Yet Another High-Level Corruption Probe In Croatia 

I would love to be able to write about an installation of anti-corruption measures across all levels of government administration in Croatia – local, regional, and state government – but sadly I cannot because such measures do not appear to exist or, if they do, they are ignored, and life continues as was during the utterly corrupt communist former Yugoslavia. When stamped out at grassroot levels – local government – then much of the problem of corruption is eradicated. In May 1990, 94% of Croatian voters chose Yes at referendum seeking secession from Yugoslavia. Then the Homeland War for independence ensued to defend that people’s decision from Yugoslav Army and Serb aggression brutal aggression. 

33 years have passed since that fateful referendum! Corruption that defined communist Yugoslavia was surely one of the factors solidifying the Yes vote at that referendum in 1990. And yet, here we are – ordinary people are mainly suffocating in that corruption – from pressure to pay bribes to officials, professionals, work force and employment, service provision, business dealings, various licences processes… to corrupt deals at evidently high levels that secure privileges and monopoly for certain companies or corporations and severely undercut the obligatory free-trade environment.  

To illustrate corrupt wheeling and dealings Predrag Dragicevic, judge of the County Court in Slavonski Brod, and Darko Puljasic, former Croatian Democratic Union party/HDZ mayor of Požega and member of parliament, were arrested on Tuesday 11 July 2023 morning on suspicion of corrupt crimes. As it turns out, the arrested men are charged with accepting and giving bribes and favouring employment. Searches of homes and other premises used by suspects have been underway in Slavonia since the early hours of that morning. 

To add to the detrimental effects of corruption alarmingly high levels of emigration and corruption don’t just co-exist inside Croatia as politicians would like us to believe  — they correlate with one another, Tado Juric, a political scientist and historian at the Croatian Catholic University, revealed in his 2021 study “Research on Corruption in Croatia – Measuring Corruption.” His research showed that 75% of companies operating in Croatia claim to know companies that bribe the local or state administration in order to do ‘successful’ business. So, the more corruption, the more emigration. 

On 12 July 2023 Croatia’s anti-corruption prosecution office/USKOK, launched a probe into the resale of natural gas by state-owned power utility Hrvatska Elektroprivreda (HEP), local media reported citing unofficial information. USKOK investigators entered HEP’s offices and seized documents, following media reports last week that it practiced reselling of natural gas surpluses at very low prices. 

Since the HEP/Gas scandal broke out in the public arena in Croatia ten days ago the Prime Minister, Andrej Plenkovic, keeps saying that someone in the government knew about the resale of gas, but that he didn’t know! Well, during his Prime Ministership mandate Plenkovic has lost and replaced some 20 government ministers due to either proven corruption charges or suspected corruption and he remains “squeaky clean”! He does not stand down, his government is not suspended, his government is not sacked even though the parliamentary opposition has called for his resignation several times amidst his government ministers’ involvement in corruption as would be the case in a functioning democracy! How is this possible if not because of the lack of democracy and saturation with authoritarian rule as the people had to suffer under communist Yugoslavia. 

This is almost unbelievable. The Prime Minister carries no responsibility it appears; he does not resign nor is he forced to resign from office! The staged investigation into the HEP scandal will simply give Plenkovic more time to come up with excuses to save his own skin.  Not only do the published texts of emails and letters regarding the surplus storage of gas (later sold at obscenely cheap prices) now stand confirmed, which were signed the Head of HEP Frane Barbaric, but at the same time he also informed minister Davor Filipovic and, hence, the prime minister.  Plenkovic simply cannot advertently or inadvertently plead that he knew nothing. By default, if he did not know, read, the submissions of the president of the HEP management, on his cabinet’s desk, then his colleagues, those people who read it and were obliged to inform the prime minister, must have known. If he didn’t know, he had to know. Otherwise, he and his government ministers involved must suffer the consequences of gross negligence at work, in office. 

According to media reports quoting Zvonimir Troskot, opposition member of parliament, HEP was losing 500,000 euro per day by purchasing natural gas from INA at a regulated price of 47.60 euro per megawatt hour, only to resell it later through the Croatian Energy Market Operator HROTE at lower prices (for 1 cent per megawatt it seems!). 

Someone has lined their pockets with cash in this disgraceful example of corruption, for sure. Will the investigation reveal that as promptly as possible or will it bury the case to linger for a decade or more, like similar cases before, is yet to be seen. The effective EU corruption watchdog in Croatia is not involved because there does not appear to be any connection with EU funds but local trade with gas and so not much faith is held in USKOK or any other statutory body in Croatia. They all appear and operate as heavily laced with corrupt individuals who learned their trade during communist Yugoslavia, or whose parents did.     

