The Wheat Affair

AIM Zagreb, July 17. 2000

Addressing the Government at its last session, Prime Minister Ivica Racan, used a style unknown to the Croatian public until now: namely, the Prime Minister revealed that his Government was about to uncover a major criminal affair of shocking proportions.

He also announced a detailed investigation. It soon turned out that Racan was not speaking at random. The Government discovered that as much as 110 thousand tonnes of wheat was missing from state commodity reserves, the total value of which exceeds 119 million kunas, i.e. DM 30 million! Unfortunately, that was not all. Immediately after that Goranko Fizulic, Minister of the Economy, disclosed that apart from wheat, flour, corn, meat and some other products were also missing from the reserves.

The total value of the damages which will be probably disclosed at the next Government session, will be calculated when, after stock taking of the missing wheat, the value of these articles is added to DM 30 million. The only thing certain now is that just before the peak of the tourist season the state commodity reserves have been drained dry and suffered a great loss. Although the main culprits are not known yet, Racan has promised to disclose other important details already on Thursday when the Government will meet again. Almost all details of this great robbery are more or less known, except for the specific names.

How was the plundering of state commodity reserves carried out? In Croatia the State Commodity Reserves operate in way according to which the state specifies the compulsory storing quantities for strategic commodity reserves which major food producers have to store in their warehouses. Logically, the wheat was stored in big silos, which were state owned in early nineties, but out of which many were privatised in the last decade. However, in view of the importance of wheat - irrespective of their ownership - they were still under the obligation of storing food for the state needs. This fact was taken advantage of by the people entrusted with the keeping of wheat - naturally to their benefit. Although the investigation has not been concluded yet, it is mostly clear was has happened.

Many silos' owners or directors figured it out that it would be much better to sell the wheat, pocket the proceeds of the sale since the bill anyway, the bill - they thought - would never have to be paid. The directors were basically working in cahoots with former ruling structures and it is obvious that they had the party's blessing, if not order, for this operation. For, the proportions of the theft were too large for anyone to believe that it happened accidentally.

Just a glimpse of the structure of enterprises, which have made enormous losses of wheat, speaks that this was not an accident. For example, the wheat that vanished from the shareholding company "Slavonia" from Zupanja was worth as much as 52 million kunas (DM 13 million); from the firm "Bozji dar sunca" (God's Gift of Sun) from Cazma, over four million kunas worth of wheat disappeared and "Siltom" from Garesnica, lost wheat worth over DM 3 million, etc. There are 13 such enterprises in Croatia, some with somewhat smaller losses. Too much to be accidental. After the first news, silos' directors, caught "wheat handed", gave mostly brief and rather unconvincing explanations. In his statement for the "Evening Paper", Milan Darabos, director of "Bozji dar sunca" from Cazma, which made second largest loss of wheat, stated that this was just a business failure. "Because of the poor quality of wheat we used more than we were entitled to under the contract, but in our letter to the Ministry of May 5, we undertook to compensate for that difference from this year's crops. According to the contract terms, we shall inform the Ministry of Economy about replenished stocks by August

1. In the meantime we paid 458,888 kunas to the commodity reserves for some of the wheat we have used. We shall fully honour our obligations from the contract." Director of "Siltom", the third largest wheat-losing warehouse - which is accidentally a private company - only said that the company's owners have gone to the Commodity Reserves Directorate, where the precise amount of loss was being determined.

Ivan Milas, Director and owner of the firm "Slavonia" from Zupanja, from which the largest quantity of wheat had disappeared, was immediately arrested. Journalists did not manage to get a statement from him because he was transferred to a "safe" place.

However, he wouldn't be able to give any convincing explanation either, because the police has discovered how was 76 million worth stolen wheat entrusted to Milas' enterprise for safekeeping. He simply sold the wheat and out of the realised profit rechannelled 76 million kunas to the accounts of his two firms. According to unofficial information, Milas was close to the former authorities - i.e. HDZ - which enabled him to privatise the shareholding company "Slavonia", which previously belonged to the Zupanja Agricultural Combine. The State Directorate of Commodity Reserves has already agreed to allow Milas to return the illegally made money, but he did not keep his side of the bargain. And it is precisely on Ivan Milas' case that it will be possible to show and prove that the robbery of state commodity reserves was a systematic long-term illegal acquisition of gain at the state's expense.

Three years ago, Ivan Milas had been a protagonist of a similar "wheat affair" when, same as today, "warehousemen" exported enormous quantities of state wheat to the West - where it had a higher price - leaving the state without bread just before the start of the tourist season and, on the other hand, ensuring huge financial profit. At that time, the Parliament had even formed a special investigating commission entrusting it with the task of unmasking the protagonists of this scandal. Vladimir Seks was at the head of the Commission and after several months of work it filed eight criminal charges for over 30 criminal acts against 50 persons. One of these persons was Ivan Milas, the same one who is the protagonist of this new – even greater - robbery of state reserves, so that three conclusions seem rather plausible now.

The first is that all the time someone with HDZ's backing, was systematically plundering state reserves; the second is that Seks' investigating commission was established with the task of covering up instead of uncovering the true dimensions of that affair; and the third that the real truth about this robbery might be found out this time. Obviously, its traces could lead very high up, to the very top of the Croatian Democratic Union, without whose consent no major deal had been realised in Croatia in the last ten years. If forced, Ivan Milas will have much to say on this subject.

Already in 1997, the Croatian press concluded that Vladimir Seks actually did not discover a single important name connected with the wheat affair. He mostly gathered what the papers had been writing, presented the clues that had already been published and after his action, several responsible people resigned. The biggest "shot" among them was Kresimir Beno, director of the State Commodity Reserves. However, the fact that a same deal, slightly modified, continued after his departure, shows that it is more than clear that Beno was not the real culprit in that theft. The very top of the state leadership had been probably involved, since one of the exporters of state wheat was the firm "Agrokor", the largest private enterprise in Croatia, owned by Ivica Todoric, a man close enough to the party to get major deals, but also distant enough not to discredit himself with that connection.

Even greater confusion in the Government ranks was caused by the fact that enormous stocks, as much as one million litres, of quite unnecessary wine were also discovered in commodity reserves. According to first explanations the wine was held in pledge for credits the state reserves granted to enterprises that were having difficulties. The Government will have to explain where has all the wheat gone, who allowed the robbery of such proportions, when will - if at all - the money be paid back and, last but not the least, who made all this possible. For it is theoretically impossible that managements of 13 firms simultaneously got the idea to rob the available state wheat stocks, unless such an idea had originated in one centre or someone ordered it as a part of the state policy. If it succeeds in uncovering all these elements, the Racan's Government, whose popularity is dropping, will score at least one point in the Croatian public which is more ardently supporting President Mesic as a prominent advocate of the anti-crime campaign. In that sense, Racan's decision is surely a sign that the Prime Minister has decided to show his horns to criminals from the former nomenclature, whose large appetites helped him come to power. And vice versa: if he doesn't uncover the main protagonists of this affair and doesn't call a spade a spade, Racan will lower his rating even further.

Boris Raseta

(AIM)