Lithuania on verge of corruption scandal because of Belarusian contraband

The flows of fuel from Belarus to the EU via Lithuania have grown by more than 60 times in five years.

The total value is approaching 1 billion litas (around 400 million dollars). The fuel is being imported by the means of the customs procedure 42, which allows for paying taxes not in Lithuania, but in the fuel recipient country. The European Commission warns that such a procedure gives way for large-scale abuse

Lithuanian entrepreneurs, who cracked the procedure for the fuel transit, use the protection of high-ranked officials in Lithuania and Belarus. Not only the oil processing plant Baltneftekhim, controlled by Lukashenka, caught the attention of law enforcement agencies, but also Lithuania’s criminal underworld leaders, among whom there is repeatedly convicted Arunas Pukialis, known under the nickname Shvinius. It is exactly him, who coordinates the decisions on who will be allowed to start the business in Belarus.

It is claimed that this person’s blessing is necessary for many Lithuanian entrepreneurs, who want to start their business in the neighboring country, and the repeatedly convicted citizen of Lithuania maintains friendly relations with high-ranked Belarusian officials.

State tax inspection‘s deputy head Arturas Klerauskas named the scale of the probable abuse.

“In the recent years there has been significant increase in oil products imports and their subsequent shipments to other EU countries. From 2007 to 2012 the transit volumes increased from 13 million to 870 million litas. At the same time in the neighboring Poland an opposite process in being observed – the shortening of imports to this country”, - he said.

A year ago a scandal broke out in Poland, when law enforcement agencies discovered an illegal scheme for fuel transit. Diesel fuel came to Poland from Belarus via Lithuania and Latvia. A paper company, supplying the fuel, avoided the value added tax (VAT). According to the calculations, Poland’s budget could have lost around a billion zlotys in a year (800 million litas).

Polish media claimed that oil products transit via Lithuania and Latvia was organized by people from Lukashenka’s entourage. During the investigation the names of the Belarusian dictator’s son Dzmitry Lukashenka, the owner of the Interservice company Mikalaj Verabej, an entrepreneur Jury Chyzh, who in the end was sanctioned by the EU, were mentioned.

Arturas Klerauskas explained, how the tax evasion mechanism worked:

“Lithuania is an intermediary between the West and the East. Oil products are imported from Russia and Belarus, where they are cheaper. However, an additional risk emerges because of that. The 42 procedure was provided for simplifying working conditions for business – to avoid current assets getting frozen. If a Lithuanian enterprise buys diesel fuel from a Belarusian supplier and imports it to Lithuania, it immediately states that these oil products will be subsequently exported, that is why the importer escapes taxation at the moment of imports”.

The chairman of the Parliament’s anti-corruption commission Vitalius Gailius explained why it is that law enforcement agencies and entrepreneurs are so reluctant to speak on the topic. In his opinion, so far especially bad damage to the state is caused by shadow activities, and its organizers work under the protection of influential representatives of the authorities: “I did encounter such crimes, but I firmly stick to my principles and do not comment on investigations. As of today the problem is that we do not qualify such an activity as organized crime, that is why such a view of this contraband type exists. This is a form of organized crime, which is done by organized groups of criminals, among other it is done under a corrupt cover”, - the commission’s chairman said.

Gailius confirmed that there is information that the same diesel transit routes from the Belarusian Baltneftekhim plant, which were involved in last-year’s events in Poland, also exist in Lithuania.

That Arunas Pukialis has long grown out of his racketeer’s sweatpants is confirmed by his connections in Lithuania.

Lithuania’s officials cannot operate in the territory of another stated, but the collected data allows to claim that the interests of the Belarusian authorities can be represented in Lithuania by underworld leaders, who have become entrepreneurs.