In an interview to 15min, Bank of Lithuania governor Vitas Vasiliauskas relates how the central bank decided whom to hire to oversee Snoras bankruptcy procedures, why their services have cost so dearly, and what to make of the recent biting media reports.

– Let us begin from the start. In November 2011, the Bank of Lithuania suspended Snoras operations and announced that the bank would be administered by a foreign firm. This triggered suspicions that the bankruptcy of Snoras had been anticipated and prepared for. How did you choose Simon Freakly as the temporary administrator for Snoras?

– We needed a person with international experience, so we turned to banking supervisory agencies in other countries to recommend us consultants who had worked on similar cases. We were recommended several companies. One was Oliver Wyman which had worked on the banking crisis in Iceland and later assessed Spanish banks' stress resistance. Kroll, an international restructuring and corporate investigations firm, was also suggested as a potential partner. They also mentioned Ovington Financial. So these were the three companies we spoke to.

When we did it, we still had little idea of what the actual situation in Snoras was. We drafted several scenarios: what would happen if...

After speaking to all the three candidates, we picked Oliver Wyman, because their proposal seemed most acceptable. This firm could not be the bank's temporary administrator, because it offered restructuring services.

So it suggested we bring in another international firm, Talbot Hughes McKillop. We contacted them. They refused the offer, saying they were unfamiliar with the legal environment in Lithuania. Then we were recommended Zolfo Cooper and the firm's boss, Mr Freakley. We had a long conversation on the phone with him and agreed to get in touch again, if need be. That's how Mr Freakley came to be our choice for the administrator.

– A year and a half later, the media are still indignant about the lavish compensation for Mr Freakley's services. How much did Lithuania pay for Snoras administration and what was it spent on?

– The temporary administrator's salary was agreed at 140 thousand euros, and that's what we paid him.

In all, Snoras paid 17.5 million litas (5 million euros) to its temporary administrator, including Mr Freakley's salary. This also includes compensation to everyone who worked with him: international firms Oliver Wyman, Zolfo Cooper, international legal adviser Linklaters, law firm Eversheds, data recovery company Kroll Ontrack, auditors Deloitte Central Europe.

– The daily Lietuvos Rytas has recently published allegations about Mr Freakley possibly breaking the Bank of Lithuania's injunction against conducting financial operation, transferring millions of euros from Snoras accounts without authorisation, about him being virtually uncontrollable. Is it true?

– Absolute nonsense. If it were true, you can stone me. This issue was raised by lawyers Gytis Kaminskas and Irmantas Dobilas. They, representing the interest of former owners of Snoras bank (Vladimir Antonov and Raimundas Baranauskas, who are now suspected of embezzling Snoras assets, - 15min), presented these accusations to preliminary investigation institutions, asking to investigate Freakley's alleged misconduct. When their request was declined, they appealed against the decision to the Prosecutor General and, when the latter rejected the appeal, went to court. In July 2012, the court presented its final ruling. It unambiguously states that this transfer was completely legitimate. I suggest that everyone who wants to escalate old topics read the court ruling.

The court also ruled on alleged document destruction and illegal transfer of data. These episodes were refuted, even though someone continues to escalate them. And I can tell you why.

Firstly, the month of July is approaching, when a court in London will continue to hear (Antonov and Baranauskas') extradition case. Moreover, the administrator of Snoras has announced the sale of Snoras Media, subsidiary of Snoras, which owns 34 percent of Lietuvos Rytas (interested buyers were to submit their offers by the end of May, – 15min).

I sincerely believe, that these allegations are an attempt to influence the bankruptcy administrator. I hope he will remain professional and sell Snoras assets in the best possible way, with maximum financial returns to its creditors.

– Lietuvos Rytas also alleges that “since closing Snoras bank, about 100 people were allowed to reclaim their money.” Have you checked this information?

– Supposing significant sums had been taken out of the bank, this would have certainly not escaped the attention of the temporary administrator or the bankruptcy administrator. This is exactly the point of temporary administration as a legal institution – to shut down all systems and freeze the bank in order to assess the situation and make decisions.

Yes, we are familiar with these speculations. One media outlet is particularly active in spreading them. We have made requests, in writing, to the individuals who made public comments on the matter, asking them to present all the information they allegedly hold about illegal recovery of deposits. We turned to parliamentary Budget and Finance Committee chairman Bronius Bradauskas, president of Snoras depositors and creditors association Danukas Arlauskas, as well as to Snoras administrator Neil Cooper and former temporary administrator Freakley – the latter has already publicly refuted this information. We requested that individuals with information present the proofs by 17 June. Let's put the facts on the table and then we'll talk.

– Snoras bankruptcy administration costs millions. What is this money spent on?

– When it comes to the cost of bankruptcy administration, one should bear in mind that it involves great many components. Like operating costs needed to maintain the bank as a business company: employee salaries, the cost of administering and the upkeep of the bank's property, the cost of administering its loan portfolio. The bankruptcy administrator must be paid, too. The sale of assets and international legal procedures are in motion, so the bank hires specialized consultants who also must be paid.

