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News 17 Oct 17

Owner of Croatia’s Indebted Agrokor ‘Had Financial Control’

A former executive from the heavily-indebted Croatian conglomerate Agrokor presented a document to the state attorney alleging that owner Ivica Todoric made all the financial decisions.

Sven Milekic
BIRN
Zagreb
Mislav Galic arrives for questioning at the state attorney's office. Photo: BETAPHOTO/HINA/Lana SLIVAR DOMINIC/MO

A former executive from the ailing Croatian conglomerate Agrokor, Mislav Galic, was questioned at the state attorney’s office in Zagreb on Tuesday and presented a document which allegedly shows how all the major financial decisions were made by company’s owner and founder Ivica Todoric.

Galic, who was a member of the executive board of the mother company Agrokor d.d., which was responsible for the conglomerate’s food business, was arrested alongside several other former Agrokor executives on Monday.

Galic was also the president of the executive board of Agrokor’s water company Jamnica and president of the supervisory board of Agrokor’s ice cream company Ledo.

Galic’s lawyer Dubravka Krklec told media on Tuesday that Galic was the person responsible for making major financial decisions at Jamnica and Ledo, but not at Agrokor d.d., which runs the whole group.

“Mislav Galic completely denied any connection to financial decisions in which he didn’t participate, since meetings of the Agrokor d.d. executive board were not held,” Krklec said.

She said this meant that Galic could not take part in approving financial decisions.

“As part of his defence, Mislav Galic also handed over a document confirming the allegations in his defence, stating who actually was in charge of making financial decisions in Agrokor. This was definitely not Mislav Galic,” she said.

When asked by a journalist if the person in charge was Todoric, Krklec agreed.

Galic was arrested in a large-scale police operation on Monday, in which Todoric’s residence in Zagreb was searched, along with the homes of former senior officials.

Six former members of Agrokor d.d.’s executive and supervisory boards were arrested.

Damir Kustrak, Ivan Crnjac, Tomislav Lucic, Piroska Canjuga and Ljerka Puljic were arrested as well as Galic and are being questioned on Tuesday.

Todoric’s son-in-law Hrvoje Balent – who also held a senior position in Agrokor – was also arrested on Tuesday, but has yet to be taken to the state attorney’s office for questioning.

Ivica Todoric and his sons Ante and Ivan were not found at their address in Zagreb and are currently abroad.

It has been confirmed that over a month ago, Ante Todoric registered that he is now living at an address in London.

Ante Todoric’s lawyer Rajko Cogurlic told media on Tuesday that he is in contact with his client, who is willing to cooperate with the police.

“We want to end this agony, and we’ll offer the phone number at which he can be contacted,” Cogurlic said.

If Todoric’s relatives do not respond to state attorney’s calls for them to present themselves for questioning, Croatia will file a European arrest warrant and request an Interpol ‘red notice’.

Meanwhile police filed criminal charges against Ivica, Ante and Ivan Todoric, along with the former Agrokor executives and five additional people from both Agrokor and Baker Tilly, the audit agency that did the initial financial reports which are alleged to be incorrect.

Agrokor, which fell into financial trouble at the beginning of the year, was put under state crisis management in April.

The results of a financial review of the Agrokor group and its mother company from last week showed that, instead of a reported profit of 160 million euros in 2015, the group actually ran up losses of 480 million euros.

The company's role in the economy of Croatia is massive, with revenues of 6.5 billion euros in 2015 – almost 16 per cent of Croatia's total GDP – and around 40,000 employees.

Agrokor employs another 20,000 people in neighbouring Bosnia and Serbia, while it is believed that suppliers and companies for the Slovenian retailer Mercator – which Agrokor bought in 2014 – employ around 70,000 people in Slovenia as well.

 

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