White-Collar Crime 2021

Last Updated October 21, 2021

Lithuania

Law and Practice

Authors



WALLESS is a modern Baltic law firm with offices in Vilnius, Riga, Tallinn and Tartu. The firm's Baltic legal team unites 100 lawyers with top-tier professionals as leading partners across all major practices in three Baltic countries. The team provides the full scope of specialised region-wide seamless business law services, with a particular strength in the areas of mergers and acquisitions, capital markets, banking and finance, fintech, commercial and regulatory, real estate, tax, dispute resolution, and white-collar and government investigations. WALLESS lawyers help clients to represent their interests in various criminal and judicial proceedings, relying on 20 years of experience. The white-collar and government investigations practice team has practical experience and skills in defending and representing clients in criminal matters that require international co-operation and knowledge of related rules and regulations in cross-border criminal proceedings. WALLESS services include representing and defending clients in pre-trial investigations and court proceedings, official misconducts, enforcement actions, investigations to support due diligence and fraud investigations.

Categories of Offences

According to Lithuanian criminal law, there are two categories of criminal offences: crimes and misdemeanours.

Crime is a dangerous act (act or omission) that satisfies the description provided in the Lithuanian Criminal Code (LCC) and is punishable by imprisonment.

Depending on the sentence that can be imposed on the perpetrator, crimes are classified as:

  • minor crimes (punishable by a maximum duration of three years of imprisonment);
  • less serious crimes (punishable by more than three years, but not exceeding six years, of imprisonment);
  • serious crimes (punishable by more than six years, but not exceeding ten years, of imprisonment);
  • grave crimes (punishable by more than ten years of imprisonment).

The severity of the crime has certain legal consequences, for example:

  • the court generally imposes a non-custodial sentence upon a person prosecuted for the first time for a negligent, minor, or less serious crime (Article 55 LCC);
  • a person is liable for preparation to commit a serious or grave crime (Article 21 LCC);
  • a person who commits a serious or grave crime cannot be released from criminal liability upon reconciliation between himself or herself and the victim (Article 38 LCC) or released from criminal liability on bail (Article 40 LCC);
  • the amount of the penalty or fine is determined upon the severity of crime committed (Article 47 LCC).

Misdemeanour is a less dangerous act (act or omission) that satisfies the description provided in the LCC. As a less dangerous offences, it is punishable by a non-custodial sentence, except for arrest.

Both crimes and misdemeanours can be intentional and negligent.

Offences that do not meet the description provided in the LCC can fall under the regulation of administrative law. The Lithuanian Administrative Offences Code defines administrative offence as a dangerous act (act or omission) which corresponds to the characteristics of an administrative offence, insufficient for offender’s criminal liability. Administrative offences are punishable by a fine.

Elements of Criminal Offence

According to the LCC, a person shall be liable under the criminal law only if the act that he or she has committed corresponds to the elements of a criminal offence – ie, a set of objective and subjective features, which determine if the act can be recognised as a crime or misdemeanour.

The objective side of a criminal offence is defined through a prohibited act, harmful consequences, and causal link (causality) between the two. The place, the time, modus operandi and other facts or circumstances related to the act are significant elements that must be identified to qualify an act as a criminal offence.

Fault (including its content and form) is another important element of a criminal offence. Fault is described as perpetrator’s psychological link to a dangerous act and corresponds to the subjective side of the criminal offence. A person can be found guilty of commission of a crime or misdemeanour only if he or she has committed this act intentionally or negligently.

Intent is classified as specific or general. Negligence is classified as criminally false assumption (nusikalstamas pasitikėjimas) or criminal carelessness (nusikalstamas nerūpestingumas).

Attempt to Commit an Offence

In Lithuanian criminal law, an attempt to commit a criminal offence is an intentional act or omission which marks the direct commencement of a crime or misdemeanour, yet the act has not been completed by reason of circumstances beyond the control of the offender.

A person is held liable for the attempt to commit an offence in the same way that he or she would be held liable for commission of such offence, but the penalty in such a case may be reduced (Article 62 LCC).

Preparation to Commit a Crime

Preparing to commit a crime includes search or adaptation of tools and instruments, production of an action plan, as well as mobilisation of accomplices, or creation of mitigating factors.

A person is held liable only if he or she has been preparing to commit a serious or grave crime.

Limitation Periods

Different limitation periods are provided in Article 95 LCC. Depending on the severity and nature of the criminal offence, limitation periods vary from three years (in case of a misdemeanour) to 30 years (in case of a crime relating to a premeditated homicide).

There is no limitation period for genocide and other crimes against humanity or war crimes.

Calculation of limitation periods

The limitation period starts from the moment of the commission of a criminal act.

The limitation period is suspended if a person who has committed a criminal act escapes from pre-trial investigation or trial. The limitation period is resumed the day the person is detained or when he or she appears before a pre-trial investigation officer, a prosecutor or a court. A conviction may not be handed down if 25 years have passed since the person committed the offence or 30 years have passed since the commission of a crime relating to a premeditated homicide.

The limitation period can also be suspended during the trial. It must be suspended for such period for which the court announces a break in the court proceedings:

  • due to the absence of the accused or his or her defence counsel;
  • until the forensic examination, examination of a specialist or execution of a request for legal aid to a foreign state;
  • due to instruction to the prosecutor or the judge of pre-trial investigation to perform additional procedural actions;
  • due to the right of a new defendant's counsel to familiarise himself or herself with the case file.

The limitation period is interrupted if a person commits a new intentional offence before the expiry of the limitation period. In this case, the limitation period for the first offence begins to run from the date on which the new intentional offence was committed.

In case of a continuing criminal offence, the limitation period begins to run the day the last criminal action is committed.

