of the Republic of Lithuania Law on State Treasury, Item 5 of Article 21 of the Law on the Government of the Republic of Lithuania, as well as Article 4 of the Law “On Approving the 1995 State Budget of the Republic of Lithuania and the Specifications of Deductions into Budgets of Self-Governments and Their Subsidies” 17 June 1997, Vilnius The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court Egidijus Jaraðiûnas, Kæstutis Lapinskas, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Pranas Vytautas Rasimavièius, Teodora Staugaitienë, and Juozas Þilys, the secretary of the hearing - Daiva Pitrënaitë, the party concerned - Vytenis Gudelis, a state consultant, and Robertas Martinkus, a state consultant, adviser for the Prime Minister, both are the representatives of the Government of the Republic of Lithuania, pursuant to Part 1 of Article 102 of the Constitution of the Republic of Lithuania and Part 1 of Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, in its public hearing on 4 June 1997 conducted the investigation of Case No. 1/97 subsequent to the petition submitted to the Court by the petitioner - a group of the members of the Seimas of the Republic of Lithuania - requesting to investigate if the 31 August 1995 Government of the Republic of Lithuania Resolution No. 1169-22 “On the Special Auction of Government Securities” was in compliance with the Constitution of the Republic of Lithuania,
of the Republic of Lithuania Law on State Treasury, Item 5 of Article 21 of the Law on the Government of the Republic of Lithuania, as well as Article 4 of the Law “On Approving the 1995 State Budget of the Republic of Lithuania and the Specifications of Deductions into Budgets of Self-Governments and Their Subsidies”. The Constitutional Court has established: I On 31 August 1995 the Government adopted Resolution No. 1169-22 “On the Special Auction of Government Securities” (the said resolution was classified, it has not been published in the official gazette “Valstybës Þinios”, it was declassified by the decision of the 19 March 1997 Government sitting, Government sitting Protocol No. 12, Item 26). The content of the resolution in question is as follows: “In attempt to render support for the Vakarø Bankas and the “Aurabankas” in solving temporary liquidity problems, the Government of the Republic of Lithuania shall resolve:
of the Republic of Lithuania Law on State Treasury, Item 5 of Article 21 of the Law on the Government of the Republic of Lithuania, as well as Article 4 of the Law “On Approving the 1995 State Budget of the Republic of Lithuania and the Specifications of Deductions into Budgets of Self-Governments and Their Subsidies”. II The petitioner grounds his request on the following motives. According to Part 1 of Article 128 of the Constitution, decisions concerning state loans and other basic property liabilities of the state shall be adopted by the Seimas on the recommendation of the Government.
of the Constitution provides that procedures concerning the management, utilisation, and disposal of state property shall be established by law. Item 5 of Article 25 of the Law on the Government consolidates the provision that the Government shall hold, use and dispose of the state property according to the procedures and situations established by law.
of the Law on State Treasury provides that the money resources which are disposed of by the Government may only be used for financing the needs established by the law. Article 4 of the Law “On Approving the 1995 State Budget of the Republic of Lithuania and the Specifications of Deductions into Budgets of Self-Governments and Their Subsidies” granted the right to the Government to take loans only for financing the 1995 state budget deficit. The petitioner alleges that at the time when the Government adopted the aforesaid resolution, the Constitution and aforementioned laws had not granted the right to the Government to adopt the decisions set forth in the resolution, therefore, in the opinion of the petitioner, there exist grounds to maintain that the Government exceeded its competence and that its 31 August 1995 Resolution No. 1169-22 “On the Special Auction of Government Securities” contradicts the Constitutions and the laws. In the course of the preparation of the case for the court hearing, the representative of the petitioner J. Razma noted in writing that on 31 August 1995 the Government adopted the resolution on a state loan regardless of the proposals of the Budget and Finance Committee of the Seimas set forth in Paper No. 109-14-201 of 19 June 1995 for the Government to prepare and submit draft legal acts to the Seimas for deliberation wherein the establishment of the amount of state internal and foreign debts, as well as their legalisation, coping with and other questions linked with basic property liabilities of the state were regulated. The Government neither took account of these recommendations, nor did it move that the Seimas adopt a decision concerning the 50 million litas state loan. III In the course of the preparation of the case for the court hearing, R. Martinkus and V. Gudelis, the representatives of party concerned - the Government - noted in their explanations that, in their opinion, the most important fact is that the Government of 1995, under the cover of the laws then in force, as well as ostensible necessity to strengthen commercial banks, in fact covered embezzlements of certain private persons which had been made in the commercials banks “Aurabankas” and Vakarø Bankas which were indicated in the disputed resolution of the Government. This was confirmed by subsequent events: the means allotted for the said banks by the Government and officially registered as deposits were dispensed, while the deposits themselves were not returned. They are of the opinion that, in adopting the disputed resolution and assessing the actual condition of the said banks, it was practically impossible for the Government not to foresee such a destiny of the deposits. Another aspect of this problem is the fact that state means were embezzled in attempt to make use of then valid laws and other legal acts as a cover. The representatives of the Government called one’s attention to the fact that on the day of the adoption of the disputed resolution the state held shares for only 39, 000 Lt in the Vakarø Bankas and not a single share in the “Aurabankas”. The deposit put with the “Aurabankas” was capitalized - converted into shares of the stock company Turto Bankas which was undergoing the