An analysis of State Tax Inspectorate (VMI) asset declarations has revealed that several Lithuanian politicians, state officials and their relatives maintain significant portions of their wealth in cash rather than in bank accounts. While many officials claim these funds are the result of legitimate long-term savings, the presence of large liquid sums has raised questions regarding transparency and financial oversight.
The “Red Flag” of Large Cash Holdings
According to Martynas Endrijaitis, the Deputy Head of the VMI, holding large amounts of cash is viewed as a risk factor in both national and international practice. Specifically, possessing cash amounts exceeding €100,000 is considered a “red flag.”
Endrijaitis noted that while large cash holdings are not inherently suspicious if the source of the money is easily explained, unclear origins could suggest illegal activity or undisclosed income. The tax administrator monitors these amounts by checking whether an individual’s declared expenses align with their reported income.
“The incredibly fact that a person disposes of a large amount of cash, a sum of €100,000 or more, is a red flag, a certain risk factor,” said M. Endrijaitis.
Profiles in Liquidity: Notable Declarations
Among those declaring significant cash reserves, Robertas Puchovičius, Vice Chairman of “Nemuno aušra,” holds the highest amount. He reported €455,900 in cash for 2024, with no funds held in a bank. Puchovičius stated the sum was accumulated over many years through dividends and property sales.
Kastytis Masalskas, an advisor to former MP Darius Varnas, declared €259,800 in cash for 2024. Masalskas, who cited concerns over cyberattacks and banking stability as reasons for his preference, previously declared similar amounts in prior years. However, records show that in 2018, Masalskas declared €609,000 in income but paid no personal income tax, a discrepancy he stated he does not remember.
Remigijus Žemaitaitis, leader of “Nemuno aušra,” reported €277,700 in total savings, of which €214,000 is held in cash. Žemaitaitis defended the practice as a matter of “guarantee and security,” noting that some of the funds were inherited from his father.
Social Democrat Ramūnas Vyžintas declared €205,000 in cash, with only approximately €3,800 in the bank. Vyžintas, who has been in business for 33 years, maintained that his funds were legally withdrawn as dividends and expressed frustration when questioned about his privacy.
Debates Over the Right to Cash
The issue of cash usage has become a political flashpoint. The “Nemuno aušra” party is currently initiating a consultative referendum to ask citizens if the Constitution should be amended to guarantee the right to settle transactions in cash. The party argues that restricting cash could negatively impact elderly citizens and those in rural regions.
Other officials provided varied justifications for their holdings. Aidas Gedvilas described his €175,000 in cash as a “financial pillow” for unforeseen circumstances and retirement. Eugenija Neverdauskienė, an advisor to MP Kęstutis Bilius, stated she withdrew €137,000 from the bank due to low interest rates and concerns regarding the war.
Scrutiny of Business and Family Assets
Some declarations have drawn attention due to the relationship between personal cash and business entities. MP Artūras Zuokas declared €133,900 in savings, with €120,000 in cash. While Zuokas claims his income stems from property sales and rentals, data shows he frequently borrows sums between €255,000 and €500,000 from his company, “BNA Grupė,” which holds €1.6 million in undistributed profit.
In other instances, discrepancies in family declarations have surfaced. Lina Vėgėlė, wife of MP Igno Vėgėlė, declared €153,000 in cash for 2024. While her savings grew by €18,000 over the previous year, her declared annual income for 2024 was less than €400. The MP suggested the funds may have come from his own income brought into the household.
The outcome of the proposed consultative referendum could influence future legislative debates regarding the constitutional right to use cash. If discrepancies between declared income and growing cash reserves persist, the State Tax Inspectorate may increase individual risk assessments for high-net-worth officials.
Frequently Asked Questions
Why is holding large amounts of cash considered a risk by tax authorities?
Large cash holdings, particularly those exceeding €100,000, are considered a “red flag” because they can potentially mask illegal activities, undisclosed income, or tax evasion if the source of the funds is not clearly explained.
How does the VMI verify if the cash declared by officials is legitimate?
The tax administrator monitors these sums by analyzing whether an individual’s expenditures and lifestyle are consistent with their officially declared income and assets.
What reasons do officials give for preferring cash over bank deposits?
Commonly cited reasons include personal security, protection against cyberattacks, concerns regarding banking stability during wartime, and the desire to avoid low interest rates offered by banks.
Do you believe the right to use cash should be protected by the Constitution?