The LCC regulates both crimes committed in the territory of Lithuania as well as crimes committed abroad. Crimes committed abroad include crimes committed by citizens of the Republic of Lithuania and other persons permanently residing in Lithuania. In individual cases, aliens without residence permits may also be liable under the LCC.

When the criminal offence was committed both in the territory of Lithuania and abroad, it is considered that the offence was committed in the territory of Lithuania if it was initiated, completed or terminated in Lithuania.

According to Article 8 LCC, a person who has committed a crime abroad shall be liable only if the criminal offence is recognised as a criminal offence within the meaning of the laws of Lithuania. If a person who has committed a crime abroad is tried in Lithuania but both countries provide different punishments for the crime, the punishment shall be imposed under the laws of the Republic of Lithuania. However, the punishment cannot exceed the maximum penalty specified in the criminal laws of the state in which the crime was committed.

Legal Entity as a Subject to Criminal Liability

Lithuanian criminal law recognises legal entity as a subject to criminal liability. The criminal liability of a legal entity derives from the liability of a natural person.

A legal person may be held liable for a criminal offence committed by a natural person only if the natural person acted (i) for the benefit of, or (ii) in the interest of the legal person. A natural person may act either individually or on behalf of a legal person, but he or she must have the right to:

  • represent a legal person; or
  • make decisions on behalf of a legal person; or
  • control the activities of a legal person.

To prosecute a legal entity, fault and intention to commit a crime must be established. Although the fault of a legal person is closely linked to the fault of a natural person, they are not identical and cannot be transferred from one to another.

Criminal liability of a legal person does not exclude criminal liability of a natural person who has committed, organised or facilitated the commission of a criminal offence and vice versa.

Reorganisation

Reorganisation by itself is not a ground for releasing the reorganised legal person of criminal liability and terminating the criminal proceedings. Any possibility to apply criminal liability must be decided after assessing the individual circumstances, determining whether the legal person remained criminally dangerous after the reorganisation.

Sanctions for Legal Entities

Penalties that may be imposed on a legal entity are set out in Article 43 LCC. For an offence, a legal entity can be punished by (i) a fine, (ii) restriction of its activities and (iii) liquidation. The list of sanctions for a legal person is exhaustive, regardless of the offence committed.

A legal person may be sentenced to only one penalty per offence. The amount of the fine is set on the basis of the general grounds for imposition of punishments (see 5.2 Assessment of Penalties). The court also assesses whether the company continues to engage in legitimate activities, amount of income, etc. The court may impose a more lenient fine on the grounds that the punishment provided by law may be fatal for the company and may result in harm to innocent persons (eg, employees).

After imposing a penalty on a legal person, the court may order that the judgment be announced publicly through the media.

Penalties imposed on legal persons are not specified in the sanctions of specific articles of the LCC describing different criminal offences. When imposing a sentence on a legal person, the court follows the list of penalties set forth in Article 43 LCC.

The Right to Compensation

The right to receive compensation for loss due to a criminal offence is established in the Constitution of the Republic of Lithuania. This constitutional provision is implemented in the Civil Code and the Code of Civil Proceedings, as well as in the Code of Criminal Proceedings (LCCP).

Civil Action in Criminal Proceedings

Persons who have suffered pecuniary or non-pecuniary damage because of the criminal offence have the right to bring a civil action in criminal proceedings. Such claim is considered in criminal proceedings, together with the criminal case. If the claimant brings a civil action in a criminal case, he or she is exempt from stamp duty.

A civil action is brought by submitting a claim to a pre-trial investigation officer, prosecutor or court at any time during the proceedings, but not later than before the start of investigation of the evidence in the court.

When a civil action is brought during the pre-trial investigation, the investigator must also gather evidence confirming the basis and amount of damage.

In exceptional cases, where it is not possible to investigate the civil claim accurately without delaying the criminal proceedings or without receiving additional evidence, upon conviction the court may recognise the civil claimant's right to recovery of damage and refer the question to civil procedure.

Civil claims of victims of white-collar offences are heard by courts of general jurisdiction. No specific procedural rules are provided for bringing an action or allocating damages for white-collar crimes.

Action in Civil Proceedings

A victim who has not brought a civil action in a criminal case has the right to bring an action in civil proceedings. However, if a civil claim is dismissed by a criminal judgment, the claimant loses the right to bring the same action in civil proceedings.

Case Law

Throughout the past few years, the Supreme Court of Lithuania has developed consistent case law regarding business and corporate crime. The main rules distinguishing civil and criminal liability were defined.

According to the Supreme Court, criminal law may not be applied seeking resolution of civil disputes. It is the last remedy for protection of legitimate rights or interests (ultima ratio) in cases where the same objectives cannot be achieved by softer means provided by administrative, tax or civil law.

Focus of the Law Enforcement Authorities

Observing the latest trends in foreign and Lithuanian financial markets, the supervision of fintech companies has been declared one of the main priorities of the Financial Crime Investigation Service. A separate unit will be set up in the Financial Crime Investigation Service (FCIS) to ensure more efficient supervision.

The focus of the law enforcement authorities has also been set on tracing, seizure and recovery of criminally obtained assets. Imposition of criminal liability for the acquisition or realisation of criminally obtained property has also been strengthened.

Developments of Laws

Developments of the LCC were made by the implementation of the EU directives to fight fraud affecting the financial interests of the European Union.

Developments Due to the COVID-19 Pandemic

Due to the COVID-19 pandemic, the Lithuanian government established several funding means to assist private companies affected by the pandemic. The initial analysis of the use of state aid showed that businesses tend to provide incorrect data or even take additional unlawful actions to meet the eligibility criteria for the funding. The higher risk of fraud or misappropriation of state aid measures is predicted, accordingly resulting in an increase of white-collar cases. Therefore, one of the priorities of the law enforcement is to identify and prevent the negative consequences of the COVID-19 pandemic on the financial system.

