“We’ve invested in canned food instead of nuclear power” – that’s how the funds NDX Energija received after the LEO LT 2009 liquidation are described in the VP White Book.
At that time NDX Energija received 680 million litas (196, 9 million euro) from purchased LEO LT shares. Yet an investigation into business influence on policy conducted by Seimas National Security and Defense Committee (NSGK) chairman Vytautas Bakas raises the question regarding the paid out dividends during the administration by Western Power Grid (WPG).
In 2009 chairman of the board of the Investors Association Vytautas Plunksnis calculates that “over that period while the WPG belonged to the owners of Maxima, around 700 million litas (202, 7 million euro) were paid out to the owners in various ways.
Member of the current NDX Energija observers” council Lina Karkliauskaitė gave details to DELFI on the amount because not everything was paid out as dividends.
Phase 1 – Privatisation of WPG
In the results of the NSGK investigation, endorsed by the Seimas and presented to the General Prosecutor and taking into account information gathered and the circumstances around the founding of LEO LT by the national investor, it is again accessed as to whether a criminal offense was committed in the establishment of a national investor.
At that time it was suggested to the Seimas that it request the Energy Commission to determine if the founding of LEO LT and its activities by an independent investor were to the detriment of Lithuania and then propose ways of mitigation.
LEO LT’s beginnings are considered to have been in 2003 when NDX Energija which was managed by the owners of Maxima won the tender for the privatisation of WPG. According to what Ms. Karkliauskaitė now says, the privatisation of WPG was held by public tender in which the Achemos group as well as NDX Energija took part.
NDX Energija won the tender having offered 156,4 million euro, i.e. significantly more than the initial selling price of the shares portfolio set by the state, that being 104 million euro and 24,6 million euro in liabilities.
WPG shares were listed on the stock exchange and then NDX Energija paid another 40, 8 million euro for WPG shares in 2004 to other small WPG shareholders – 197, 2 million euro in total was paid for 97 % of WPG shares.
Phase 2 – Re-evaluation of assets and amendment to the law
In 2004, WPG assets were revalued from 571 million to 2,351 billion litas (165, 4 million and 681 million euro respectively). That same year the Seimas amended the Electricity Act and indicated that, when setting the upper limits of electricity diffusion, distribution and supply services, the value of the supplier’s assets is taken into account. It is also stated that the profit rate is calculated from this value.
Verslo Žinios summarized this as follows: “Based on such a scheme, the greater the electricity distributor’s wealth, the more expensive it becomes for consumers and the more profits the company has.”
Raimondas Kuodis, Deputy Chairman of the Board of the Bank of Lithuania, said earlier that he was shocked by an interview by an ex-head of the National Control Commission for Prices and Energy in November 2004 saying that politicians were detached from doubling electricity prices.
Mr. Kuodis said that after some adjustment of assets, which was performed by both WPG and EPG and Lietuvos Energija, it was somewhat strange that since 2005 Lietuvos Energija had not asked for a higher price cap.
“Of course those who thought up this scheme were pragmatic enough and contrived to double the price of electricity – and gradually in order to avoid a consumer backlash. They asked that the price of electricity be increased from 2005 by 10 % only but in actual fact this was enough to scuttle the introduction of the euro in Lithuania in 2007. At that time we exceeded the inflation criteria by 0, 1 % and the 10 % increase in the price of electricity increased inflation by 0, 3 %” said Mr. Kuodis.
Stage 3 – millions in dividends
Ms. Karkliauskaitė states that after privatisation, WPG was managed economically.
“Administrative and other expenses were reduced, inefficient investments were discontinued and so the company generated a positive cash flow and could pau out returns to its shareholders who at that time numbered over 4 thousand.
With a change in its authorised capital structure WPG’s authorised capital in 2004 was reduced by 116 million euro and in terms of the number of shares NDX Energija held 112, 9 million euro. This amount was not paid out but was converted to into a loan that was later transferred to banks.
From 2005 to 2007 WPG shareholders were paid out dividends – around 89 million euro and of that NDX Energija received about 58 million euro in dividends. Another 27, 8 million euro of payable dividends was converted into a loan that was later transferred to banks” she said.
Ms. Karkliauskaitė argued that after an assessment of NDX Energija’s investment in the risky energy sectors (profitability depends entirely on state regulation) and the economic circumstances of the time (the average annual inflation of about 5%, and an average interest rate of about 5%), return on investment was not exclusive.
