. I don’t want to start guessing (what lies behind it), but it would not be very nice if the tenure-ending Government is trying that way to keep its current high-level personnel in the posts of power,” the President told Lithuanian journalists during her visit to a crisis centre in Vilnius.

To get enacted, the bill needs to pass scrutiny of the Cabinet and of the parliamentarians.

Government defends bill

The Social Democratic Government, meanwhile, denies the initiatives have anything to do with the nearing end of the Government’s term. In fact, the bill is all about the striving to touch up the quality of municipal company management, according to Government.

«We believe that the enactment of four-year terms for municipal company heads with the possibility to extend them would help not only to closely monitor and assess their capabilities but also find new leaders. According to data by the Lithuanian Ministry of Economy, more than half of all municipal company heads were appointed to their posts 10 years ago and some even before the mark. A quarter of the directors have been in their posts over two dozen years. Therefore, the Government’s substantiated doubts over the efficiency of the supervisory institutions overseeing operations of municipal companies and their heads,» Government says in a statement.

The bill also foresees a possibility to call off the director if he appears to be not up to the requirements by the employer, the Municipality’s Council.

Law can do good and bad

Approached by BNN, Kęstutis Daukšys, a MP from the ruling Coalition’s Labour Party, said he is not in favour of the draft.

«If the head of company is bad, he needs to be asked to leave right away, and if he good, then has to be allowed to work as long as he show good results. There are not too many smart, thinking and organizational skills- exercising heads around. If the company performs well, why the top of the company has to be shuffled?» the lawmaker asked rhetorically.

Speaking to the daily Lietuvos Žinios, Ričardas Malinauskas, mayor of Druskininkai in southern Lithuania, voiced opinion that the proposals cannot be viewed unilaterally.

«It never happens that a single act of legislation would suit all 60 municipalities in the country, as many mayors, all the 141 members of the Parliament and all the heads of municipal companies,» Malinauskas underlined.

In his words, if the results of a municipal company are excellent, riddance of the director after four or eight years will do no good for it.

«And if the director fails to cope with the tasks and the enterprise underperforms, there has to be a legislative possibility to cut him after a year in the office, or even sooner,» the mayor reasoned.

To ramp up his words, he employed the example of Druskininkai Water Supply Company, which performance, in his words, is «fabulous», the investments are well thought-out and the price of water is one of the lowest in the country.

«To change the director at the helm of the company for perhaps two dozen years now makes no sense absolutely» he stressed.

Company heads tend to «run out of steam»

However, Konstantinas Skierus, director of JSC Palangos komunalinis ūkis, a communal service utility in the resort of Palanga, says that a head of a municipal company «runs out of steam» after eight, or more, years in the office.

«This is an observation from my own experience. After many years most directors of municipal companies lack progressive ideas, so I do support the legislative initiative,» Skierus told BNN.

Reminded that he himself has spent over eight years with the Palanga utility and is still overwhelmingly praised for his accomplishments, he, nevertheless, says he is not «exception.»

«I stick to my point. Refreshment is needed,» he repeated.

To infuse more transparency end efficiency into management of municipal enterprises, their boards have to consist of independent members, not officials from the municipality, he says.

«We will never have transparency with municipality officials on boards. There are on and off talks on necessity to change the situation, but no actions have been taken in the regard so far. The modern world, for example, Finland which I visited and inquired of the kind of things, has independent people on municipal company boards. Unless we follow the example, Lithuania will keep its name as a land of brothers-in-law, i.e. a land where people are rewarded highest posts because of their merits to the local ruling party and their leaders,»  Skierus underscored.

Company boards have to be reshuffled

Meanwhile, Rimantas Antanas Mikalkėnas, the deputy mayor of Palanga, hesitates whether the enactment of limited terms for municipal company directors would work wonders.

«It might work in some companies but may not (work) in others,» he says.

With many years on top of local utilities, he says, many of the directors get inevitably «tangled in the mob» of acquaintances, cronies and so on.

«A fixed term would prevent from such entanglement, I believe,» the deputy mayor pointed out to BNN. «On the other hand, if the director does well, it does not make sense to ask him to leave the job after the tenure is over. The law amendments will discourage some of talented leaders to pursue a municipal work career because of the restrictions,» believes Mikalkėnas.

He also supports the idea of appointing members to boards of local municipal companies from «outside.»

«This is how the management of all the Western municipal companies works. I think we are moving towards the same here in Lithuania, but it will take some more time to have it enacted here,» the  municipality official said. He added: «We simply do not have the traditions that the Scandinavians, for example, have. But we will have to accept them in future.»


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  1. josh says:

    It’s horrible…Nearly 30 years independent the country is still laden with Soviet management relics…

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