CORRUPTION IN CROATIA: SYSTEMIC, NOT CASE OF BAD APPLES

By: Ina Vukic

Photo: Crona.hr

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.