Prosecutor as the Main Authority

The prosecutor is the main authority that has the power of prosecution and enforcement for white-collar offences. The prosecutor organises and directs the pre-trial investigation and represents prosecution on behalf of the state in court.

Financial Crime Investigation Service and Police

In Lithuania, the pre-trial investigation of white-collar offences is carried out by investigators of the FCIS and the police. The FCIS is an autonomous law enforcement body under the Ministry of Interior, responsible for the investigation of violations of law against the financial system and related crimes. Within the police, white-collar crime investigations fall within the responsibility of specialised economic crime investigation units (property crime investigation units of the Police Headquarters). Where white-collar investigations relate to organised criminality, they are conducted by organised crime investigation units.

Control by prosecutor

In all cases activities of investigation, officers are supervised and controlled by the prosecutor who may initiate the pre-trial investigation and carry out all or part of investigation actions himself or herself.

Courts

In courts, white-collar cases are examined by the judges of the division of the criminal cases of the courts of general jurisdiction.

Role of the European Public Prosecutor’s Office

Since the establishment of the European Public Prosecutor’s Office (EPPO) on 1 June 2021, white-collar crime investigation has gained a new direction. The role of the EPPO is to investigate and prosecute fraud against the budget of the European Union and other crimes against the EU’s financial interests, including fraud concerning EU funds of over EUR10,000 and cross-border VAT fraud cases involving damages above EUR10 million. Previously, only member-state authorities were able to investigate and prosecute these crimes, and they could not act beyond their own state’s borders. Thus, the establishment of the EPPO should help to improve the effectiveness of international co-operation and the wider investigation of white-collar offences.

In Lithuania, all criminal cases can be initiated:

  • upon receipt of a complaint or notification of a criminal offence; or
  • if the prosecutor or the pre-trial investigation officer establishes the signs of a criminal offence themselves.

The pre-trial proceedings may be started either by a prosecutor or a pre-trial investigation officer. Upon receipt of a complaint or notification statement regarding the commencement of a pre-trial investigation, the prosecutor may also initiate the revision of the data specified in the statement. The prosecutor may delegate the pre-trial investigation officer to clarify the circumstances specified in the statement or complaint before he or she opens the case.

During the proceedings of review of the initial statement, the following actions may be taken: site inspections, hearing of witnesses and (or) the person/institution in whose interest the complaint/notification has been submitted. Such proceedings must be completed in the shortest possible time, within a maximum period of ten days.

White-collar offences are usually investigated by the FCIS or police investigators under the supervision of a prosecutor. If the matter is high-profile and has exceptional public importance, the pre-trial investigation is conducted by the prosecutor.

Collection of Information and Documents

Investigative authorities have broad rights to gather information and documents related to white-collar offences. Both pre-trial investigation officers and prosecutors can issue a written demand that a person or legal entity submit information, documents or any other objects relevant to the investigation of a criminal offence.

Protection of Personal Life and Trade Secrets

If the information or documents in need are related to a person’s private life (eg, bank account information, financial condition and assets, business plans), or the legal entity’s documents contain trade secret or otherwise confidential information, the prosecutor issues a written decision to access such information. The decision of a prosecutor must be approved by the judge of a pre-trial investigation.

Coercive Measures to Collect Documents

Failure to comply with the demand to provide investigative authorities with the required documents or information is punishable by a fine or arrest (Article 163 LCCP).

Where there are grounds for suspicion that documents are objects of criminal offence, or documents and other relevant objects can be hidden or destroyed, the investigative authorities may carry out the search of company premises or a persons’ private premises.

If the investigative authorities know exactly of the whereabouts of documents related to the investigation, they also may enter private premises to carry out a seizure.

On request of the prosecutor, a search and/or seizure warrant is issued by the judge of a pre-trial investigation.

Under urgent circumstances, the search or seizure may be carried out on the grounds of a prosecutor’s or investigation officer’s decision. However, within three days an order of a pre-trial investigation judge confirming the legitimacy of such decisions must be obtained.

Summoning to Questioning/Testifying

A company’s manager, representative, member of the board, accountant, employee or any other third party related to the criminal offence under investigation may be summoned to questioning.

A person who may be aware of any circumstances relevant to the investigation is obliged to testify unless a non-self-incrimination rule is applied.

In general, there is no legal obligation to conduct internal investigations.

Internal investigations are usually advised as a part of due diligence or compliance programmes in order to prevent white-collar crimes. Despite the advantages of internal investigations, in Lithuania they are still not common practice.

International Agreements and Legal Instruments

Lithuania is a party to numerous bilateral and multilateral treaties on mutual legal assistance and cross-border co-operation.

Two main legal instruments of the European Union are available to local authorities concerning cross-border co-operation, namely: the European Arrest Warrant and the European Investigation Order.

Regulations and procedures regarding mutual legal assistance are provided in the LCCP.

Articles 71–76 LCCP regulate the surrender of persons under the EU Framework Decision 2002/584/JHA on the European Arrest Order and in instances provided for by international treaties in force in Lithuania.

Extradition

Lithuania has ratified the Council of Europe Convention on Extradition and its first, second and third additional protocols. Most white-collar crimes are extraditable offences – they are punishable by imprisonment for more than one year, which is a necessary condition to consider a request for extradition.

Article 9 LCC and Article 13 of the Constitution prohibit the extradition of Lithuanian citizens unless an international treaty establishes otherwise. Lithuania has also made a declaration under the European Convention on Extradition that it does not extradite its nationals.

