Privatisation Scandals: Sale of Mogren Hotel in Budva

Conflict inside the Family

In case of illegal sale of Mogren Hotel in Budva has an open confrontation broken out between the interest group gathered around president Milo Djukanovic and prime minister Filip Vujanovic on the one, and the interest group personified by chairman of Montenegrin assembly Svetozar Marovic

AIM Podgorica, 18 April, 2000

It is only natural that on the eve of a new summer stories about tourism and hotels are told in Montenegro: it is necessary to get prepared for the season, advertise the offer, attract guests. However, the story about Mogren Hotel in Budva which has lately drawn attention of Montenegrin public just partly fits in the customary pre-season atmosphere. The central issue in this story is something else - the attempt to illegally sell this hotel and the fact that the main protagonist is Svetozar Marovic, chairman of Montenegrin parliament and the second man in the Democratic Party of Socialists. Marovic is the president of the management board of Budvanska rivijera, tourist and hotel enterprise which owns Mogren Hotel. There are other prominent members of DPS in this management board, too.

Although the Law on privatisation of the economy and the decree on sale of shares and property of enterprises in a public auction precisely describes the privatisation procedure, the management board of Budvanska rivijera tried to sell three restaurants, a bar and Mogren Hotel which is rented until 2005 by Merkur private coompany from Budva, according to the rules it had determined on its own.

The obligation to procure approval of the government council for privatisation headed by prime minister Filip Vujanovic was ignored, as well as the requirement that this approval must be preceded by adoption of the plan of privatisation for this year. Even the warning of the council for privatisation was ignored and the management board reached the decision to sell Mogren Hotel to Swiss Atlantic Management Enterprise as the buyer.

It turned out that the buyer was so carefully concealed that it was impossible to find out anything about it although the persons from Budvanska rivijera enterprise, even Svetozar Marovic himself, were trying to convince Montenegrin public that it was a "serious foreign investor" who owned a chain of 427 hotels and restaurants.

Despite assurances that it is a Swiss company seated in Geneva it is not in the records of the Swiss Registration Court. A detailed investigation carried out by interested persons was also in vain - they did not manage to find a company with this name even in electronic registers of European enterprises.

"Such a result of the search indicates that it is not a company known in hotel industry", concluded in the latest issue of Montenegrin independent weekly Monitor, Nebojsa Medojevic, coordinator of Group 17 of independent economists and a connoisseur of privatisation process.

According to Medojevic's assessment, buyer of Mogren Hotel could be a company registered under special conditions (off-shore or similar) or a firm which was strictly intentionally registered only for the purpose of the business venture of the purchase Mogren Hotel. Based on all the facts he assumes that "this is a typical attempt of money laundry through phantom foreign companies" in the background of which are "well known domestic up-start businessmen".

The subsequent information from Budvanska rivijera that Mogren Hotel would become part of Rene Chateau chain just additionally increased suspicion. Rene Chateau really exists but it is a firm which offers management for running hotels. This means that anyone could have bought the attractive hotel in Budva and then given it to the mentioned firm to run it!

A new light was shed on the whole affair by the statement of a lawyer of a local businessman interested in purchasing Mogren Hotel. Lawyer Milorad Bojovic stated for Vijesti daily from Podgorica that his client Ratko Buturovic had offered the highest price - 6,666,666 German marks, and not the alleged Swiss firm to which the hotel was sold for 6,900,000 marks. Bojovic claims that it was stated in the minutes that Atlantic Management Enterprise had offered the round figure of six million marks. The decision on the sale was accompanied by information that hotel equipment had also been purchased, although it had not been mentioned in the public announcement of the sale.

From the legal point of view, sale of Mogren Hotel is invalid, and this was, loud and clear, stated by Branko Vujovic, member of the council for privatisation and director of the government agency for restructuring the economy and foreign investments.

Protagonists of the illegal sale seem to hope that the business deal will not go uo in smoke after all, because they rely on cooperative comradeship of the people in relevant state agencies. Miodrag Raicevic, member of the management board of Budvanska rivijera and president of the commission for the auction of this enterprise is persistently repeating that they will "come to terms" with the government and the council for privatisation. Although the scandal because of the sale of Mogren Hotel is in full swing, this still seems as an attempt to persist in violation of the legal procedure and sweeping the dirt under the carpet.

All things considered, "coming to terms" was something they had also relied on before, in fact from the very moment the management board of Budvanska rivijera had decided to sell Mogren Hotel. It is interesting, for instance, that the council for privatisation reacted only after serious warnings of the lease-holder of Mogren, private company Merkur, that the sale procedure prescribed by law had not been followed, and when the knowledge of the scandal had already begun to leak in the public. That is why its protagonists make the impression that they had been caught in the act which is, among other, evident from the fact that they got themselves entangled into most unconvincing explanations.

When the case of the (un)successful sale of the hotel in Budva is concerned, what is surprising is not just violation of the law (the political and economic elite in Montenegro had such inclinations before), but to what extent everything was done clumsily and obviously. That is the reason for the dilemma whether this is just a case of insolent arrogance or whether somebody has broken the rules of the game silently established by a circle of power wielders from the political and economic elite mostly recruited from the Democratic Party of Socialists.

All the speculations appearing in resolving this dilemma about this scandal which has quite obviously shown that there is a controversy inside the top of Montenegrin authorities and interest groups linked to them, that is, individuals from it. This means that an open confrontation has emerged between the interest group around president Milo Djukanovic and prime minister Filip Vujanovic on the one, and the interest group personified by chairman of Montenegrin parliament Svetozar Marovic on the other hand.

It is especially intriguing that the mentioned confrontation occurred on the eve of early local elections in Podgorica and Herceg Novi, which are expected by the coalition regime, especially the Democratic Party as its backbone, to confirm its prestige. That is why the whole scandal makes the impression of being somebody's political sabotage, it just is not clear whether it occurred on purpose or unintentionally and who will come out of it as the winner.

Be what may, the case of illegal sale of a hotel in Budva has not just intensified the problem of the approach to privatisation of the dilapidated Montenegrin tourist and catering complex, but shook up the very top of the regime and announced interesting political developments. Many in Montenegro are ready to reach the conclusion after the Mogren scandal that nothing will be the same.

Dragoljub Vukovic

(AIM)