“Something between OnlyFans and a telephone scam”. What will be the outcome of the financial scandal surrounding the Lithuanian prime minister?

Since the end of May 2025, a political scandal has been brewing in Lithuania: Lithuanian news outlets have been publishing investigations with sensational headlines revealing possible corruption on the part of Lithuanian Prime Minister Gintautas Paluckas. The essence of the case is that in 2024, the company "Garnis", co-owned by the prime minister himself, received a preferential loan of €200,000 from the state bank ILTE. The company was small and relatively new, while another company owned by the prime minister, "Emus", was not eligible for the grant due to its high income. The competition did not allow businesses with high incomes to participate. The loan application was submitted while Paluckas was already in office as prime minister, so an independent investigation characterized the situation as a “conflict of interest.”

The scandal remains one of the most discussed topics in the Lithuanian media. The prime minister's ratings are falling, new details of the investigation are being published, old scandals are being brought to light, and both Lithuanian investigative authorities and, to some extent, the European Public Prosecutor's Office have been involved in the investigation. The situation was even commented on by Transparency International as a “risk of conflict of interest.”

Lithuanian Prime Minister Gintautas Paluckas. October 2024. Justinas Stacevičius/LRT

The Lithuanian prime minister himself responded with sharp criticism to all the accusations, calling them “an attempt to profit from groundless accusations.”

The Lithuanian prime minister himself responded with sharp criticism to all the accusations, calling them "an attempt to profit from groundless accusations" and comparing the investigation to “something between OnlyFans and a telephone fraud.” Just a month after the publication of the opinion polls, the prime minister's approval rating fell to a record low and now stands at around 34%, compared to around 45% in May, according to a poll by the "Vilmorus" centre.

The war with "Emus"

ILTE – a national development bank, which in Lithuania is a state institution designed to promote the development of the business environment in the country. Not so long ago, the bank adopted the «Startuok» program, which aimed to help small and medium-sized businesses.

In 2024, the company “Emus,” which was engaged in the production of electronics, applied for a preferential loan under the competition. The co-founder of the company was a Lithuanian citizen. In 2024, "Emus", a company engaged in the production of electronics, applied for a preferential loan under the competition. The co-founder of the company was the Lithuanian prime minister, who owned 51% of the company's shares. Since the company's undistributed profit amounted to more than €1.5 million, it was not allowed to participate in the competition. Instead, another company, "Garnis", which was also involved in the production of electronics and whose co-founder was also the Lithuanian prime minister, owning 49% of its shares, won the competition.

The company applied to participate in the program a few days after the former head of the Social Democratic Party, Viliya Blinkevičiūtė, announced Paluckas as her successor. Paluckas was also one of those who actively campaigned for reforms in business lending. As a result, “Garnis” won a grant for a preferential loan in the amount of €200,000.

What does it mean in practice?

The prime minister could have used his influence as head of government on ILTE Bank to obtain a loan, but through a front company. According to the investigation, the goods purchased by "Emus" were paid for through the loan accounts of "Garnis". In this regard, the opposition called for the prime minister's resignation, and an extrajudicial investigation was launched.

The loan story is not the only one that casts a shadow on the prime minister's reputation. In May, he was spotted fishing at a private villa with Druskininkai Mayor Ričardas Malinauskas, who was charged with bribery in 2019. In 2013, Paluckas owned «Sagerta», a company that developed bathymetric maps of lakes and received loans totalling €180,000 between 2013 and 2017, which have never been repaid. The loans were issued by "Uni Trading", a company closely associated with businessman Darius Vilčinskas, who is known for his close ties to the country's political elite.

Recently, law enforcement agencies started another investigation against the prime minister over the purchase of real estate at a price reduced by nine times from a company that evades paying rent.

Demonstrative investigation

Due to current events, the situation has reached a crisis point. The opposition is calling for the prime minister to resign, while the coalition is actively defending him. The government has decided to conduct a pre-trial investigation, with the Financial Crime Investigation Service (FNTT) being the only agency investigating the "Garnis" case. The anti-corruption agency, the Special Investigation Service (STT), has not started a separate investigation, but the European Public Prosecutor's Office has given orders to appoint one of the STT employees to investigate together with the FNTT. Two other agencies are also conducting separate investigations: the Chief Commission for Professional Ethics (VTEK) and the State Tax Inspectorate (VMI). The latter's investigation ended with a statement that no violations had been found. Other investigations are still ongoing.

It is important to note here that the body responsible for investigating corruption is not involved in the investigation, and this may reflect the personal interests of government officials: it is unacceptable for the head of government to be accused of corruption. Even if these accusations are groundless, they could significantly damage the coalition's ratings and cause a political crisis, as Paluckas has only been in office for seven months.