Article 9(3) LCC stipulates circumstances that may constitute the refusal of extradition:

  • absence of dual criminality;
  • a person is persecuted for political crimes or political reasons;
  • a person has been convicted, acquitted or released from criminal liability, or punishment for the committed criminal offence;
  • a person may be sentenced to death for a crime committed in another state.

The above list of circumstances should not be considered exhaustive as international treaties may provide other legal grounds in specific circumstances.

Procedure of White-collar Prosecutions

The procedure of initiation of investigation of a white-collar crime is not different to any other criminal offence. However, the investigations of white-collar crimes are usually initiated by special subjects – tax authorities, the aggrieved party or the FIU (upon criminal intelligence information).

When investigation officers gather enough evidence to support the suspicion on committed white-collar offence, the criminal case is passed through to a prosecutor who prepares the indictment.

Indictment of a Legal Entity

If the white-collar offence is committed solely for the benefit or in the interests of a legal entity (see 1.4 Corporate Liability and Personal Liability), a company may also be indicted.

Depending on the circumstances of the case, the charges against a legal entity may be waived, for example:

  • a legal entity did not benefit from the white-collar offence;
  • the activity of a person, even though he or she acted on behalf of a legal entity, was more harmful than beneficial to a company;
  • the owner (shareholders) of a legal entity were unaware, did not encourage or allow the unlawful actions of a natural person.

Transformation of a Legal Form of a Legal Person

The transformation of the legal form of a legal person is not sufficient ground for dropping charges against the successor. The case law of the Supreme Court of Lithuania provides for the following conditions that must be assessed dealing with such successor’s criminal liability:

  • the moment of reorganisation – ie, whether the legal entity ended only in criminal proceedings, whether reorganisation was planned in advance, the reasons that lie behind the termination of the legal entity, etc;
  • whether the persons who have held executive positions and committed a white-collar offence for the benefit of the legal entity are involved in the successor’s entity (number of these persons, their duties, real influence in the formation of the strategy of the legal entity, participation in the decision-making, etc);
  • whether the successor has taken over the property of the legal entity who has committed the offence, and whether there is a link between the offences committed and the activities carried out by the new legal entity;
  • whether merged legal entities knew (or had or could have known) about the criminal offence committed for the benefit (interests) of the legal entity, the threat of criminal liability, whether they tolerated such criminal offences, accepted the criminal results of these crimes, etc;
  • whether the persons holding managerial positions in the successor’s legal entity changed the control and priorities of the activities of this legal entity and the organisational structure in such a way as to eliminate preconditions for further criminal acts, etc.

Lithuanian criminal law does not provide for the legal possibility for deferred prosecution agreement or non-prosecution agreement to resolve a criminal investigation without a trial.

However, several legal mechanisms to end investigation with less severe consequences can be applied if the defendant pleads guilty.

Plea Agreements

Plea agreements are not available under Lithuanian criminal law.

Pleading Guilty

However, pleading guilty opens possibilities for the defendant to complete criminal proceedings more quickly, with more lenient consequences or even without going to trial.

Exemption From Criminal Liability

The LCC sets out the following grounds for an exemption from criminal liability: 

  • when a person or a criminal offence has lost its danger (Article 36 LCC);
  • due to the minor nature of the crime (Article 37 LCC);
  • due to reconciliation between the perpetrator and the victim or a representative of a legal person, or a state institution (Article 38 LCC);
  • on the basis of the mitigating factors (Article 39 LCC);
  • when the person actively assisted in revealing the criminal acts committed by the members of the organised group or criminal association (Article 39(1) LCC);
  • under bail (Article 40 LCC).

In practice, the most common forms of exemption from criminal liability in white-collar crime cases are: reconciliation between the perpetrator and the victim; representative of a legal person or a state institution; and release under bail. The full acknowledgment of charges is a prerequisite for being dismissed from criminal liability in this way.

Court's Criminal Order

Until the indictment the prosecutor may offer the suspect to agree on the conviction by a court Criminal Order. It is a written proceedings for conviction without a hearing a case in court.

In this case, the prosecutor files a request and the court issues a Criminal Order stating the conviction of the accused and imposing penalties that the prosecutor and the defendant agreed on. However, the agreement made between the defendant and the prosecutor is not binding on the court.

A plea of guilt is not directly indicated by law as a necessity to resolve investigation in this way. However, all circumstances of the case must be clearly established and there must be no reasonable doubt. Thus, in practice the proceedings of a court’s Criminal Order are only possible if the defendant acknowledges all charges.

Abbreviated Criminal Proceedings

In case the accused during the trial (i) pleads guilty, (ii) is willing to testify immediately and (iii) agrees that no further evidence will be investigated, after questioning of the accused, the judge may terminate further examination of the evidence.

The circumstances of the criminal offence must be beyond any doubt and such abbreviated criminal proceedings must be agreed between the prosecutor and the defence counsel.

Defendants seriously consider a court's Criminal Order and abbreviated criminal proceedings, since in both aforementioned cases the penalty imposed by the court is reduced by one-third.

Furthermore, a plea of guilt is a mitigating factor (Article 59(1-2) LCC) that is estimated by the court and may result in an additionally reduced sentence.

In Lithuania, the most common corporate white-collar crimes are fraud, embezzlement and misappropriation of assets, together with forgery or fraudulent book-keeping.

Fraud

According to Article 182 LCC, a fraud is a criminal offence by which the perpetrator acquires property or a property right by deception for his or her own benefit or for the benefit of others, or evades or extinguishes a proprietary obligation.

The acquisition of high-value property by deception is a qualifying feature of a fraud (Article 182(2) LCC). Property, proprietary rights or obligations are considered to be of high value in case of exceeding EUR12,500.

A person may be misled by any circumstances or facts related to the transfer of property (value of the property, its characteristics, the personality of the perpetrator, his or her powers, or real intentions, etc). The deception used by the perpetrator must determine the victim’s decision to transfer the property. The person committing fraud acts with direct intent.