On 13 July 2023 the Parliamentary Committee for Economy held a special meeting regarding the HEP scandal and the sale of surplus gas by HEP, a government owned energy agency. The only Agenda item at this meeting was “has the government acted efficiently in the energy field, i.e. buying and selling gas. Minister for Economy and Sustainable Development, Davor Filipovic, was sought out to speak at the meeting ad he regurgitated the government’s lamentation about last year’s energy crisis in the wake of Russian invasion of Ukraine and EU’s orders for member states to fill their gas reserve storage capacities and that HEP was to fulfil that duty. Minister Filipovic claimed that the government handled the energy crisis well. He admitted that he received several letters from HEP regarding storage of gas including loan approvals to that end.  He received a letter from HEP about the gas surplus plan in the warehouse and that the surplus gas will be used for local electricity production or sold on the domestic market if the Minister doesn’t order them otherwise. Clearly defensively Minister Filipovic said that letters did not advise him that the surplus gas would be sold “in this way” (read: cheap as chips!). 

“Let’s face it,” said at the meeting HEP Chief Frane Barbaric, “this is not an uncommon occurrence in energy markets around the world. Losses do not occur only in Croatia or only on the gas market …HEP received the gas it had to take over, the demand was low. This was resolved in a prescribed and transparent process over which HEP has and had no influence, but it is a frequent event in the world. If we understood that, no one would make a problem out of this event, let alone an affair.” 

Oh dear! If gas sales are so transparent why was Minister Filipovic so surprised and stated that he did not know the gas would be sold (by HEP) “in that way”! Which by the way generated a loss to the state budget of over 10 million euro! Something stinks in all this, and the Croatian taxpayer is entitled to know to whom the gas was sold so cheaply and whether that buyer sold it on and made profit and split the profit with any person associated with the government. The Parliamentary Committee for Economy was told at the special meeting of 13 July that 63% of the cheap gas was sold to Prvo Plinarsko Društvo/PPD which is a private company that has been enjoying exclusive trade privileges, which in themselves attract a great deal of questions and suspicions of corrupt dealings.     

So, one must ask: since HEP is government owned and accountable to the government were there no government Policies and Procedures in place regarding sale of surplus gas to which HEP had the duty of care to abide by? Why did Minister Filipovic not mention that HEP acted in breach of standing policies and procedures but merely said he did not know the gas would be sold in “that way”!?One would expect that where there are policies and procedures tightly in place for such matters of national importance as energy is. Or is the case simply that HEP had a delegation to create gas sale prices as it liked without checking first the government or minister?  In any case, the government must carry the responsibility of damage done to taxpayers by suspect sale of goods and services purchased from the state budget or supported loans. 

Evidently, there is a rather wide web of guilty people in this surplus gas deal and that no one appears innocent, not even the Prime Minister. Ensuing weeks should reveal more of this corruption scandal and heads will roll from the corridor of power for sure.

Furthermore, the current lingering protest by all court judges as well as court employees for increases to their salaries has paralysed the judiciary and placed a halt to all court proceedings; and there are at least one million of those to yet be completed and processed. The government is stamping its feet, refusing to budge enough for the return to normal in the judiciary. Certainly not a good move in the pre-elections year. 

The European Commission recommended that Croatia increase the wages of judges, adopt laws on lobbying and increase the efficiency of investigations and prosecution of corruption offences, it said. On 6 July 2023 the European Commission had recommended that Croatia revise the criminal procedure code and the law on the office for the suppression of corruption and organised crime, as set out in the anti-corruption strategy, so as to increase the efficiency of investigations and prosecution of corruption offences, it said in its latest rule of law report on. Whether the court judges’ protest has anything to do with cover ups and delay of prosecuting the HEP scandal and other major cases of corruption, we may find out. 

“In addition to recalling the commitments made under the national Recovery and Resilience Plan relating to certain aspects of the justice system and the anti-corruption framework, it is recommended to Croatia to continue structural efforts to address the remuneration of judges, state attorneys and judicial staff, taking into account European standards on resources and remuneration for the justice system,” the European Commission also said.  

Undoubtedly aware of corrupt practices in Croatia associated with public tenders, the European Commission also recommended that the government in Zagreb strengthen the framework for a fair and transparent allocation of state advertising by establishing clear criteria, good practices, and oversight measures to guarantee the effective functioning of the public tender procedure. Ina Vukic