Ivica Todoric – Croatia, the War, and the Future

Corruption in Croatia: Systemic, Not Case Of Bad Apples

November 12, 2023 by inavukic Leave a Comment

Whether Croatia’s Agrokor corruption scandal, now in its seventh year without a single court hearng, will further expose coverups that may be the catalyst for HDZ (or the voting public) to remove Andrej Plenkovic’s HDZ party from government in the 2024 mega election year is something worth contemplating upon or hoping for.

Upon searching on Internet with a phrase such as „Croatia corruption“ there are quite a number of credible media sources where one may read that Croatia, her HDZ government to be more precise, is tackling corruption as a matter of systematic and genuine effort to democratise Croatia. The reality on the ground as well as credible sources, though, gives an entirely different picture and that picture does not talk of genuine efforts to root out corruption (at least the large-scale one) but rather the one of genuine efforts to cover up corruption (at the the large-scale one). I would love to have been able to tell you differently 32 years after Croatian people overwhelmingly voted to secede from communist Yugoslavia, where corruption was a rule rather than exception in corridors of state powers, from top to local, but regretfully I cannot say that and will not try flogging fairytales to the public.

If one takes the effort one will, without doubt, see that when corruption has been uncovered or highly suspected in Croatia in the past two decades there was a tendency within organisations, government, including the police service, to demonstrate, suggest or imply that the problem is one that may be confined to a few rogue personnel or persons sometimes referred to as ‘bad apples’. However, the history of the trail of corruption fighting in Croatia and attempts to prosecute it have too many examples that strongly evidence institutionalised or systemic corruption for this view to carry much credence. Moreover, any notion of ‘bad apples’ narrows the scope of attention, often directing concern away from others and implies that, barring the individual ‘bad apples’, everything in government or its organisations is ethically sound. The facts pertaining to communist regime heritage, from widespread large corruption amounting to millions of euros stolen to bribery at every point of public sector or government services including medical treatment, nepotism in employment, to local council building permits, suggests that this is rarely the case and that maintaining such a view is damaging to the health of the police service as well as the official Croatian anti-corruption bodies.

As a matter of record, for example, in late December 2019, Prime Minister Andrej Plenkovic was forced to defend HDZ ruling party’s record on corruption on the day that former party leader and prime minister Ivo Sanader was found guilty in the first instance of accepting a bribe of 10 million euros to grant Hungarian oil and gas company MOL a controlling stake in Croatian energy firm INA (Croatia’s leading energy company). While Sanader was first arrested under corruption charges in late 2010, in what was seen at the time in a signal to the EU of Croatia’s seriousness about rooting out graft as it sought to join the bloc, Sanader was sentenced to 8-1/2 years in prison in the case in 2014. His fellow defendant, MOL’s Chief Executive Zsolt Hernadi, was being tried in absentia after Hungary refused to heed an international arrest warrant for him. In 2015 Croatia’s Constitutional Court ordered retrials in two corruption cases against Sanader, ruling that procedural errors had affected his right to a fair trial. Sanader’s other retrial ended on 22 October 2018 with the judge handing him a two-and-a-half-year prison sentence for taking a bribe from Austria’s then Hypo Alpe Adria Bank when he was deputy foreign minister in early 1990s. In the re-trial ordered by the Constitutional Court as mentioned above, the presiding judge ruled in November 2020 that Sanader had organised a group of people for criminal activity and covering up illegal financial deals, state television reported. His former HDZ party, which is now in power, was fined 3.5 million kuna ($547,071.60) by the court and that it must also return some 14 million kuna of illegally obtained funds.