If the perpetrator commits fraud by acting in the name and on behalf of the company, a legal entity may also be held liable for the offence of fraud.

Acquisition by deception of high-value property is a serious crime with the sanction of imprisonment for up to eight years.

Embezzlement and Misappropriation of Assets

Embezzlement of property is an unlawful and unremunerated conversion or transfer of property or proprietary rights entrusted to the perpetrator or in his or her possession at the time of the alleged offence.

Embezzlement consists of both misappropriation of assets (Article 183 LCC) and embezzlement of assets (Article 184 LCC).

Under Articles 183 and 184 LCC, the person or legal entity is held liable for the acts of embezzlement if they:

  • intentionally and unlawfully misappropriated any property which was entrusted and/or was in possession of the perpetrator (Article 183 LCC); or
  • wasted another person's or legal entity’s assets which were entrusted to the perpetrator and/or were in possession of the perpetrator.

Assets may be entrusted to a perpetrator as part of his or her current duties, special assignments, contracts, or other legal bases; the perpetrator has legally defined powers on these assets.

The corresponding penalty for embezzlement of high-value property is imprisonment for up to seven years (Article 184 LCC) and up to ten years (Article 183 LCC).

Forgery

According to Article 300 LCC, forgery means the production of false documents. The perpetrator can either produce the entire new document containing information which does not correspond to reality, or he or she can replace the contents of an existing document with false data.

Forged documents are often used as a tool of deception in a fraud crime. The fact of documents being forged is also often revealed in embezzlement cases: the perpetrator produces false documents in order to justify the use of misappropriated or wasted money.

Sanctions

The sanctions that may be imposed on legal entity are set out in 1.4 Corporate Liability and Personal Liability.

Bribery

The LCC distinguishes two main forms of bribery:

  • passive bribery (acceptance by public officials of an improper benefit or advantage of any nature for himself or herself or for a third party); and
  • active bribery (an offer, promise from a private person to reward a public official).

In case of passive bribery, a public official or a person treated as such (eg, head of the company, doctor, teacher) promises or agrees to accept a bribe, demands, or provokes or accepts a bribe. At least one of these acts is sufficient to entail criminal liability. A bribe may be accepted not only for a specific act or omission of a public official, but also for an exceptional situation or favour in the future. 

In active bribery, as in the case of passive bribery, a bribe may be linked both to a specific desired act or omission of a public official or a person treated as such and to an exceptional situation or favour.

Bribery also includes situations where a public official accepts a bribe indirectly (acting through an intermediary). The most severe sanctions are imposed on persons who have accepted a bribe amounting to more than EUR12,500. Such persons are punished by imprisonment from two to eight years.

Influence Peddling

According to Article 226 LCC, influence peddling is linked to the promise to exercise influence over a bribe (passive influence peddling) or the desire for a person to exercise influence for a bribe (active influence peddling). The fundamental difference between influence peddling and bribery is that, in the case of influence peddling, the aim of the bribe is to influence someone rather than a specific act or omission of a public official or a person treated as such.

Influence peddling may also be committed directly or indirectly.

Anti-corruption programmes provided for in the Law on Prevention of Corruption serve as means to prevent corruption. The anti-corruption programmes are divided into the National Anti-Corruption Programme of the Republic of Lithuania, sectoral, institutional and other programmes.

Article 5 of the Law on Prevention of Corruption establishes corruption prevention measures – namely, corruption risk analysis, anti-corruption assessment of legal acts or their drafts, provision of information to the registers of public officials and legal entities, public disclosure of detected instances of corruption, report of criminal offences of a corrupt nature, etc.

Sectoral, institutional and other anti-corruption programmes are developed by state and municipal authorities and non-governmental organisations which are required to develop such programmes following the National Anti-Corruption Programme and other legislation.

The responsibility for co-ordination and monitoring of the implementation of such programmes lies with managers of such entities or their structural units, or with persons authorised with conducting corruption prevention and control in the entity.

Insider dealing and market abuse offences are described in the LCC. Regulations refer to the European Market Abuse Regulation (MAR).

  • Insider dealing (Article 217 LCC) consists of the disclosure of inside information of a precise nature, which has not been made public – relating, directly or indirectly, to one or more issuers or one or more financial instruments – and which, if it were made public, would be likely to have significant consequences for the financial instruments market and/or the financial system.
  • Market manipulation (Article 218 LCC) comprises activities such as entering into a transaction, placing an order to trade or any other behaviour which gives (or is likely to give) false or misleading information of a benchmark, the issuer or related financial instruments, or it is likely to affect the price of one or several financial instruments, and of which could have significant consequences for the financial instruments market and/or the financial system.

Corresponding sanctions for legal entities are specified in 1.4Corporate Liability and Personal Liability.

The LCC does not contain special legal norms establishing criminal banking. Therefore, the relevant criminal offences (such as illicit banking or financial solicitation, illicit conduct of banking business) may fall under concepts of other white-collar crime, (eg, fraud, illegal activity, embezzlement, abuse of powers).

Tax Avoidance Schemes as Fraud

For a long time, Lithuanian criminal law practice was to qualify various tax avoidance schemes as fraud (ie, crime against private property, Article 182 LCC).

Fraudulent Tax Evasion as a Separate Crime

Over the past few years, the case law of the Supreme Court of Lithuania has clarified that corporate fraud (Article 182 LCC) and criminal offences against the financial system in relation to tax avoidance (Articles 220, 222 LCC) must be distinguished according to:

  • the subject matter of the offence;
  • the specific nature of the relevant tax regulation;
  • the nature of the fraud used;
  • the existence or absence of signs of abduction; and
  • the content of the intent.

