2020.01.08 17:15

Entire Baltic stock market to suffer from Grigeo pollution scandal – economist

BNS 2020.01.08 17:15

The entire Baltic stock market might be affected after a subsidiary of a publicly traded Lithuanian company was accused of polluting the Curonian Lagoon, says Žygimantas Mauricas, a chief economist at Luminor bank.

Prosecutors on Tuesday launched an investigation into Grigeo Klaipėda, a paper manufacturer, suspected of releasing untreated wastewater into the Baltic Sea bay.

Read more: Klaipėda plant accused of polluting Lithuania's Curonian Lagoon

Read more: Company claims breakdown responsible for pollution in Curonian Lagoon

On that same day, the Nasdaq Vilnius Stock Exchange suspended trading in Grigeo shares.

Mauricas compares the situation with the recent money laundering scandal in Estonia which damaged the reputation of the entire Baltic banking sector.

Investors view the Baltic countries as a single region, the economist says.

“In terms of reputation, with no doubt, damage has already been done, and not only for the company [Grigeo], but for the whole stock market [...] of the entire Baltic region,” Mauricas told BNS.

People in Klaipėda, where the paper manufactory is based, had been complaining about pollution from Grigeo Klaipėda for some time before the investigation was launched. Klaipeda Mayor Vytautas Grubliauskas told BNS on Tuesday that the company had been among several suspected of polluting the environment.

Mauricas says the problem is that environmental protection services often ignore people's complaints.

“There's a general attitude [among public institutions] in Lithuania to barely respond to such complaints,” the Luminor analyst said. “Second, if they do get attention, measures are not taken for various reasons. Who could deny corruption is not involved?”