Author Topic: Croatian Prosecutors Investigating Pm And Other "untouchables" For Corruption  (Read 2653 times)

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Croatian Prosecutors Investigating Former Pm And Other "untouchables" For Corruption
Origin   Embassy Zagreb (Croatia)
Cable time   Tue, 26 Jan 2010 13:40 UTC
Classification   CONFIDENTIAL
Source   http://wikileaks.org/cable/2010/01/10ZAGREB53.html
References   09ZAGREB644
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This cable also mentions Hypo Bank

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C O N F I D E N T I A L SECTION 01 OF 02 ZAGREB 000053
 
SIPDIS
 
STATE FOR EUR/SCE, EUR/ACE, AND INL/AAE
 
E.O. 12958: DECL: 01/01/2020
TAGS: PGOV PREL KCOR HR
SUBJECT: CROATIAN PROSECUTORS INVESTIGATING FORMER PM AND OTHER "UNTOUCHABLES" FOR CORRUPTION
 
REF: 09 ZAGREB 644
 
Classified By: Political Officer Chris Zimmer for reasons 1.4 (b) and (
d).
 
¶1. (C) SUMMARY: Chief State Prosecutor Mladen Bajic has
outlined to us several ongoing corruption cases targeting
former Prime Minister Ivo Sanader and other top government
officials.  Prosecutors are developing at least one case
against the former PM which could result in his indictment,
and they are continuing to uncover evidence in several other
cases which could also implicate Sanader.  PM Kosor has
strengthened anti-corruption efforts by creating interagency
teams to investigate the most serious cases of corruption in
state-owned enterprises, while the Ministers of Interior and
Justice have warned that there are no "untouchables" in the
corruption clampdown.  END SUMMARY.
 
¶2. (C) In a series of meetings in early to mid-January,
Croatian Chief State Prosecutor Mladen Bajic described
several ongoing corruption probes to Poloff which target
former Prime Minister Ivo Sanader, current and former
ministers, and nearly all major state-owned enterprises
(SOEs).  Bajic said that Sanader has possible involvement in
several cases, but the one in which prosecutors have gathered
the most evidence involves illegal mediation between his
friends and Hypo Alpe Adria Bank Group of Austria. The Hypo
Bank case indicates that Sanader allegedly arranged a DM 4
million loan for his neighbor, Miroslav Kutle, in the 1990's
and received a DM 800,000 kickback from Kutle in return.
Kutle's cashier is cooperating with the anti-corruption
prosecutors (USKOK), and her story has been corroborated by a
former tourism minister with knowledge of the transactions.
The illegal mediation charge for receiving gifts and benefits
while abusing an official position to secure business
transactions carries a prison term of one to five years.
Bajic said that Hypo Bank is cooperating with the
investigation.
 
¶3. (C) Sanader is also implicated in several corruption cases
involving the Transportation Ministry.  Transport Minister
Bozidar Kalmeta has been under fire for several months due to
corruption cases involving Croatian Highways and Croatian
Railways, both of which are overseen by his Ministry.
According to Bajic, however, Kalmeta was not one of the major
players in these affairs.  Bajic said that Sanader often
bypassed Kalmeta and gave instructions about how to handle
certain cases directly to (former) Transportation State
Secretary Livakovic.  Bajic did note, however, that Kalmeta
should have at least been aware of what was happening within
his own ministry.
 
¶4. (C) Bajic said his office is leading interagency teams
established under orders from PM Kosor to deal with five
priority cases involving state-owned enterprises (SOEs):
Hrvatska Elektroprivreda (HEP or Croatian Electric), Hrvatske
Zeljeznice (HZ or Croatian Railways), Hrvatske Autoceste (HAC
or Croatian Highways), Hrvatske Vode (Croatian Water
Company), and Hrvatske Sume (Croatian Forests Management
Company).  The teams, led by the prosecutor's Office for
Suppression of Corruption and Organized Crime (USKOK), meet
daily and include the Police, Tax Administration, Finance
Police, and other experts.  Bajic said he believes that all
major Croatian SOEs are now under investigation.  Chief of
Police Oliver Grbic told reporters in mid-January that police
were running twelve investigations during the past six months
into CEOs and management officials of public companies.
 
¶5. (C) A sixth company under investigation, Podravka, has 26
percent government ownership, and parliament approves the
supervisory board.  At least seven members of the board, all
affiliated with the ruling coalition, were arrested, and
Deputy Prime Minister (and Minister of Economy and former
Podravka executive) Damir Polancec resigned in October 2009.
Dinko Cvitan, head of USKOK, confirmed to poloff on January
21 that USKOK has now opened a formal investigation of
Polancec for illegal mediation.  The scandal involves
embezzlement and fraudulent loans by several Podravka-linked
firms in an attempt by managers to buy controlling interest
in the company.  Bajic said he needed several documents from
OTP Bank in Hungary to move forward with charges in the case,
and initially described efforts to secure them from Hungary
as "catastrophic."  OTP Bank and several Hungarian officials
were uncooperative, he said, but in a wiretap a bank official
told a person close to Polancec that the bank would not be
able to resist Croatian prosecutor requests much longer.
During a January 18 meeting between PM Kosor and Hungarian PM
Bajnai, PM Bajnai told press that documents relating to
Podravka's OTP bank accounts were sent on to Croatia on
January 15; Bajic said he received a Hungarian prosecutor's
 
ZAGREB 00000053  002 OF 002
 
 
report on OTP's dealings with Podravka on January 22.
 
¶6. (U) Minister of Interior Tomislav Karamarko and Minister
of Justice Ivan Simonovic have also been spearheading a
public relations campaign to publicize the "war on
corruption" in Croatia.  Simonovic said on Croatian Radio
that "no one can be above the law -- either former or present
or future presidents or prime ministers." He went on to add
that "there have always been untouchables, but this is the
first time in the history of Croatia that there won't be
untouchables anymore."
 
¶7. (C) COMMENT: An important test of Croatia's
anti-corruption efforts will be the ability to go after the
biggest fish.  For several years, Bajic has been extremely
hesitant to open even a formal investigation, let alone seek
an indictment against high-ranking officials, unless he felt
he had a watertight case.  The opening of the formal
investigation against Polancec, and Bajic's assessment that
the Hypo Bank case currently has solid evidence against
Sanader, are strong signs that some "big fish" may soon face
formal charges, joining former Defense and Interior Minister
Berislav Roncevic, who is currently under indictment for a
truck procurement scandal during his time at the MoD
(reftel).  While the illegal mediation charges being
considered against Sanader and Polancec may seem rather
minor, Bajic suggests that there is likely much more to be
uncovered involving the former PM.  In any case, as Bajic
likes to point out, Al Capone was brought down for tax
evasion rather than for his more notorious activities.
FOLEY
***

Source/ Full cable: http://wikileaks.org/cable/2010/01/10ZAGREB53.html