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Lithuania to Let Them Fail...

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  • Lithuania to Let Them Fail...

    Lithuania opts for "Jail 'em and Fail 'em" approach to criminal banking institutions.

    "Jail them and Fail them" - it has to catch on...


    VILNIUS, Lithuania (AP) - A Russian businessman who owns Portsmouth Football Club and has tried to invest in cash-strapped car maker Saab has been arrested in London in connection with a money laundering probe that has rocked Lithuania and Latvia, officials said Friday.

    Vladimir Antonov, 36, and a Lithuanian partner, Raimondas Baranauskas, 53, were detained Thursday on an arrest warrant issued by investigators probing alleged fraud and money laundering at his banks in the Baltic states, Lithuanian prosecutor Tomas Krusna told reporters.

    The Bank of Lithuania said late Thursday that his bank there, Snoras Bank, will be liquidated, calling it the best solution for country's financial system and economy, which were jolted after the bank was nationalized and its operations halted.

    Lithuanian regulators claim that hundreds of millions of euros were siphoned from Snoras, the country's fifth-largest financial institution, while Latvian authorities have said that similar asset-stripping took place on a massive scale at Latvija Krajbanka, a subsidiary bank controlled by Snoras.

    Lithuanian bank chief Vitas Vasiliauskas said the government was liquidating the bank rather than waste taxpayers' money trying to help "a plane that won't fly."
    "There is no other way to solve this situation," he said.

    The decision to liquidate Snoras means that Latvijas Krajbanka, which Snoras controls through a 68 percent stake, is almost certain to suffer the same fate given Latvia's meager financial resources as it emerges from one of the world's worst recessions.

    When asked about Antonov's arrest, London police read a statement saying that two men - age 36 and 53 - were arrested in response to a Europe-wide arrest warrant in London's financial center. British officials do not name suspects until they have been charged.

    Police said the two men remained in custody overnight and are due to appear in a London court later Friday.

    Lithuanian prosecutors on Wednesday issued the warrant for Antonov, who owned over 60 percent of Snoras, and Baranauskas.

    Antonov told the Lithuanian daily Respublika in a phone interview published Thursday that he feared for his life.

    "I returned to London because I live and work here - my family is here. Where else can I go? Russia? That would be a one-way ticket. I would have to stay there for safety, but this would be considered an escape attempt," he said.

    "I am ready to testify...I understand that extradition is inevitable. I can say it openly - I am scared that I may get killed," Antonov said.

    Latvian officials had hoped that Lithuania's government might be able to salvage the banks, and Prime Minister Valdis Dombrovskis was due to travel to Lithuania on Friday on discuss the issue. However, once news of Snoras' liquidation broke, Dombrovskis canceled the trip.

    Lithuania's Finance Ministry said Friday that they would pay out all guaranteed deposits - up to euro100,000 ($132,000) - at Snoras by Christmas - requiring some 4 billion litas ($1.5 billion) in funds.

    Latvia's government was due to hold an emergency meeting to discuss the fate of Latvijas Krajbanka.

    Authorities in both Lithuania and Latvia say the two banks' collapse does not pose a systemic risk since they are mid-sized and the two states have ample reserves to guarantee deposits.

    Latvijas Krajbanka was Latvia's 10th largest bank by assets after it was taken over by regulators on Monday.

    Janis Brazovskis, an official with Latvia's Finance and Capital Markets Commission who was appointed to oversee Krajbanka, said Wednesday that Antonov's failed attempt to acquire the troubled Swedish automaker Saab might have triggered the Baltic banks' downfall.

    He said that approximately 100 million lats ($200 million) were siphoned from the bank to increase its charter capital and finance Antonov's investment projects - including the unsuccessful takeover of Saab.

    Deposit holders in both countries are now forced to wait in long lines to withdraw money from cash machines, while companies and municipalities have seen the working capital virtually disappear.

    Baranauskas, who owned just over 25 percent in Snoras, said last week that Lithuania's decision to nationalize Snoras was "robbery" and an attack on Antonov.
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  • #2
    Re: Lithuania to Let Them Fail...

    The Latvias Krajbanka was a formerly state owned bank where most old age pensioners still had their pension accounts. They can now withdraw $100/day max, and according to current plans I believe that all funds up to the guaranteed level are to be paid out by the state in 20 days. Anything above that level is probably lost. This simply guarantees that everyone in Latvia has been re-alerted to the fact that banks are inherently risky places to keep your assets.

    Apparently the Russian "clown/faux" oligarch owner "borrowed" (stole?) essentially all the money, which is twice as much as Latvia has in its bank guarantee fund.
    Now this was only the 6th largest bank in Latvia, and is not a major crisis even for little Latvia, but what happens if/when several major banks of major countries suddenly discover that most all their assets are vaporized?

    Pictures From A Latvian Bank Run As MF Global Commingling Comes To Town

    If anyone is wondering why the collapse of MF Global after the discovery of its commingling and theft of client funds was the single worst thing that could happen to market confidence, then look no further than the small Baltic country of Latvia where precisely what Jon Corzine's firm did to its clients, has happened at the bank level. Businessweek reports: "Lithuanian prosecutors issued an arrest warrant for Vladimir Antonov and Raimondas Baranauskas who are former shareholders of Bankas Snoras AB. Both men are suspected of embezzlement and document forgery, the Prosecutor General said in a statement on its website today. Baranauskas is also suspected of accounting fraud and abuse of authority, it said." Kinda like Jon Corzine, if not by the actual authorities, then by everybody else. And just like in the US where the lack of confidence in the system following the MF filing, so in Latvia the people have decided to hit the ATMs first and ask questions later.
    Justice is the cornerstone of the world