Suffice to say that several HDZ government ministers and high-level officials have been removed fro their positions amidst allegations of major corruption in the past several years as well and while Andrej Plenkovic served as Prime MInister. In the Agrokor corporation that controlled supply chains of goods and supermarkets scandal, poiting fingers of serious corruption by the head of that corporation Ivica Todoric, saw the finance minister Zdravko Maric eventually drop out of government cabinet amidst allegations that while he worked for Agrokor he must have been aware of corruption in the company. In early 2022, Minister of Construction Darko Horvat stood accused of authorising illegal payments in a number of instances. The investigation had also implicated (and removed from ministerial portfolio) Deputy Prime Minister Boris Milosevic. Both this scandal and the allegations of procurement rigging against former government minister Gabrijela Zalac have called the integrity of the entire Plenkovic government into question. To boot, other high-level arrests or suspicions of high-level corruption saw former mayor of Knin Josipa Rimac under long-term investigation since 2015 and now the former rector of the University of Zadar and others are being placed under the investigative loop for serious corruption.

To make a single point here, fight against corruption in Croatia appears as a mask dotted with high-level arrests, corruption investigation scandals but, really not much in line of actual prosecution and court judgments! There is no doubt that the dysfunctional and biased judiciary in Croatia functions in the much the same way as it did during the era of former communist Yugoslavia regime. In Croatia, during the past two decades at least, the Constitutional and Supreme and District Courts have played an active role in the undermining of indictments in high-level corruption cases and this to any discerning eye shows that corruption in Croatia is no matter of „bad apples“ but a matter of systemic corruption well disguised by the government. We all agree on one thing: a bad apple is relatively easily and swiftly removed. Functioning democracies of the West have taught us that much, at least. But in reality the removal of „bad apples“ in Croatia has been made almost impossible out of political reasons as well as hiding any other „bad apples“ lurking active in the background of corrupt practices.

With each new corruption scandal in Croatia, the public and ordinary people are horrified by the amount of property that has been accumulated in a short time by ministers, state officials of all kinds, members of public company boards, local powerful… Villas, apartments, cottages, cars, other property in the form of works of art or hunting trophies suddenly appear in property declaration cards or, which is much more often the case, in the names and surnames of people close to those named in corruption scandals. Much of it, especially when it comes to cash, goes off the radar, often abroad. Every new corruption scandal has reopened in public and in the parliament the question of whether a law on the source of property attainment should finally be passed and enforced, which would confiscate illegally acquired property. But, here we are in late 2023 and Croatia still does not have legislation under which acquisition of property can be investigated and dealt with. There are and were indeed many proceeds of criminal activities there including confiscation of property under communist Yugoslavia, corruption and theft that is still going on unchecked etc.

On 6 November 2023, Croatia’s High Criminal Court in corruption case of Agrokor and Ivica Todoric had declared illegal the key piece of evidence in the prosecution’s case.That is, the accounting and financial expert opinion and report based on forensic accounts examination and findings by KPMG (Poland) was found inadmissible in the court proceedings everyone thought would finally be on their way. Reportedly, the court’s decision to label this financial investigation and its consequent report as illegal was based on the fact that KPMG Poland had used some staff from KPMG Croatia for its investigations and that such was in breach of court procedures as it reeks of conflicts of interest and possible interference. And so here we have it: The Agrokor/Ivica Todoric corruption case has been going on for six years without a single court hearing, and it is now in the seventh year without a single hearing in the entire process.

This is scandalous and bears no association with justice, it’s a judicial farce.

It’s easy to see that in the Agrokor/Ivica Todoric corruption affair, where many millions of euros are said to have been misappropriated and/or embezzled from Croatia’s public purse, one criminal group such as the so-called Borg Group stole Agrokor from another criminal group at the head of which was Ivica Todoric. All this during the years when there should have been court hearings but were none. In that time there was an agreement on behalf of Andrej Plenkovic government that Todoric’s substantial property would not be touched, that his people would not be prosecuted, but that he would sign the document triggering forced administration of Agrokor. Given that his son reportedly worked for KPMG Croatia when the Agrokor forensic account’s investigation was being carried out and now rendered illegal the former Attorney General of Croatia, Dinko Cvitan, should now be arrested an vigorously investigated. But then, we can expect that from a country where rule of law presides, not in Croatia.

