Bank Reports Shaking the HDZ
"Golden" Accounts of Non-Existent Firms
AIM Mostar, December 18, 2001
After the first results of the investigation into criminal dealings of the political-business establishment of the Croatian Democratic Union (HDZ) through the Herzegovina Bank (Hercegovacka banka), new reports on illegal operations of this banking organisation, in which the firm "Croherc AG" also took part, shook up the B&H public. Recently, hiding his identity, a member of the OHR's Anti-Corruption team, using the example of "Croherc" firm, informed the public on the Federal TV about crimes that had been committed in the Herzegovina Bank (Hercegovacka banka). The investigation determined that the Herzegovina Bank had committed a tax fraud in the amount of at least DM 27 million, while it was estimated that the damages could easily be over DM 100 million.
As the anonymous member of the Anti-Corruption team stated, embezzlements connected with "Croherc AG" started some six years ago when a group of officials of the HVO Logistic Centre in Grude established a firm "Monitor M". Some time later, this firm established "The Herzegovina Construction Ltd" with its headquarters in Posusje, as well as a shareholding company - Herzegovina Bank, Mostar.
In January 1999, "The Herzegovina Construction Ltd." founded an oil-trading limited partnership company "Croherc AG". The founder of "Croherc AG" was "Herzegovina Construction Ltd.", controlled by Ljubo Cesic Rojs, whereas Ante Jelavic and his associates were mentioned as co-owners. "Croherc AG" concluded a contract for the import of oil with a firm from Kopar. The firm from Posusje gave instructions to the Slovenian exporter, and the forwarding firm "B-Tank" from Posusje imported heating oil with blank order forms of "Croherc AG". After that the heating oil would be sold in B&H to non-existent firms, such as "Gabrijel", which had its head office in Posusje. The Anti-Corruption Team told us that fictitious firms had been the key factor of embezzlement and tax evasion in the B&H Federation and Federal Cantons.
The realised profit would end in the "Croherc AG" account. The OHR's Anti-Corruption Team pointed out that in this way "Croherc AG" had traded with as much as 120 firms. Until now, 44 have been investigated and according to the findings of the investigation team, ten requests for filing criminal charges have been submitted. "Behind this firm are close associates and friends of Ante Jelavic, which doesn't mean that either Jelavic or any of them are guilty of any wrongdoing. The investigation will continue", said the unnamed official of the Anti-Corruption Team, pointing out that this organised crime was aimed at collecting funds for the establishment of the third Croatian entity in B&H.
As it has been stated, the investigation established that "Croherc" had been involved with as much as 120 non-existent firms, which all had an account in the Herzegovina Bank and made payments in cash. That is how they tried to cover tracks on the origin of the money. Very soon after that came a confirmation from the Office of High Representative that the investigation in "Croherc" could end with criminal persecution of HDZ B&H leader Ante Jelavic. "Jelavic could be indicted for criminal dealings by which he damaged the B&H public funds for enormous amounts of money" said to the press Patrick Wolf, spokesman of the Office of High Representative for B&H. He revealed that a criminal report had already been filed against the forwarding firm "B-Tank" (as forwarders played a very important role in the illegal import chain), because it took care of import documentation. In connection with these reports, the firm "Croherc AG" from Mostar issued a statement for the public denying all allegations presented in the media about its illegal business operations.
However, the international sources told us that the grip was tightening around the HVO Logistic Centre in Grude. Also, Ante Jelavic (HDZ President), war generals Ljubo Cesic Rojs, Ivan Medic, as well as Miroslav Rupcic and Director of the Herzegovina Bank Ivica Karlovic, were also mentioned as members of this clan. According to unofficial statements of international representatives, the investigation of the Herzegovina Bank has only started.
This April 6, High Representative of the international community in B&H Wolfgang Petritsch brought a decision on placing the Herzegovina Bank in receivership and blocked all accounts of this banking organisation under suspicion that illegal financial transaction had been carried out through this bank, in which some highly placed officials of the HDZ B&H were involved. A day later, escorted by the SFOR and Federal Police forces, staff of the compulsory management led by their boss Ms.Toby Robinson entered the Bank's business premises. However, because of the introduction of compulsory management demonstrations were organised in front of the Herzegovina Bank's central building in Mostar, as well as its branch offices all over Western Herzegovina, which resulted in street riots and physical eviction of the compulsory management staff from the Herzegovina Bank's head office and branch offices.