“NDX Energija’s investment in LEO LT was a huge business failure” she said.
Phase 4 – LEO LT L
Ms. Karkliauskaitė said that in 2007 KPMG valued WPG’s shares from 685 to 848 million euro, EPG’s from 642 to 794 million euro and Lietuvos Energija’s shares from 594 to 744 million euro.
“These values were used to calculate share ratios in LEO LT” she explained.
Ms. Karkliauskaitė said that in 2008 NDX Energija contributed to the incorporated LEO LT WPG shares with a “dividend portion” that at that time it could not also offer to LEO LT into which state-administered EPG and Lietuvos Energija are contributed.
“It was in 2008 that 176 million euro in dividends paid out by WPG were received by LEO LT of which only 38, 3% belonged to NDX Energija. These funds were necessary for LEO LT to ensure the start of strategic project development work (the construction of a nuclear power plant and electrical connections with Poland and Sweden).
NDX Energija never received dividends or any other payouts from LEO LT. Only at the end of 2009 with the end of LEO LT, NDX Energija was paid 196, 9 million euro from sold LEO LT shares. This entire amount was paid to NDX Energija with the approval of the government” she said.
In 2009 the government decided to liquidate LEO LT.
“At that time NDX Energija and the state were in a difficult economic situation and so although the LEO LT founding agreements provided for dispute resolution arbitration in Stockholm, NDX Energija chose a goodwill exit from the project. All countries confirmed that they have no claim against each other and will not have in the future” said Ms. Karkliauskaitė.
The ending – new investments
During the time of the stakeholder conflict, as stated in 2015 in the Vilniaus Prekyba “White Book”, there was a most unexpected turning point for NDX Energija.
“In Lithuania the openly maligned NDX Energija holdings, created from funds which the group got back from its share in the liquidated LEO LT, now manages long-life food manufacturing enterprises in Poland, Slovakia, Czech Republic and Belarus. Simply put, we’ve invested in canned food instead of nuclear power” the publication states.
As Ms. Karkliauskaitė noted, by signing a peace agreement with the Lithuanian government, NDX Energija has turned over a new page in its activities and is now known in Europe as the NDX Investment Group.
“At the end of 2011, NDX Energija was split up and in 2010 to 2015 shareholders of the new NDX group invested in factories manufacturing pet food and canned food for people and which operate in Sweden (Doggy AB, the biggest manufacturer of dog and cat food), Poland (Mispol SA a manufacturer of pet food and canned food for people), Slovakia (Novofruct SK s.r.o. a manufacturer of baby and canned food) as well as in other European countries she says.
According to the Centre of Registers, NDX Energija shareholders are currently the Nerijus Numavičius Holdings Metodika B.V. registered in the Netherlands, Bertona Holdings Limited which is managed jointly by shareholders of Vilniaus Prekyba which is registered in Cyprus, Attexo OU registered in Estonia, the Lithuanian company Kalpa (which belongs to Ignas Staskevičius), Biruliškių Projektas (owned by Mindaugas Marcinkevičius and Vladas Numavičius).
A belated offer
Darius Kuolys a visible public figure at the time of the LEO LT saga told DELFI that he believes that NSGK’s current proposal to access the project is late.
“At that time we raised the issues and had we been able to answer at that time, we could still have given clarity. Now the train has long gone. We could only look at the situation in terms of democracy and political decision-making.
It’s a rather serious precedent when state officials who have good intentions but don’t have any respect for the democratic state and their citizens, turn to business. They essentially are resolving to hand the entire energy economy back into private hands, believing that it will be salvation.
It didn’t seem like that to us at the time because how does one reconcile public interest with group politics and business interests? It’s natural that these issues arise and it would be good to consider them in a wider field, rather than look for a settling of scores” he said. Mr. Kuolys described Mr. Bakas’s current statements as being more journalistic and not legal or political.
“This is not very good, with the whole study, the State Security Department certificates. I see some kind of superficiality, rejection and selectivity. It makes a very bad impression because the problems are serious but they are discussed and investigated in a very dismissive way.
This game looks multi-layered. There is all-out war against everyone and this kind of thing shouldn’t happen in a civilized society. There should be certain rules as to what we are aiming for and what we’re setting up. Mr. Bakas looks like a lone dancer dancing to an unknown dance and it is unclear whether he himself knows that “, – said Mr. Kuolys.