A risky strategy

All representatives of the Social Democratic Party have stood up for the prime minister and begun to deny the accusations against him. The opposition, as mentioned earlier, is demanding an investigation - best case, and resignation - worst case. The key problem facing the ruling party is that they have to keep the person in office while their ratings are steadily declining. On July 11, social surveys began to be published, in which the Christian Democrats overtook the ruling Social Democratic Party for the first time since the last parliamentary elections in 2024.
Thousands of people protest in Vilnius' Independence Square. July 2025. D. Umbrasas/LRT

Since the prime minister's case involves not only the Financial Crime Agency, but also Transparency International, the European Prosecutor, and the Anti-Corruption Agency, the hype surrounding the "Garnis" scandal has only increased. As a result, the coalition has been criticized, and constant “black swans” are only escalating the situation, not in favour of the Social Democrats: there are more and more investigations emerging regarding the prime minister’s questionable activities, protests involving thousands of people are already underway, and a recent investigation claims that the coalition party "Nemunas Dawn" is being financed by Russian businessmen. Paradoxically, the party itself promotes Euroscepticism and anti-Semitism , which is one of the reasons for the criticism of Paluckas, so the situation with “Garnis” can largely be considered a reason for the final outbreak of dissatisfaction with the current government. Interestingly, the "Nemunas Dawn" party itself has no major conflicts with the government and has not even commented on the recent events surrounding the prime minister.

In addition, the situation is escalating against the backdrop of the upcoming "Zapad-2025" military trainings between Russia and Belarus, which will take place this fall. Despite the fact that Lithuanian President Nausėda claims that these trainings will be on a smaller scale, and the Belarusian authorities report that the trainings will take place further from the border, Lithuania has long been concerned about the threat posed by Belarus and Russia. The country's defence capabilities are being questioned by the public due to the increase in illegal border crossings from Belarus into Lithuania, and after the recent incident involving the crash of a Russian UAV in Lithuania, this can only intensify dissatisfaction with the current government.

The problem with the coalition is that it is dragging its feet on the investigation and sacrificing its ratings in favour of keeping Paluckas in office. This can be explained by the unwillingness to cause a political scandal and provoke a political crisis in a country that faces threats from Russia and especially Belarus in the form of illegal migrants. But this is already a threat to the party itself, as opinion polls show that it does not have a definitive monopoly and could be overtaken by the Christian Democrats.

What's next?

It is unclear how the situation with the prime minister will turn out. However, he is not the only reason for the decline in public opinion toward the current government. Recent tax reforms in the country have caused a similar storm of criticism from the public. The most likely scenario is the prime minister's resignation without a judicial investigation: he is already using aggressive rhetoric in the media regarding the accusations, protests are continuing across the country, and the new tax reforms are not being cancelled. Paluckas may resign on his own initiative to demonstrate personal political responsibility (since the party has already stood up for him), but this could happen under pressure from the coalition and with possible guarantees that no criminal proceedings will be brought against him as a result of a “conflict of interest” related to “Garnis”. However, this scenario is a short-term perspective, as it needs to be done now to save the party’s ratings.

Remigijus Žemaitaitis, leader of the “Nemunas Dawn” party. 2024. Raupelis / LRT

The second, but less likely scenario is the status quo, with the possible partial rollback of tax reforms. This is directly indicated by the still unfinished investigation, the prime minister's active appearances in the media, the absence of conflicts within the coalition, and the absence of violations according to the results of the tax inspection.

The last, but also likely scenario is resignation followed by a judicial investigation. If the situation becomes critical, the party may resort to this step to secure its ratings, turning the prime minister into a scapegoat to demonstrate loyalty to society. In the worst case, this could lead to the collapse of the coalition and early parliamentary elections, where there is a risk of Russian interference and the promotion of pro-Russian proxies. The coalition is fully aware of all the risks, so it will not allow the situation to escalate.

The future of Lithuanian Social Democrats

The scandal involving the Lithuanian prime minister came as a surprise to everyone. The intense defence of the prime minister has trapped the coalition and limited its room for manoeuvre. Protests continue with high intensity, the investigation is ongoing, and criticism of the coalition is growing. The Prime Minister is being asked to resign, and new details regarding the 'central' scandal or other new scandals involving the Prime Minister emerge every week.

This issue is also important for Ukraine. Since 'Nemunas Dawn' entered parliament and joined the coalition, and given its potential ties to Russian oligarchs, the three largest parties in the Seimas could immediately become new opponents in the event of a political crisis and dissatisfaction with the Social Democrats: the Social Democrats themselves, the Christian Democrats, and 'Nemunas Dawn'. Although the last one does not have direct pro-Kremlin narratives in its activities, it openly criticizes Lithuania's rapprochement with Taiwan, accuses Western countries of trading with Russia, thus trying to justify trade between Vilnius and Moscow, and criticizes Lithuania's national sanctions against Russia.

The Seimas' policy could be a failure if no action is taken now. But since no measures are being taken at all, we can only say that the government is playing the long game, where the results may become apparent in a month, given that the rating is falling quite rapidly. If the “conflict of interest” is confirmed by the investigation, it could lead to a political crisis, but even if it is justified, it will be extremely difficult to restore the reputation of the Social Democratic Party.