Leaving the Herzegovina Bank's building and branch offices, under the pressure of protesters, the staff of the compulsory management and SFOR still managed to take most of the Bank's documentation. However, the central computer, which contained a great number of essential data on financial transactions, remained behind in the Bank's management building. Some twenty days later, in a night operation, the SFOR managed to take the central computer form the Bank. According to unofficial information published in the media, during these twenty days after the introduction of receivership, the data were deleted from this computer. But, with the assistance of computer experts, the investigation team managed to get the listing of all deleted transactions. One of the most important questions in this investigation was the disappearance of KM 54 million which the Republic of Croatia had paid in for the wages of soldiers of the Croatian component of the B&H Federation's Army (VF).
Many local analysts came to the conclusion that the OHR's investigation team had finally managed to get the data on committed criminal acts, after the Attorney General of the Republic of Croatia, Radovan Ortinski paid a semi-secret visit to our country. Namely, The Economic Bank of Zagreb (Privredna Banka Zagreb from the Republic of Croatia) had been mentioned as an accomplice of the Herzegovina Bank in the matter of the embezzlement of KM 54 million earmarked for the Croatian component of the VF, which was why Ortinski allegedly visited B&H and met with OHR's representatives in Sarajevo. A secret meeting held in Zagreb between the Croatian Prime Minister, Ivica Racan and High Representative Petritsch (which the local media managed to find about) and which was also dedicated to the case of Herzegovina Bank and the role of the Zagreb Economic Bank in the transfer of money to Herzegovina, showed that there were serious indications that the case of the Herzegovina Bank was the reason for Ortinski's visit to Sarajevo.
At a press conference organised this November 6, Johan Verheyden, spokesman of the Herzegovina Bank's receiver, Ms. Toby Robinson, disclosed recorded frauds in the Herzegovina Bank connected with the role of some Bank's shareholders, but also employees who, according to his allegations, carried out about a thousand transaction even after the Bank was placed under compulsory management. Transactions worth DM 2 million were mostly carried out for relatives and friends of the Bank's staff, which reduced the remaining amount for the payment of small depositors, pointing to a conclusion that the Herzegovina Bank had been used for personal gain of a few potentates.
True, that same evening after the press conference, he also said that the discovered documents, which mentioned these names, did not necessarily implicate them and that everything was now up to the judicial authorities of B&H Federation, with which the compulsory management was cooperating. Verheyden also presented a fact that basically the Bank's shareholders were the ones who had robbed it, because immediately after they had bought shares, they withdrew the invested money from the Bank, in the form of loans, which they never repaid. "Out of DM 20 million with which firms bought Bank's shares, as much as 19,5 million was withdrawn in the form of loans", he concluded.
Among rare shareholders who did not take a loan were the Franciscan Province, as well as firms "Graming". "Jambo", "Lon Commerce", "Mepas", "Mucic" and "Primus AD Mostar". That same document also mentioned that the largest amount of money went to the Croatian Posts and Telecommunications (HTP) from Mostar. This firm was granted five loans in the amount of DM 6.5 million.
As was expected, shareholders of the Herzegovina Bank reacted to the data Verheyden supplied to the press, pointing out that they were "surprised by lies that are presented to the public that shareholders and depositors have robbed the Bank". However, the Federal Deputy Prime Minister and Minister of Finance, Nikola Grabovac, discovered elements of criminal accountability in the actions of the Herzegovina Bank's compulsory management. "First of all, I did not know anything about the raid and I am very angry that the investigation has not been concluded within two or, at least, three months. If for no other reason, then for the sake of interests of the B&H Federation, because our calculations show that with the introduction of receivership some KM 17,700,000 have remained blocked in the Herzegovina Bank". Minister Grabovac also added that these funds were the reason why the Government was contemplating filing criminal charges against the OHR staff.
The case of the Herzegovina Bank has thus entered its second stage - publishing of investigation results which will for ever seal the fate of the clan from the HVO Logistic Centre Grude (where during the war Jelavic and his most loyal associates had been stationed) or give these politicians a fresh impetus.
Zvonimir JUKIC
(AIM)