All this stinks of the ground being prepared for Ivica Todoric to settle enormous sums of money through arbitration, which in case of successful arbitration will be paid by Croatia’s tax payers! And I am certain this would never have come to this had Ivica Todoric been prosecuted for what was evidently improper and most likely criminal. We still remember that even the American credit rating agency Moody’s had some four or five years ago informed the public that Agrokor or Ivica Todoric together with Zdravko Maric doctored the company’s balance sheets which would tantamount to a situation when someone comes to a bank and says/shows their income is ten million euro per annum and then on the basis of that, the bank gives them huge loans, and they don’t even have two thousand euro in their pocket, nor do they have any such income. Croatia’s Attorney General did absolutely nothing to pursue in the courts of law such allegations from such a credible source as is Moody’s.

Hence, judicial corruption in Croatia is certainly the culprit of unreasonably prolonged or no court processes set in motion for alleged or evident corruption cases. Equal treatment before te law is a pillar of democratic societies. When courts are corrupted by greed or politics the scales of justice are tipped and ordinary people suffer. It is more than obvious that the faulty KPMG financial report and investigation of Agrokor finances was produced on purpose and with advance knowledge that the court would not accept it as evidence. That is said assuming Croatia is as advanced in its democratic processes as it likes to present itself through its government’s rhetoric. But evidently it is not, because if it was the KPMG financial investigation would not even have commenced before the otherwise obligatory ticking off of any conflicts of interests that could jeopardise the validity of its results. Ina Vukic

Filed Under: Uncategorized Tagged With: Agrokor, Andrej PLenkovic, Bad Aple corruption, corruption, Croatia, Croatian judiciary, government ministers involved in corruption, Ivica Todoric, Ivo Sanader, KPMG Croatia, KPMG Poland, systemc corruption

Whistleblowers And The Unravelling Corruption In Croatia

November 22, 2017 by inavukic 7 Comments

Fear of reprisals for reporting wrongdoing, whistleblowing on corruption or possible corruption, breaches of legislative regulations etc. is a real concern when fighting corruption and this fear is very pronounced in Croatia. Croatia (like all former Yugoslavia member states) is a country riddled with entrenched corruption stemming from the communist public service and administration culture and it needs a stronger whistleblowing regime. To have a strong whistleblowing regime it means freedom from damaging consequences for those who report wrongdoing and it also means that the number of whistleblowers present and active needs to be high. That is, the number of people raising complaints and pointing to wrongdoing. That means Croatia needs better protection laws for whistleblowers; better freedom of information laws; a third party to report wrongdoing to in a process of operational “checks and balances”; cultural change at the organisational and individual levels; and compensation for those suffering retaliation for speaking out.

According to the Croatian justice ministry’s June 2017 issue of Action Plan for 2017-2018 under the Implementation of the Anti-Corruption Strategy for 2015-2020 (PDF of Action Plan), the law that would, among other, make provisions for the protection of whistleblowers should reach the parliament chambers in the third and fourth quarters of 2018. The justice ministry has already established a working group under the government’s Advisory Committee On Combating Corruption.

The above anti-corruption strategy recognises and acknowledges the fundamental role of whistleblowers in highlighting corrupt practices and in contributing to enhance transparency and political accountability. The strategy stresses the “need” to guarantee whistleblowers effective judicial protection, including measures to strengthen judicial transparency, enhance the reporting system for illegal conduct, and complete the regulatory framework to safeguard whistleblowers.

Croatia’s economy is presently overcast by thick clouds of unease and suspicions of major corruption emerging from the Agrokor affair. Related to the Agrokor and its majority owner Ivica Todoric affairs threatening to bankrupt the country once debt recovery claims, especially those from foreign banks such as Russia’s Sberbank, come knocking on the door sits, of course, Pandora’s box of corruption at the highest levels of political echelons. Should the lid of that Pandora’s box be lifted then even if all the “evils” escape into the open the mythical hope (for justice and good) that should remain inside the box is likely to be weak and flimsy, if at all existing.

