A soft loan granted to Garnis, a company partially owned by Prime Minister Gintautas Paluckas, was issued in line with existing rules, Lithuania’s national development bank said Monday following an internal review.
“The investigation did not identify any significant shortcomings,” said Daina Kleponė, chairwoman of the supervisory board at the Investment and Business Guarantees Agency (ILTE), which initiated the review. “The descriptions of financial instruments and internal procedures clearly define the timelines, stages and required documentation for financing processes.”
The review recommended clarifying the definition of related parties and including a requirement for actual capital increases before signing financing agreements.
ILTE noted that its financial instruments generally interpret the concept of a “group of companies” according to the Law on Financial Reporting by Undertakings. Under this interpretation, companies owned by the same individual are not considered part of the same group.
“The specific description of the financial instrument and the relevant state aid scheme are the main documents used to assess whether an application qualifies for funding,” ILTE said in a press release.
ILTE CEO Dainius Vilčinskas said the findings would help improve internal risk management processes.
“For example, the current situation showed that our interpretation of what constitutes a group of companies is too narrow,” he said. “We should also consider business ties between companies connected through shareholders – natural persons – and how actively those shareholders are involved in company operations.”
The development bank also plans to tighten decision-making procedures for applicants linked to politically active individuals. Future business relationships with such clients will require approval from the management board, and new monitoring rules are being proposed.
ILTE said it is cooperating with law enforcement to address public concerns surrounding the loan to the prime minister’s company.
The internal review was conducted by ILTE’s Audit and Risk Committee, which reports to the supervisory board and includes four independent members.
The review was launched after investigative journalism centre Siena and Laisvės TV reported in late May that Garnis, a company planning to produce battery systems, received a €200,000 soft loan while Paluckas was in office.
Paluckas owns 49% of Garnis. He also holds a 51% stake in another company, Emus, which would not have qualified for the loan due to its operating history. Garnis, too, would have been ineligible if it had been formally classified as part of the same company group as Emus.
The reports sparked public questions about whether Garnis was established to obtain the loan and whether the funds are being used appropriately.
Paluckas’ conduct is under review by the Chief Official Ethics Commission, and the Special Investigation Service has also launched an inquiry. The prime minister denies any conflict of interest and says he is not involved in the day-to-day operations of his businesses.
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