procedure of being established. During the process of judicial investigation the representatives of the party concerned explained that the Law on Approving the State Budget of 1995 permitted the Government to take a loan for financing the state budget deficit. The wording of the disputed resolution of the Government to organise a purposive issue of Government loan bonds in attempt to render support to commercial banks is not a correct one. One might say, that it is for this that the said Government resolution contradicts the aforesaid law. The representatives of the party concerned noted that the money received during the auction, after they had been in the deposits of the commercial banks, were allowed to be used for financing the state budget deficit, therefore, in their opinion, the Government resolution must have consisted of 2 parts: the first - on the issue of Government loan bonds for the purpose of financing the budget deficit, the second - on the right to deposit the received money in the banks providing the shortage of the budget does not arise. The representatives of the party concerned also noted that the deposit of state means in a bank is in itself not its financing. By placing the deposits, the Government was formally not financing the Vakarø Bankas and “Aurabankas”, however, in reality the matters happened to be otherwise. Both aforesaid banks had negative capital, as well as big debts, therefore, when the disputed Government resolution was being adopted, it was evident that the deposits would not return. The Government is entitled to and must strengthen banks, however, it must do so only in pursuance of laws. In the case at issue the state means had been used not rationally. There were a number of violations in implementing the said Government resolution. The state has incurred losses due to the disputed Government resolution. In the opinion of the party concerned, the Government adopted a classified resolution on support for commercial banks as it did not want to publicize the problems of banks to which the public was very sensitive. The Constitutional Court holds that: 1.
of the Constitution stipulates: “Procedures concerning the management, utilisation, and disposal of State property shall be established by law.” The entirety of the rights of management, utilisation and disposal of property constitutes the content of the right to property. The said norm of the Constitution commissions the legislator to regulate state property relations by law. The state property right is a type of public property right. The chapter “The Public Property” of the Civil Code consolidates that the subject of the right to state property shall be the state (Article 97 of the Civil code), while the institutions of supreme state power and governance shall manage, utilise and dispose of state property (Article 99 of the Civil Code). The nature of state property as public property determines respective restriction of powers of subjects who implement property rights of the state. Bearing in mind the fact that the state is a legal subject of the right to property of the state, while the economic owner of state property is society, in that case the right to property of the state must be accomplished in the general (public) interest. Here an exclusive role falls upon the representative body of state power - the Seimas - which establishes procedures concerning the management, utilisation, and disposal of state property by passing laws. The competence of the Government in this sphere is circumscribed by laws. 2.2. Item 5 of Article 21 of the Law on Government prescribes: the Government shall hold, use and dispose of the state property according to the procedures and situations established by law. This norm of blanket character directs to the laws regulating corresponding relations of state property. The petitioner points out that the disputed Government resolution should be assessed bearing in mind the Law on State Treasury, too. In his opinion, the decision of the Government consolidated in the said resolution as regards the use of the borrowed means which became state property contradicts the stipulation of
of the Law on State Treasury which provides that the money resources which are disposed of by the Government may only be used for financing the needs established by the law. In assessing the disputed Government resolution from this standpoint, the Constitutional Court notes that, as a rule, financing is understood as appropriation of finances gratis. Meanwhile the Government resolution ordered the Ministry of Finance which accomplishes the functions of state treasury to deposit in the Vakarø Bankas up to 30 million litas received for selling of Government bonds on condition that the latter shall guarantee the returning of the deposit with its building, while the remaining portion of the means it was ordered to deposit into the “Aurabankas”. The said Government resolution establishes that the means shall be deposited in the said banks for the term not exceeding 4 months, receiving no less than 27 per cent of annual interest. According to the said Government resolution, the uppermost margin of annual interest under which claims had to be satisfied constituted 26 per cent. Depositing of state means in a commercial bank is not financing of the bank, i.e. appropriation of finances gratis. Therefore the disputed government resolution is not to be assessed on such grounds. There also exist no legal grounds to decide the question of the compliance of the said Government resolution with Part 2 which is of blanket character of Article 128 of the Constitution. Taking account of these arguments one should conclude that the disputed Government resolution is in compliance with
of the Law on State Treasury, and Item 5 of Article 21 of the Law on the Government. Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54, 55 and 56 of the Law of the Republic of Lithuania on the Constitutional Court, the Constitutional Court has passed the following ruling:
of the Republic of Lithuania Law on State Treasury, and Item 5 of Article 21 of the Law on the Government of the Republic of Lithuania. This Constitutional Court ruling is final and not subject to appeal. The ruling is promulgated on behalf of the Republic of Lithuania. Justices of the Constitutional Court: Egidijus Jaraðiûnas Kæstutis Lapinskas Zigmas Levickis Augustinas Normantas Vladas Pavilonis Jonas Prapiestis Pranas Vytautas Rasimavièius Teodora Staugaitienë Juozas Þilys
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