Accordingly, changes of Article 220 LCC providing criminal liability for incorrect data on income, profits or assets for tax avoidance purposes have been carried out.

Under Article 220 LCC, a person can be charged with fraudulent tax evasion if he or she, in order to avoid taxes, declared knowingly incorrect data on income, profits, assets or their use and submitted it to an institution authorised by the state.

Only actions that result in the evasion of more than EUR5,000 can be investigated as criminal offence.

Fraudulent tax evasion in the amount exceeding EUR37,500 or committed acting in an organised group is considered a serious crime and is punishable with up to eight years of imprisonment.

Fraudulent tax evasion is committed with the direct intent to evade taxes. Intent consists of the fact that the taxpayer realises that he or she provides incorrect data to the tax authorities and that, as a result, taxes or part thereof will be avoided, and he or she wants to do so.

Tax Optimisation and Tax Avoidance versus Tax Evasion and Tax Fraud

However, even when formally all elements of tax evasion seem to be established, these actions are not necessarily criminal. Application of criminal liability for such acts is possible only after declaring that administrative liability is not applicable. The white-collar case law settles clear boundaries between tax optimisation, tax avoidance (administrative offences), and tax evasion and tax fraud (criminal offences).

An essential feature of tax evasion (criminal offence) is that the taxpayer deliberately conceals from the tax authorities the real circumstances on which fair taxation depends. In other words, the perpetrator deceives the tax authorities in order to obtain a tax advantage. As a result of the fraud used, disclosure of the actual circumstances requires the powers of the prosecuting authorities to conduct investigations which the tax authorities do not have.

Tax avoidance (administrative violation) may also involve certain elements of deception, such as alleged, false transactions that do not correspond to economic logic, with the aim of obtaining unjustified tax benefits. However, in the case of tax avoidance, the formalisation of these transactions fulfils the formal requirements of legality. The quantitative parameters of the transactions are not falsified – they are not intended to be concealed from the tax authorities, so they do not deprive them of the possibility of identifying and responding adequately to distortions of tax legislation.

In case of tax evasion, the deception element is more aggressive and usually involves falsifying facts.

VAT Fraud Cases

In VAT fraud cases, the deception usually occurs through the VAT payer’s interaction with the tax office by submitting forged VAT returns or other documents.

Criminal Liability for Other Breaches of Tax Law

The LCC also establishes criminal liability for non-payment of tax after an official reminder from the authorities (Article 219 LCC), failure to submit a declaration, report or other document (Article 221 LCC).

Lithuanian criminal law stipulates two main offences in relation to financial record-keeping:

  • fraudulent accounting – management of accounting with an intent to violate the requirements of legal acts regulating the accounting (eg, providing false data, non-recording of part or all of economic operations and economic events in accounting documents, also intentional concealment or destruction of financial records);
  • negligent financial record-keeping – failing to keep the books for the required period, failing to keep them compliant with relevant laws, etc.

These criminal offences are punished with a fine or imprisonment for up to two years (Article 223 LCC) and four years (Article 222 LCC).

In Lithuania, cartels and unfair competition offences fall under the regulation of administrative and civil law.

The Competition Council

The Competition Council is the main institution that supervises the compliance of economic subjects with the prohibition of restrictive agreements laid down by the Law on Competition and the prohibition of abuse of a dominant position. The Competition Council also monitors concentrations by deciding whether to authorise the merger of economic operators.

Prohibited Agreements and Abuse of Dominant Position

Article 5 of the Law on Competition and Article 101 of the Treaty on the Functioning of the European Union prohibit agreements between companies that prevent, restrict or distort competition, and the breach of these laws may result in heavy fines.

According to Article 7 of the Law on Competition and Article 102 of the Treaty on the Functioning of the European Union, it is prohibited to abuse the dominant position on the relevant market by carrying out various practices which restrict or are likely to restrict competition, restrict the ability of other economic subjects to operate on the market or prejudice the interests of consumers.

Sanctions

Following an investigation of the infringement, the Competition Council has the right to issue a decision to impose the sanctions laid down by the Law on Competition. Competition offences may result in:

  • a fine of up to 10% of the total annual worldwide turnover in the preceding business year;
  • personal liability for the manager of the enterprise – restricted right to occupy the managing position for a three to five-year term and a fine of up to EUR14,481; or
  • disqualification from public procurement for up to three years; or
  • the victim’s claims for damages; or
  • loss of good reputation.

The head of a company may be restricted for a period of three to five years from holding the position of head of a public or private legal entity, or as a member of the collegiate supervision or management body of a public or private legal person for contributing to a prohibited agreement between competitors or abuse of a dominant position.

The head of legal entity may additionally be fined up to EUR14,481.

The Civil Code of Lithuania establishes key provisions related to consumer rights, and infringements of consumers’ rights are usually subject of civil liability. The LCC does not provide any additional protection related to infringements of consumers’ rights.

However, some offences against consumer rights may also trigger criminal investigations and lead to criminal sanctions. For example, fraud can be committed by selling goods of a different quality, weight or composition than indicated in supporting documents, or by selling goods whose realisation terms (ie, consumption dates) have expired.       

Cybercrimes and Computer Fraud

In Lithuanian criminal jurisprudence, the term “cybercrime” is used in its widest sense – illegal action in computer systems or computer networks. Cybercrimes include offences that are impossible without a computer (eg, hacking) as well as offences for which a computer is not usually necessary, but can involve the use of it (eg, data theft, distribution of child pornography).

Due to the Convention on Cybercrime, there was a substantial amendment to Chapter XXX “Crimes against Security of Electronic Data and Information Systems” of the LCC adopted in 2007.