To open Pandora’s box means to perform an action that may seem small or innocent, but that turns out to have severely detrimental and far-reaching negative consequences for those who open the box and for those associated with them in dealings. It was about one month ago that a former member of the Liberal Party in Croatia, Bruno Mirtl, revealed to the public that over 10 years ago he received 50,000 kuna (about 6,500 Euros) for the party’s funding from Ivica Todoric of Agrokor, In the days before Todoric’s arrest in London, it was announced that Agrokor – which had enjoyed privileged treatment by all Croatian governments for decades – had filed false accounts, hiding a loss of several billion Euros.

As Mirtl rightly observes, if even such a small party as his own obtained unlawful funding by Todoric, then there is no doubt that the main, more influential parties (Croatian Democratic Union/HDZ and Social Democratic Party/SDP) received much more substantial sums from the same source.

Mirtl’s testimonial account could trigger a domino effect on the Croatian political scene, forcing drastic and forced exodus from the major parties of significant members and political power-brokers come wheelers and dealers. But the domino effect in a political playground can only happen if those fighting against corruption possess hope that such battles can in effect be won. If one was to judge the strength of that hope upon past experiences then cover-ups, stalling of legal processes etc. that have occurred in similar circumstances, that hope will evaporate into thin air. It would seem that major political players from the major political parties, supported by the bent mainstream media are digging their heels in and trying to suppress the Mirtl and Todoric affair under similar connotations that permitted Todoric to pull wool over everyone’s eyes when it came to the origins of his enormous personal wealth.

This goes without saying that if the whistleblower protection is inserted into the legislation draft, one really never knows how even the tightest of plans for such legislation to go ahead can be hacked out of existence, the HDZ government and SDP opposition (as both have governed the country over periods in the last two decades, after Homeland War and may have had their fingers deeply immersed in the corruption pie) would no doubt try their damnedest to find solutions that ensure wolves (guild owners, managers, senior political officials) remain fully satisfied and the sheep, though perhaps reduced in number, remain anaesthetised.

And the fact that the recently established Parliamentary Inquiry Committee (which is in no way independent of political parties as it should be) on Agrokor is about to be extinguished lends itself to more unrest and recriminations across parliamentary benches. The governing HDZ insists that the applicable legislation requires for the Committee to stop operations once legal proceedings directly related to the reason why the Committee is set up commence, the Committee has no further jurisdiction. The SDP opposition, on the other hand, think differently and says the Committee can continue its operations regardless of separate legal proceedings held in court. Given SDP’s history as well as HDZ’s one doubts that when it comes to unearthing details of corruption in this case the dispute between the two major political parties about whether the Committee can or cannot continue appears blatantly contrived. It does leave room for speculation as to the genuineness within the motives to set up such an inquiry in the first place and how much of its rushed start has to do with throwing dust in public’s eyes, giving the outlook of real search for corruption was afoot when, in fact, it was all an exercise to win on time. The real crunching of corrupt culprits and their ill-gotten wealth may never even reach the door that leads into the room where justice and consequences for corruption are dished out as a matter of normal governance of Croatia.

Not all the sluggishness and lack of action from Croatia’s leadership when it comes to affirmative matters and getting things done for whistleblowers, upon whose existence fighting corruption largely depends, can be attributed to the governments of present and past. Croatia’s presidents since year 2000 have not stepped up to the action mark either. And this goes for the present president Kolinda Grabar-KItarovic as well. Shortly after taking office as president of Croatia, Kolinda Grabar Kitarovic appointed Vesna Balenovic as her commissioner/adviser for whistleblowing issues. Vesna Balenovic is a well-known whistleblower, who few years ago denounced some of the executives of the INA oil company (of national importance) where she was employed. She was immediately dismissed, ending up with defamation charges by then Chairman of INA’s Board of Directors Tomislav Dragicevic and former Minister of Finance Slavko Linic. Later on, Chairman of INA’s Supervisory Board Davor Stern advanced the idea that Vesna Balenovic could be re-admitted into the company as commissioner for the fight against corruption. This never happened, but Balenovic has remained present in public life as founder and president of the Zviždač association (Whistleblower Association). INA has stopped being a public company for some time, as the administrative rights were transferred to Hungarian MOL (this matter is the subject in criminal proceedings for corruption waged now for years against former Prime Minister Ivo Sanader). This deal was accompanied by extensive corruption (refer for example to former Prime Minister Ivo Sanader case) that still weighs not only on the bilateral relations between Croatia and Hungary, but also on domestic politics and the work of the Croatian judiciary, which is definitely not equipped to face these kinds of challenges on a fair-and-square basis as it itself is said to be corrupted and filled with former communist operatives that should be lustrated out of the judicial corridors and benches.

