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Lithuania seeks to curb its banks’ appetite for media ownership

In the wake of the collapse of the partly Russian-owned commercial bank Snoras, Lithuania scrambled to find the nearly LTL 5 billion (EUR 1.44 billion) in order to pay out the required compensations to state-insured deposit holders.

It was a heavy financial burden for a country with a 2012 state budget of slightly over LTL 25 million (EUR 7.24 billion).

Lithuanian President Dalia Grybauskaite, however, was less angered by the wrongdoings of the bank owners, who are now facing charges for money laundering and embezzlement, than by an article published before the collapse of the bank in Lithuania’s largest daily newspaper Lietuvos Rytas (Lithuanian Morning).

In November 2011, just a few days before the government’s decision to nationalise the heavily indebted Snoras Bank, Lietuvos Rytas ran a front-page story with the provocative headline: “The order is to crush Lithuanian banks”.

The article claimed that law enforcement agencies were about to clamp down on Lithuanian banks and pinpointed President Grybauskaite as having instigated the measure to “flex her muscles” for the public and show her tenacity in punishing high-level financial swindlers.

Contrary to the story’s headline, no Lithuanian bank suffered any restriction. The government did, however, close down the Snoras Bank after declaring it insolvent, and asked British authorities to arrest the bank owners who were in London at the time.

Lietuvos Ritas is Lithania’s largest daily newspaper

Pernicious ties

With sparks flaring up over the story, media reports came out recalling the fact that a Snoras daughter company, Snoras Media Investments, had acquired 34 percent of the Lietuvos Rytas’ stocks in 2009, making the financial group the second-largest stockholder of the largest Lithuanian daily newspaper.

President Grybauskaite was reportedly infuriated by Lietuvos Rytas’ move to divert the public’s attention from the troubled Snoras bank to herself and to the country’s banking system as a whole.

She reiterated her disapproval of close ties between the media and the financial sector, and hinted that she would support, or, if needed, spearhead, legislation banning media acquisitions by secondary financial institutions.

“I really assess any such kind of relationship very badly, as the media sector is very sensitive, and any form of interference in media outlets can trigger very painful economic consequences for our country,” Grybauskaite told the weekly Veidas (Face).

Nudged by the head of state, several Lithuanian parliamentarians from the parliamentary group “For Lithuania without Corruption” registered amendments in November to the Law on Public Information,  seeking to forbid banks from acquiring media stocks through secondary financial enterprises.

A similar amendment had been already introduced to Seimas (Lithuanian Parliament) in 2009, but had failed to gather sufficient legislative support at the time.

“I believe the amendments stand much a better chance of passing this time, as we all can see the detrimental effect of the heavy involvement of the Snoras daughter company in Lietuvos Rytas,” said Naglis Puitekis, a Conservative MP and one of the spearheaders of the legislative initiative.

Puteikis said it is hard to say how many Lithuanian media outlets are owned by banking establishments.

“Since banks are forbidden by law from owning a media outlet, many banks run them through secondary or tertiary financial institutions. Even state institutions in charge of registering media outlets cannot detect the ties, as they are sometimes opaque,” Puteikis stressed.

He said that his suspicion about the existence of such ties was first aroused by when he noticed bits of information being removed from the websites of the Klaipeda and Vilniaus Diena newspapers, both owned by Ukio Bankas (Economy Bank).

“Somebody explained to me that the information had been removed because it was harmful to the interests of the bank, the actual publisher of the newspapers. Can you imagine such a situation in The Guardian or The Times? I cannot. We have to adapt our media laws to the Western model that has proved itself throughout the centuries,” the Conservative MP said.

Law amendments

Going a step further, Ramute Simukauskaite, deputy chairwoman of Lithuania’s National Region and Town Newspaper Publishers Association, argued that the amendments should not be limited to restrictions to banks and their subsidiary companies.

“The restrictions should be applied to a bigger array of business entities. Especially, those in the alcohol industry. It is not very nice to see a business like MG Baltic, who owns an alcoholic beverage factory, lobbying for the alcohol industry and its products through its own TV channel, LNK, and the trendy website, alfa.lt,” Simukauskaite pointed out.

She also called for forbidding politicians from owning media outlets in Lithuania.

“As far as I know, [Lithuanian MP] Petras Grazulis owns four or five regional newspapers, one of them in the town of Prienai, where I publish my newspaper,” she said. “The publication has become a means for him to disseminate his personal political views and lobbyist activities. We need to put an end to this. These types of owners discredit the whole media. Newspapers owned by politicians should be required to state their political and financial affiliations,” the president of the publishers association stressed.

Lithuanian currency

Paulius Saudargas, a Conservative member of Parliament and a supporter of the amendments, cautioned however that it may prove too difficult to deter the banks and their financial institutions from owning media outlets.

“Frankly, a vast majority of Lithuanian media owners are engaged in one kind or another of financial activities. Lithuania is too small a country to have its media standing on its own, as it has a modest amount of viewers and readers and few advertisers. Therefore, although I support the amendments, I have some doubts whether they will work in this country,” Saudargas said.

Saudargas added that he hoped that the situation of Lithuanian media would improve when the economy picks up.

The amendments to the Law on Public Information are expected to be put for vote in the spring Parliamentary session scheduled in March.

Tags: amendment, bank, dalia grybauskaitė, dalia grybauskaite, ethics, independence, klaipeda, law on public information, lietuvos rytas, lithuania, media, newspaper, seimas, snoras, ukio bankas, vilniaus diena,

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