Let's take a look at legal procedures. The civil case Snoras vs its former shareholders is worth over 1.7 billion litas. A procedure in Switzerland against banks suspected in assisting former owners to transfer the bank's securities into their personal accounts – that's worth about 230 million litas. Another direction – the Cayman Islands. There, the sum totals 180 million litas. There are also the talks with the Latvian government on AirBaltic debts. They total 240 million litas.

Not to mention legal procedures directly linked to the bankruptcy case in Lithuanian courts. I was personally a witness in an action of damages against Mr Baranauskas (former president of Snoras bank) for alleged machinations with certain assets kept at the bank.

– What is Snoras bank currently worth?

– The situation of Snoras bank is clear enough. According to data from early April, the bank's total assets stand at a little over 3.1 billion litas. 1.5 billion of those is in the loan portfolio. 0.7 billion litas are in cash accounts. Some of the remaining money is invested into securities. The monetary assets that were reclaimed by Snoras in cash have been invested into government bonds. Other assets are linked to the bank's subsidiary companies.

– Why have these assets not been made available to the bank's creditors?

– At the moment, we are waiting for a ruling from the Constitutional Court about the creditors' line-up. Once that is resolved, there will be a possibility to make cash payments to the bank's creditors. The money now held in the bank could be moved. At the moment, it is about 1.5 billion litas.

– However, the association of Snoras depositors and creditors voice public criticism against the Bank of Lithuania that you opted for bankruptcy instead of trying to save the bank by splitting or nationalizing it. What were the reasons behind the decision such as it was?

– Right after Snoras was put under moratorium, the Seimas (parliament) was presented with a bill with a clear basic scenario for action – dividing the bank into a good part and a bad part. The same was later done with Ūkio Bankas and that was the scenario we originally envisioned.

However, we had not expected the situation at Snoras was that bad. The bank's temporary administrator presented five action plans. After assessing the public finances, the possible impact for the entire financial system, the board of the Bank of Lithuania decided that filing for bankruptcy was the best of our options. Otherwise we would have opened a Pandora's Box – Lithuania's public finances could not have supported the load.

We heard various suggestions of what we should have done. The “best” of them was taking over the entire bank, covering the financial gap, so that all the creditors were happy. We could not act that irresponsibly.

We could have divided the bank into a good and a bad part. In that case, the financial gap in the good bank would have been covered with public money – but that bank could have still fallen. The best part of Snoras' business was conducted with non-Lithuanian residents. So the question is simple – if the bank had become a state property, wouldn't have this caused foreign depositors to flee? It would have, clearly.

– Politicians, too, have plenty of complaints. MP Algimantas Salamakinas even turned to the Prosecutor General's Office, asking to open an investigation into possible embezzlement. Do you feel much political pressure?

– I do not feel any pressure from politicians. I think the problem is that people do not examine everything thoroughly enough. They ignore the facts and give in to emotion aroused by interested groups. I can clearly perceive traces of one of such interest groups, linked to former shareholders of Snoras. Each time a hearing of extradition case in London is approaching, one media outlet steps up its activities.

– And yet – can you see any mistakes you've made handling the Snoras affair? What have you failed to anticipate, what would you do differently if you had a chance?

– Of course, the information leak was an unexpected factor (right before the announcement of troubles at Snoras, Lietuvos Rytas ran a story, quoting anonymous sources, about President Grybauskaitė having ordered to destroy all Lithuanian-capital banks, – 15min). We therefore had to act quickly. After the Lietuvos Rytas piece, liquidity situation at Snoras changed erratically. If we had not reacted to it, we would not be speaking about a billion litas “frozen” in Snoras today. I'm vexed that we still do not know who leaked the information.

I certainly had not anticipated a media campaign of such an extent, so fierce an attack. I've always had this idea that, in Lithuania, we all do our job and, provided we do it well and professionally enough, no one tries to smear us.

We have to admit that, in that sense, we're still quite provincial. There's nothing exceptional about Snoras bankruptcy administration. Take a look at any other international bank collapse and you'll observe the same thing. We're not talking about closing down an insignificant local bank where we could get away with several hundred thousand.

In terms of time, there is nothing exceptional about it either. For instance, the bankruptcy case of Litimpex bank (a private Lithuanian bank that went under in 1999) lasted a decade. I do hope that the administration of Snoras assets will be shorter.

Internationally, everyone is congratulating us for successfully managing the crisis and avoiding more serious repercussions. In Lithuania, it is a custom to tear one's hair: 'How bad and expensive everything is, a good bank has been destroyed.'

– Do you think the wave of criticism would have been nothing like it is now, had Snoras not been part-owner of one of the biggest media groups in Lithuania, Lietuvos Rytas?

– In classical banking, investing in non-banking assets, let alone media companies, is quite unorthodox. I wish to highlight, however, that our actions as a banking supervision authority have nothing to do with the media company owned by Snoras. I do realize that the bank's former shareholders are interested in perpetuating this myth, but the Bank of Lithuania has clearly demonstrated with its subsequent actions that our goal is to maintain stability in the Lithuanian financial system – to expel all subjects engaging in possibly criminal activities. It is these activities that led to the cases of Snoras, Ūkio Bankas, some credit unions. And we will certainly not stop what we're doing. This is no country for financial criminals.