Four months after being appointed as commissioner/adviser for corruption by president Grabar-Kitarovic, Balenovic left that office in protest, arguing that she had not even seen a glimpse of the president in the entire time she worked in her cabinet. One could (should) be a cynic here and say that Balenovic had obviously not realised that her only task was to be a trophy in Grabar-Kitarovic cabinet, who obviously has close ties with many persons responsible for or who have contributed to the sluggishness and alarming inaction when it comes to real fighting with corruption that would see deposition, lustration and even imprisonment of quite a number of political elitists.

Taking into account the constant quest to create a climate conducive to entrepreneurship, that would save the ailing economy, both HDZ and SDP political echelons, as well as president Grabar-Kitarovic, it is truly – in the climate where institutions and big business pander to the will of the governing elite and where public administration is heavily politcised – unrealistic to expect any increases to workers rights that include the protection of whistleblowers. Not increasing protection of whistleblowers in law and practice would, without a doubt, devastate further the very core of any economic or business culture recovery or hope for it. Ina Vukic

Filed Under: Uncategorized Tagged With: Agrokor, Bruno Mirtl, communist culture of corruption, corrupt judiciary, corruption in Croatia, Croatia, HDZ, Ivica Todoric, Kolinda Grabar-Kitarovic, Pandora's Box, SDP, Slavko Linic, Vesna Balenovic, whistleblower protection

Pot Calls Kettle Black – Agrokor Corruption And Political Wile In Croatia

November 8, 2017 by inavukic 8 Comments

Agrokor’s owner Ivica Todoric,
leaves Westminster Magistrates Court in London,
Britain November 7, 2017.
Photo: REUTERS/Simon Dawson

High corruption risks and practices, political patronage and nepotism, and inefficient bureaucracy rolled over from former communist days are among the challenges that Croatia has not truly dealt with yet. To deal with that lustration would be an absolute essential. Corruption and bribery are especially prevalent in the judiciary, public procurement, and the building and construction sector. While the primary legal framework regulating corruption and bribery is contained in the Criminal Code and the Corporate Criminal Liability Act, which make individuals and companies criminally liable for corrupt practices including active and passive bribery, money laundering and abuse of functions. Facilitation payments are prohibited, and gifts may be considered illegal depending on their value or intent. The mechanisms and practice of policing and monitoring compliance with the relevant legislation is practically non-existent. Hence, the road to what is there today with the Agrokor concern – too late to save the company or the livelihood of tens of thousand employees.

Media is running flaming hot in Croatia and abroad regarding the Tuesday 7 November corruption and fraud charges arrest at London Met Police of Ivica Todoric, majority owner of Agrokor business concern whose plummeting towards bankruptcy has also been threatening to bankrupt the country as a whole. One wonders, though, how much of this concentrated hype against Todoric has been designed to hide away from the media spotlight and responsibility of those not related to Todoric family or Agrokor staff. How many in the current and past governments, how many currently sitting in the Croatian Parliament have had their fingers in the Agrokor pie since its foundation during the time of former communist Yugoslavia.

