Roundup: Shipper in troubled waters puts Lithuanian state companies under scrutiny

Dalia Grybauskaite, Lithuanian president, met with the transport minister on Wednesday to discuss the situation of the failing of Lithuanian shipping company as well as governance of other strategic state controlled companies.

All five cargo ships of Lithuanian shipping company with crew of around 100 remain stuck at ports in Italy, Portugal, Poland, the U.S. and Senegal due to seizures requested by the creditors and workers of the indebted company.

After meeting the president, Rimantas Sinkevicius, the transport minister, said Wednesday is the last day for the company to file for bankruptcy, otherwise the ministry will start the process by itself.

"The decision has already been made, the supervisory board and the board of the company has asked the Lithuanian shipping company to file for bankruptcy. The deadline is today," Sinkevicius told journalists at a press conference after the meeting with the president.

"Otherwise, the main shareholder will take the decision," he added.

The transport ministry is the main shareholder controlling 56.66 percent of the listed company. Sinkevicius has earlier said it would be better for all the stakeholders of the company to see the company filing for bankruptcy.

According to Sinkevicius, around 5 million euros are needed to cover the debts of the seized ships. Total debts of the company amount to 20 million euros.

CRITICAL SITUATION

Sinkevicius said authorities are now concentrating on bringing back the seized ships and helping the crew members.

According to the latest reports, after receiving a short-term credit line, the ships with the most critical condition received fuel and food supplies earlier this week, after fuel reserves reached the levels insufficient to generate electricity needed for air-conditioning. Meanwhile, crew members from the ship seized in Italian port told Lithuanian media the situation remains critical.

The ships of the state controlled Lithuanian shipping company were seized due to unpaid debts for fuel. Italian port authorities seized one of the ships after requests from its own crew due to unpaid wages. The company owes around 1.5 million euros for the crew members.

PRESIDENT'S CRITICISM

Problems with Lithuanian shipping company have put the broader scope of Lithuanian state controlled companies under scrutiny from the country's highest officials. Grybauskaite accused the transport ministry of ignoring the deteriorating situation of Lithuanian shipping company for years. She urged the ministry to take care of the seafarers and make decisions on the company's future no matter how painful it would be.

"This case only reaffirms the traditions of faulty governance in state controlled companies," said Grybauskaite in a press release from the President's office.

The president also paid attention to Lithuanian railways, a railway company wholly owned by the transport ministry. According to Grybauskaite, due to inappropriate attitude of Lithuanian railway which are responsible for implementation of Rail Baltica 2 railway project, Lithuania hasn't received more than half of the funding, or around 172 million euros, it applied to Connecting Europe Facility.

"This kind of work cannot be tolerated," the president's office said in the press release.

INEVITABLE BANKRUPTCY

Eugenijus Gentvilas, the former head of the Klaipeda seaport, said the current situation with the shipping company is a consequence of wrong decisions taken after efforts to privatize the company had failed around 13 years ago.

"First, it was a reckless decision to take a 13 million U.S. dollars loan. Second, its activities were ineffective," said Gentvilas in an interview with radio station Ziniu Radijas, adding that the global crisis which saw demand for cargo shipping and freight rates going down worsened the situation.

"In 2010 they had 11 ships, now only five are left and they're all seized," said Gentvilas. Endit