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Profile 27 Apr 17

Ivica Todoric: Croatia's Tycoon Who Wanted Too Much

Ivica Todoric, the man who transformed his flower company into one of the Balkans' biggest business empires, Agrokor, now faces the possibility of seeing the debt-ridden firm go under.

Sven Milekic
Ivica Todoric. Photo: Beta

The owner of the single biggest company in Croatia and one of the country's richest people, Ivica Todoric, has been at the centre of a political and economic storm after it emerged that his business giant Agrokor is so heavily indebted that it may collapse.

If the company went bankrupt, it would deliver a painful blow to Croatia’s economy and would devastate small farmers across the region to whom the company owes large sums.

Todoric was forced to hand Agrokor over to the state, which introduced an ‘extraordinary manager' to deal with the financially-challenged conglomerate.

With their own castle, a private island, yachts and VIP friends, Todoric's family have been in the public eye for years as the most important members of the country's post-war 'jet-set' - and one way or another, he looks set to remain the focus of media attention.

Todoric was born in 1951 in the village of Klostar Ivanic, some 50 kilometres from Zagreb.

His father, Ante, was a state manager in the mainly state-run Yugoslav economy of a farm in the mid-1950s.

Ante soon climbed the political ladder, becoming a member of the Croatian parliament and a representative in the Yugoslav federal assembly. He was also a member of the board of Zagreb Bank and held other important positions in economy and politics.

A map of all companies in full or majority Agrokor's ownership in the region.

In 1963, he became the general director of a large meat and egg production company, Agrokombinat.

However, in 1971, he was jailed for embezzling six million German marks, which was allegedly given to Matica Hrvatska, Croatia’s oldest national and cultural institution, allegedly in order for it to buy weapons in the context of the public unrest that had erupted in Croatia in 1971.

After he finished his sentence in 1976, Ante and his son, Ivica, started a private business, growing and selling flowers. In the mid-1980s the business spread and, as Yugoslavia dissolved, Ivica founded Agrokor as a joint stock company in 1989.

In the 1990s, Ivica Todoric played a role in the large-scale privatization process under which many former state-run Yugoslav companies were sold off for paltry sums, often through irregular or rigged processes.

After buying several other companies, the Todoric family in 1993 transformed Agrokor into a joint stock company, Unikonzum, which was then the biggest retailer in the wider Zagreb region.

He bought up stocks from workers in 1994, changed the name to Konzum – by that time it was the biggest retailer in the region – opening his first large store in Zagreb in 1995.

By the late-1990s, he had became the owner of many companies in the food sector that had undergone the transition to a capitalist market economy: from the water company, Jamnica, to the ice cream and frozen products company, Ledo, to the large meat factory, PIK Vrbovec.

“I consider myself a rich man just because I have a stable and healthy family. Anyway, I'm not rich by any criteria … If I didn’t receive a salary, if my son and daughter didn’t have a job, and if dad didn’t have a pension, I would hardly make ends meet,” Todoric told Croatian daily Vjesnik in 2000.

However, by that time, Todoric had already became a regional player, spreading his business activities to Bosnia and Herzegovina – where Konzum became the biggest retailer – as well as to Serbia, where Agrokor became the owner of the retailer Idea.

While he was often labelled a 'tycoon', he rejected the negative connotations of the word.

“This word has taken root here [in Croatia]. I can say with confidence that tycoons are the only successful part of the Croatian economy. Without them, there is no prosperity for our country. Praise God that in the future there will be as many tycoons as possible,” he told Vjesnik in 2000.

While he also spread out to Montenegro, Kosovo, Macedonia and Hungary, Agrokor’s biggest success - but possibly its biggest mistake - became the acquisition of the biggest Slovenian retailer Mercator.

In June 2014, Agrokor bought 53.12 per cent of Mercator’s stock for 550 million euros, using loans from a Russian state-owned bank, Sberbank.

Some analysts say the purchase of Mercator thrust a dagger into Agrokor’s finances as it increased the company’s debt to the point from which it has never recovered.

Experts also say the structure of Agrokor's debt was problematic as Todoric tried to cover long-term debts with expensive, short-term loans.

“Expectations are that I will destroy everything, but we will create such a miracle that you won’t believe it,” he said in June 2013, amid his attempts to buy Mercator, after Slovenian journalist Petra Sovdat quizzed him about his business model.

With Mercator in its hands, by 2014 Agrokor had become the regional leader in retail and food production along with businesses in insurance, real estate and tourism – where the company was less successful.

Between 2009 and 2015, Todoric received around 100 million euros in dividends from Agokor stocks.

Over the years, Todoric ran the company as a family business, employing his sons, Ante and Ivan, as well as his daughter, Iva, as his closest associates.

Although he was not seen as a “show-off”, in 1999 Todoric bought an estate overlooking Zagreb where a 16th-century castle, Kulmerovi Dvori, had once stood.

Once owned by the Kulmer family in the 19th century, it was torched in World War II and later nationalised by the Yugoslav authorities.

After attaining the property, Todoric invested over 3 million euros in rebuilding the castle.

Although it was officially categorised as a hotel, so that it could be rebuilt in a woodland area where construction is forbidden, it remained the Todoric family home and never received any commercial guests.

While many speculated that his family used their links to twist laws and regulations to their advantage, he always denied connections with politicians and steered away from publicly supporting any parties or politicians.

“Whatever law the government wants to pass, they always say … it’s my law [made for Todoric],” he said defensively in February 2013, when asked if the government was passing laws in his interest.

Despite his claims, since the 1990s Todoric has always been close to top politicians and officials, regardless of their political orientation.

He was one of the few VIP guests in the first train than ran from Zagreb to Split in August 1995 after the Croatian army recaptured the interior of Dalmatia from rebel Serbs in “Operation Storm”.

Todoric with VIP guests in the first train connecting Zagreb and the coastal city of Split in 1995.

Alongside then President Franjo Tudjman, Todoric sat in the special carriage, alongside Finance Minister Bozo Prka – who later became the director of Privredna Banka Zagreb – Vice Prime Minister Borislav Skegro and other politicians and influential businessmen.

In addition, a number of state officials were employed in Agrokor before and after assuming public office.

Croatia’s current Finance Minister, Zdravko Maric, worked as a director in Agrokor before becoming a minister, while the former governor of the Croatian National Bank, Zeljko Rohatinski, worked in Agrokor before becoming governor and remained on Agrokor’s supervisory board for the first two years of his governor’s term.

Todoric is also owner of a 19th-century summer home, Villa Castello in Medveja, next to the resort of Opatija, on the northern Croatian coast.

Although he lives in a castle, often flies to his coastal villa by helicopter and every now and then takes his yacht for a spin in the Adriatic, Todoric’s presence in the media was always limited.

Over more than 20 years, he barely gave 20 interviews and media reports about him and Agrokor were infrequent until the recent crisis in the company erupted.

He evidently continued to enjoy the support of the government in recent months, as it became ever clearer that his empire was in deep trouble.

Under a new Law on Procedures for Extraordinary Management in Companies of Systematic Significance, adopted on April 7, Todoric handed over the management of the company to the state.

“For 40 years, I invested in the construction of Croatia and the whole region and, therefore, I am now a proud man because everything I have built I gave the Croatian state today, by my signature,” Todoric concluded in his press release, once again, typically, avoiding direct contact with the media.

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