Viewing cable 08VILNIUS637
Title: GOL NOT CONCERNED BY EC INQUIRY INTO LEO FORMATION

IdentifierCreatedReleasedClassificationOrigin
08VILNIUS6372008-08-06 15:49:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Vilnius
VZCZCXYZ0011
RR RUEHWEB

DE RUEHVL #0637 2191549
ZNY CCCCC ZZH
R 061549Z AUG 08
FM AMEMBASSY VILNIUS
TO RUEHC/SECSTATE WASHDC 2616
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
C O N F I D E N T I A L VILNIUS 000637 
 
SIPDIS 
 
E.O. 12958: DECL: 08/06/2018 
TAGS: ENRG PREL LH
SUBJECT: GOL NOT CONCERNED BY EC INQUIRY INTO LEO FORMATION 
 
REF: VILNIUS 537 
 
Classified By: CDA Damian Leader for reasons 1.4 (b) and (d). 
 
¶1.  (C) Following an inadequate first response from the 
Ministry of the Economy, the EC recently made a second 
request to the GOL to explain how the non-transparent 
formation of the national power holding company, LEO LT, did 
not violate EU directives on public procurement, according to 
Deividas Kriauciunas, the head of the European Law Department 
in Lithuania's Ministry of Justice. 
 
¶2. (C) Kriauciunas told us the EC is interested in LEO's 
formation because NDX Energija, the private firm that was 
incorporated into state-owned LEO, was included without the 
public tender required by EC regulations when public 
procurement is involved.  He noted, however, that LEO is an 
energy holding company with no procurement function.  This 
position was echoed by LEO board member Saulius Specius and 
by Arturas Dainius, an Undersecretary at the Ministry of the 
Economy, who asserted to us that it was not necessary for the 
GOL to announce a tender for the formation of LEO, as it 
involved no government expenditure. 
 
¶3.  (C) Neither Kriauciunas, Dainius nor Specius expressed 
concern regarding the possibility that the EC might find that 
LEO must be restructured.  Kestutis Sadauskas, Head of the EC 
office in Vilnius, confirmed to us July 16 that the EC is 
looking carefully at LEO's formation.  So far, the argument 
that LEO has no procurement function is keeping the GOL out 
of trouble.  The GOL is "on thin ice, but it's not broken 
yet" he told us. 
 
¶4.  (C) Specius said that Lithuania may face a challenge 
under EC regulations, when it comes time to create a project 
implementation (construction) company for the new INPP.  He 
said it may be hard for the Estonian, Latvian, Lithuanian and 
Polish partners to justify their firms holding exclusive 
domain over the construction of a new INPP, as the project 
would involve public procurement.  Dainius opined that this 
would not be a problem, however, because national security 
concerns would trump competition law; so long as the Baltics 
remain an energy island separate from the EU, their 
dependence upon Russia for energy resources threatens their 
security. 
LEADER