The main object of the criminal offences listed in Chapter XXX of the LCC is the security of electronic data and information systems:

  • Article 196 “Illegal impact on electronic data” (eg, hacking of the website, illegal connection to the website content management system and modification or deletion of electronic data);
  • Article 197 “Illegal impact on the information system” (eg, DoS and DDoS attacks against websites, servers – the main purpose of such attacks is to affect information system or network to make computer services inaccessible to consumers);
  • Article “Illegal interception and use of electronic data” (eg, databases of public authorities, non-public information of banks);
  • Article 198(1) “Illegal connection to the information system (eg, connection to a third-party banking, email accounts, Facebook, SKYPE, ICQ accounts, illegal access to various non-public data repositories, registries);
  • Article 198(2) “Illegal access to devices, software, passwords, access codes and other data (eg, access to malware which gathers customers data – "Trojan horses", keylogger – as well as illegal possession of passwords and log-in codes of alien electronic accounts.

The perpetrator can be punished by fine, arrest or imprisonment for up to two years. A person responsible for significant damage to information systems either of strategic importance to national security or to information systems of major public importance, the economy or the financial system is subject to the penalty of imprisonment for up to six years.

Breach of Company Secrets

The Law on Competition prohibits the fraudulent use of trade secrets as one of the acts of unfair competition.

The LCC provides criminal liability for commercial espionage (Article 210) and the disclosure of trade secrets (Article 211). A legal entity can be held liable for these criminal offences.

However, Articles 210–211 LCC are rarely applied in Lithuanian criminal law. Illegal disposal of trade secrets is being decided in administrative and/or civil proceedings.

The Customs Criminal Service (CCS) was established on 1 January 2002 upon reorganising the Violation Prevention and Investigation Service of the Customs Department into a separate customs office. The main task of the CCS is to disclose and investigate crimes and other violations of legal acts related to customs activities. The CCS also carries out international and interdepartmental co-operation in smuggling investigations. It is also responsible for the prevention of violation of customs law.

Customs offences are mostly related to smuggling, evasion of customs control (concealment, false description and false declaration), forgery of export, import and transit documents, illegal possession of excise goods, etc.

The main sanctions of customs offences are fine or imprisonment for up to eight years (depending on the value of goods transported). However, the most severe punishment is applied in cases where a person has transported firearms, ammunition, explosives, radioactive materials, drugs or other strategic goods, or poisonous, highly active narcotic substances through the state border of Lithuania. As a result of this crime, a person can be subject to the penalty of imprisonment for up to ten years (Chapter XXXI of LCC, Articles 199–200).

Concealment

Under Article 237 LCC, a person can be held liable for concealment if he or she without prior promise:

  • hid, destroyed or damaged traces or tools of a serious or grave crime committed by another person;
  • hid, destroyed or damaged other criminal objects, or other matters relating to the concealed crime of evidentiary significance; or
  • concealed the offender.

To charge a person for concealment it must be proven that he or she knew that the traces, tools or other criminal objects came from a serious or grave crime.

It must also be established that the person concealed evidence without prior promise to the perpetrator. If he or she has promised the perpetrator in advance to hide items, traces or other evidence of a crime, he or she would be charged for a predicate offence as an accomplice (assistant).

Concealment is punishable by public works or a fine, or a restriction of liberty, or arrest or imprisonment for up to two years.

Relatives and family members of the offender cannot be held liable for concealment.

Other Acts of Obstructing Criminal Proceedings

Under Lithuanian criminal law, other acts of obstructing criminal proceedings are also punishable, namely:

  • obstruction of the functions of a judge, prosecutor, official, lawyer or bailiff (Article 231 LCC);
  • exerting undue influence on the witness, victim, expert, specialist or translator (Article 233 LCC);
  • false testimony, conclusions or assessment (Article 235 LCC);
  • failure to report a crime (Article 238 LCC);
  • transfer, concealment, or destruction of property seized or subject to a temporary restriction of the right of ownership (Article 246 LCC).

Aiding and abetting another person to commit a crime is regulated by Article 24 LCC. The LCC distinguishes four following persons: perpetrator, organiser, instigator and accessory. All of them may be held liable for the offences committed by the perpetrator and of which they were aware and jointly intentionally committed.

The assistance to commit a criminal offence can be either material or psychological. Material help occurs when an accomplice offers certain facilities, tools or removes any obstacles and makes everything as simple as possible for the perpetrator to commit the crime. Psychological help occurs when the accomplice promises the perpetrator to cover or conceal the crime (eg, to sell stolen property).

However, if the perpetrator’s offence has ceased in preparation for or in an attempt to commit it, the organiser, instigator and accessory will be held liable for preparing or attempting to commit the crime. If the perpetrator’s role as an accomplice in the offence was secondary, he or she may be punished by less severe means (Article 62 LCC).

Lithuania faces various money laundering threats, mainly deriving from corruption, the shadow economy, organised crime and the widespread use of cash. Cross-border money laundering threats are also recognised in the fintech sector. The law authorities are aware of these threats and have taken steps to address a number of them.

In recent years, major efforts have been made to target money laundering in relation to criminal activity. However, despite ongoing complex money laundering cases, money laundering convictions obtained to date are mostly related to self-laundering.

Money laundering is criminalised under Article 216 LCC.

A person can be charged with money laundering if he or she, knowing that the property was obtained from criminal activity and having an aim to conceal or legalise it:

  • transfers the property to other persons; or
  • carries out financial operations related to the property; or
  • enters into transactions or uses the property in economic, commercial activities or otherwise restructures it; or
  • falsely claims that the property was derived from lawful activities; or
  • hides the true nature, source, location, disposal, movement of his or her own or another person's property or property or other rights in relation to those assets, knowing that the property was obtained by criminal means.

The physical and mental elements required under the Vienna and Palermo Conventions are all present in the offence. The offence does not cover the conversion or transfer of property for the purpose of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action.