How much of this concentrated media and government effort against the Todoric clan (however justified under law and justice) is in effect a ploy to save the government from falling! Friday 10 November is bound to be a day of upheaval and patience generally running very thin as the yet another vote (in about 18 months’ time span) of no confidence in the government jumps onto the agenda for the day’s proceedings. Reportedly the opposition Social Democrats are seeking a vote of no confidence against the HDZ- led government.

As both Social Democrats/SDP and Croatian Democratic Union/HDZ have held government power in Croatia since independence from communist Yugoslavia and, many of their leading individual powerful members had held positions of power in the former communist regime, which institutionalised corruption and theft in that country, one truly cannot trust that Social Democrats’ motives are noble in this. How many thieves and corrupt individuals are they trying to hide, one wonders.

Croatia’s richest businessman Ivica Todoric, the founder and owner biggest private food and retail company, the drowning Agrokor that’s been shaking Croatia’s economy for months, threatening to bankrupt the country, was arrested after reportedly handing himself in to the Met Police Tuesday 7 November 2017 in London amid allegations of corruption, fraud. It is alleged that he has embezzled millions from his large retail company, leading it into a massive bankruptcy that is now an issue of national concern in Croatia and the countries around it. Todoric appeared in Westminster Magistrates’ Court and District Judge Richard Blake granted him freedom on 100,000 British pounds ($132,000) bail.

A European Arrest Warrant was issued after the firm collapsed, having amassed debts of over 5 billion euro. Criminal prosecutions have begun in Croatia against 14 senior figures at Agrokor, including Todoric, on suspicions of corruption and forgery. Todoric denies any wrongdoing, is accused of falsifying accounts to hide unsustainable debts estimated at £4.8bn (€5.4bn).

Asked by District Judge Richard Blake whether he consented or objected to the extradition request from Zagreb, Todoric said he would oppose being sent back to his home country, Reuters reports.

Prosecutor Benjamin Seifert, appearing on behalf of the Croatian authorities, told the court Todoric faced three charges back home — false accounting, fraud by false representation and abuse of position — amounting to a total alleged fraud worth about 110 million Euros.

The court heard that there was a worldwide freeze on Todoric’s assets.

“This is extremely serious offending,” Seifert said.

“The context in which I grant you bail is the knowledge that both within this country and throughout the world, your assets are frozen and your ability to obtain money is limited,” Judge Blake said from the bench. “The security is a very small sum in the context of what sums I have heard being spoken of.”

The judge also set conditions requiring that Todoric wear an electronic tag between midnight and 3 a.m., sign in at a London police station three times a week and give up his travel documents.

Agrokor, which began as a flower-growing operation in the former Yugoslavia in the 1970s, underwent a rapid expansion over the past decades that saw it run up debts of about 6 billion euros ($7 billion). The company employs about 60,000 people throughout the Croatia and neighbouring countries and is so large it now accounts for about 15 percent of Croatia’s gross domestic product. Its debt is too large for the government to rescue it without endangering the state’s financial stability including superannuation or pension funds that have invested in the company.

Although Todoric still formally owns 95 percent of Agrokor, the Croatian government, having rushed in a special law known as “Lex Agrokor” a few months ago has taken over management of the company. It is now trying to keep it alive through restructuring and negotiations with major creditors, which include Russia’s Sberbank and VTB bank, to which it owes 1.4 billion euros and who want their money back.

After he appeared on Europol’s fugitive arrest list, Todoric wrote on his blog that he was not hiding and that his conscience was clear.

“As a man whose human rights are deeply violated I have the right to oppose political persecution,” Todoric wrote. “Today, I too am fighting against a corrupt system in Croatia,” he wrote on 6 November 2017, the day before he handed himself in to London Met Police.

Todoric has always claimed that the government illegally took over his company and indicated that he will fight his extradition on the grounds that he is the victim of political pursuit.

Political pursuit, Mr Todoric, has been there always, only before you used it to benefit yourself, to wrongfully create and amass wealth and now you use it to crucify those that helped you in that. Out with the lot of you and your communist heritage – in with lustration! Ina Vukic