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Friday 15.11.2019 | Name days: Undīne, Leopolds, Unda

Cancer-stricken PM Skvernelis fends off accusations over concessions to Poland’s Orlen

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Orlen, Saulius Skvernelis, Lithuania, basketball

Linas Jegelevičius for the BNN

Basketball is called Lithuania’ second religion, and with the Lithuanian Prime Minister, Saulius Skvernelis, being an avid fan of the game, the concessions he made to Poland’s Orlen operating an oil refinery in Lithuania’s north-western town of Mažeikiai seem not just ambiguous but possibly fishy too.

Suspicious arrangements

«The allegations Skvernelis is facing are very serious, but it seems to me that many officials tend to give him a slack due to its grave illness (Skvernelis is fighting cancer- L.J.). I really cannot understand why he does not take a long sick-leave to cope with it. He has obviously lost his efficiency (as PM) as a result of chemotherapy that he is undergoing,» Vytautas Dumbliauskas, associate professor of Mykolas Romeris University, told BNN.

To make a long story short, Skvernelis gave Orlen Lietuva concessions worth of millions of euros after Skvernelis met clandestinely Jaroslaw Kaczynski, the leader of Law and Justice, the Poles’ ruling party. The Lithuanian PM’s meetings were brokered by Tomas Pačėsas, a former Olympic medallist and, now, a big shot in Lithuania’s basketball management.

In exchange, Orlen Lietuva allegedly allotted hefty sums to businessmen running basketball club Vilnius «Rytas», Panevėžis «Lietkabelis» and to Lithuania’s Regional Basketball League (LRBL), chaired by the afore-mentioned Pačėsas and Darius Gudelis. Both club owners and the LRBL heads are thought to be close to Skvernelis’ inner circle.

The two basketball clubs did not reveal the value of received support. Meanwhile, the Regional Basketball League admitted the receiving of 10,000 euros.

The revelation was brought to light by the news website. It also stated that, following Skvernelis’ unannounced meetings with the Polish politicians, the Lithuanian subsidiary of Poland’s state-controlled Orlen received discounts on LG’s rail freight rates and successfully bid in state electricity reserve auctions in Lithuania.

The report claims that Orlen Lietuva had its problems resolved after Skvernelis held secret unofficial meetings in Warsaw with Jaroslaw Kaczynski, Polish Prime Minister Mateusz Morawiecki and other politicians and Orlen Lietuva representatives during 2016-2018.

Reportedly, Skvernelis also met Orlen Lietuva CEO Michal Rudnicki and his Polish counterpart in Vilnius in the spring of 2018.

PM admits Olympic medallist’s help

Skvernelis has however publicly admitted that Pačėsas, who is a five-time champion of the Polish national basketball league and who coached the Polish basketball club Sopot «Prokom Trefl» for five years, has helped him to make acquaintances with Poland’s top brass politicians.

The allegations were vehemently denied by cancer-stricken Skvernelis. The PM has rejected the report as «deliberate lies» and insisted that a deal between the state railway company Lietuvos Geležinkeliai (LG) and Orlen’s Lithuanian subsidiary Orlen Lietuva was in line with the state’s interests.

Skvernelis says the resolution of the dispute benefited both the two companies and relations between Lithuania and Poland.

«Deliberate lies and disinformation are being spread,» he told reporters on Wednesday, November 6. «The deal with Orlen was inevitable. The dispute, which had been dragging on for over ten years, was harmful both to LG and Orlen and to the relationship between Lithuania and Poland».

A failure to strike a deal with the Polish company could have cost Lithuania hundreds of millions of euros, according to Skvernelis.

«LG’s tariffs were unilaterally revised, even though a long-term contract until 2024 had been signed… if Lithuania had lost (the legal battle), unilaterally breaching the contract, it would have paid – these are confidential figures but I can say – more than one or two hundred million euros in damages in court,» he argued in his defence.

According Skvernelis, the amicable settlement agreement opened the way for LG to ship oil products to the neighbouring country.

«LG never carried oil products to Poland before. It does now… If we weigh the balance, it would probably be positive for Lithuania,» he said.

Orlen Lietuva is the largest commercial enterprise in the Baltics – its turnover reached 5 billion euros in 2017 and was believed to be in the range last year.

A shift in position on Orlen

Notably, former Lithuanian Prime Minister, Social Democrat Algirdas Butkevičius had claimed that Orlen’s demands were unsubstantiated and damaging Lithuania’s interests. But the shift came with Skvernelis in office.

Referring to a public service obligation (PSO) tariff rebate to Orlen Lietuva, Skvernelis explained that it can only be granted to companies that have no arrears and have executed energy efficiency measures.  When it comes to the former, Orlen Lietuva has debt of 12 million euros to the State of Lithuania accumulated since 2011 as it failed to pay the PSO tax that is aimed at promoting green energy. The company also found itself in million-worth debts for the transportation of rail freight after the Lithuanian government increased the tariff for the transportation of hazardous freight, including oil products.

«A lie is being spread that one can have a rebate even if one has arrears. A hundred and fifty Lithuanian companies are entitled to be granted a PSO rebate. Thirty-nine will use it now. For some reason, one company is targeted,» Skvernelis explained.

With regards to the tertiary active power reserve, where Orlen Lietuva was among the participant companies, Skvernelis insisted that Orlen’s participation in the auction helped to save public funds.

«For example, 22.5 million euros were paid for the reserve service in 2018. Following the auction, where it was purchased from three companies, Orlen, Kauno Termofikacinė Elektrinė and Panevėžio Elektrinė, this service cost 7.59 million euros,» the PM said.

Yet, due to the VIAP debt, Orlen Lietuva initially could not take part in state power reserve auctions in Lithuania. But the company asked for and was granted an exception and subsequently was allowed to bid in auction with other companies. The Lithuanian state has already paid it 6 million euros for a reserve service for two years.

Orlen supports sport

Pressed by the, Pačėsas admitted that Skvernelis and Kaczynski have discussed during their meetings not only general principles of mutual investments, but the issues of Orlen Lietuva too.

When asked if Orlen’s support for Lithuanian sports clubs were discussed with Polish politicians and officials and the group’s representatives, the prime minister said: «We always talk with Polish leaders (about the need for) businesses to be socially responsible. Orlen is a great supporter of social and sports activities from Mažeikiai to Vilnius». «That support is not either for Alvydas Bieliauskas or for Darius Gudelis; it is for the sports club,” he added. «Basketball is not profitable in Lithuania, and shareholders …incur losses,» he added.

Darius Gudelis, a PR expert and a major shareholder of BC «Rytas» is regarded very close to the Lithuanian prime minister, meanwhile Skvernelis’ former road police colleague and now businessman Alvydas Bieliauskas is the president of «Lietkabelis».

Valdas Indriliūnas, director of Lithuania’s Regional Basketball League (LRBL), told BNN that the League last year received support in the amount of 10 thousand euros not from Orlen, but through a fund tasked with support and development of basketball in Lithuania.

«We received it after fulfilling all the conditions stipulated by the agreement. I don’t understand what is has to do with your mentioned company (Orlen),» he underlined.

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