The acquisition, possession and use of the property under Article 216 are only criminalised insofar as they are committed having a purpose to conceal or legalise the property.

The money laundering offence refers to any property obtained by criminal means. Pursuant to Article 224(1) LCC, the property referred to under the money laundering offence includes property of any form obtained directly or indirectly from a criminal act.

Under the Lithuanian criminal law, the money laundering offence does not require a conviction for the predicate offence. It simply refers to property obtained by criminal means. In order to recognise that property as a criminal offence, it is sufficient to rely on the evidence gathered in the case which confirms the criminal origin of the property. A person may be found guilty of the money laundering offence no matter whether property is criminally obtained within or outside Lithuania.

The money laundering offence carries a maximum prison sentence of seven years or a maximum fine of EUR300,000.

A legal person can be held liable for money laundering (Article 216(2) LCC).

Most common defences for white-collar offences in Lithuania are related to the civil (private, commercial) nature of the relationships under investigation. Defence lawyers usually claim that a perpetrator’s decisions comply with the business rules, and that if these actions or decisions have caused damages then it was the risk every business faces and did not overstep the boundaries of civil liability.

Subjective elements of an offence are also often argued, in a defence stating that the perpetrator did not have any intent of committing an offence that inflicted damage to his or her own company.

Regarding tax fraud-related offences, defence is often built on the argument that the perpetrator was forced to reduce the tax burden for objective reasons rather than evasion of taxes. Therefore, he or she did not commit a crime, but rather was guilty of a violation of administrative law.

As company compliance procedures are still not common practice in Lithuania, compliance programmes are rarely used as a defence in business crime cases. The main common defence for legal entities that are being charged with white-collar crimes is that a company did not have the intent for committing a crime, and therefore cannot be held liable for the actions of the individual person that acted in the legal entity’s name.

Lithuanian criminal law does not provide de minimis or any other exceptions for white-collar offences.

The court may recognise a self-disclosure and/or co-operation with investigators and prosecuting authorities as a mitigating factor while dealing with the individual case.

The courts seriously consider active and voluntary co-operation with the law enforcement officials. The fact that the accused has significantly helped to reveal the criminal offence may result in the court imposing a lower penalty (Articles 61–62 LCC).

Also, a person who committed a crime against public service and public interests (such as bribery or influence peddling), may be released from criminal liability if he or she has voluntarily disclosed himself or herself to the law enforcement authority (Articles 226-6, 227-6 LCC).

Active collaboration with investigators and disclosure of criminal offences committed by members of an organised group or a criminal organisation may be a reason to release a suspect from criminal liability for participating in such criminal organisation or an organised group (Article 39(1) LCC).

In 2018 the Whistle-blower Protection Act entered into force. The competent authority which examines or transmits reports of violations to other authorities and co-ordinates the whistle-blower protection process is the Public Prosecutor’s Office.

The main measures that must be implemented by companies to protect, promote and assist whistle-blowers are:

  • ensuring secure channels for providing information on violations;
  • ensuring the confidentiality of a person (data of such a person, which allows establishing his or her identity, may be provided only to the person or institution which is investigating the information about the violation);
  • prohibition on adversely affecting the person who provided the information about the violation (eg, it is prohibited to dismiss a person from work or service, transfer a person to a lower position, harass, discriminate or reduce wages) and, furthermore, it is prohibited to adversely affect the family of such a person;
  • the right to receive compensation;
  • the right to receive free legal assistance;
  • release from liability – a whistle-blower who has participated in the infringement and notified the competent authority thereof following the procedure established by law may be released from liability for participation in such infringement (Article 39(2) LCC).

The burden of proof in white-collar cases, as well as in any other criminal proceedings, is on the prosecution.

The standard of proof that prosecution must satisfy to deliver the case to court is not directly stated in the laws. After being convinced that sufficient data to support the suspect’s guilt for committing a criminal offence was collected during the pre-trial investigation, the prosecutor himself or herself decides to announce the end of the pre-trial investigation and prepares an indictment.

However, the prosecutor’s decision must be based on the evidence “beyond any reasonable doubt”; on the grounds of the in dubio pro reo principle, all doubts must be interpreted in favour of the suspect or accused.

Presumption of innocence applies in Lithuanian criminal law.

General rules for imposition of penalties indicate that the court decides on a penalty in accordance with the sanction of the article providing liability for the offence committed, and also assesses the degree of danger of the offence, the form of fault, the motives of the perpetrator, aggravating and mitigating factors, as well as damage caused by a criminal offence.

In case a defendant is found guilty of a white-collar offence, general rules for imposition of penalties apply.

As a rule, persons convicted of white-collar crime are usually given a non-custodial sentence. The corporate and business crime case law show that courts consider monetary penalties to be more dissuasive than imprisonment.

WALLESS

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Law and Practice

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WALLESS is a modern Baltic law firm with offices in Vilnius, Riga, Tallinn and Tartu. The firm's Baltic legal team unites 100 lawyers with top-tier professionals as leading partners across all major practices in three Baltic countries. The team provides the full scope of specialised region-wide seamless business law services, with a particular strength in the areas of mergers and acquisitions, capital markets, banking and finance, fintech, commercial and regulatory, real estate, tax, dispute resolution, and white-collar and government investigations. WALLESS lawyers help clients to represent their interests in various criminal and judicial proceedings, relying on 20 years of experience. The white-collar and government investigations practice team has practical experience and skills in defending and representing clients in criminal matters that require international co-operation and knowledge of related rules and regulations in cross-border criminal proceedings. WALLESS services include representing and defending clients in pre-trial investigations and court proceedings, official misconducts, enforcement actions, investigations to support due diligence and fraud investigations.

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