Croatian police raid home of Agrokor’s founder, arrest former executives

Croatian police raid home of Agrokor’s founder, arrest former executives
By Carmen Simion in Bucharest October 16, 2017

Croatian police raided the house of Ivica Todoric, the founder of troubled food and retail giant Agrokor, on October 16 and several former executives in the company were detained. The move is part of an ongoing investigation related to financial irregularities uncovered at the group after it entered restructuring. 

Agrokor, Croatia’s largest company which employs around 60,000 people in the region, is undergoing restructuring after a debt crisis pushed it to the brink of collapse earlier this year. The Croatian government has appointed an emergency management at the group. 

An audit report recently showed that the Agrokor Group’s net loss in 2016 amounted to HRK11bn (€1.46bn), while the company’s liabilities amounted to HRK56.3bn. The report also showed undisclosed liabilities amounting to HRK3.9bn.

Croatia’s State Prosecutor’s Office (DORH) said in a statement that the proceedings of the prosecutors and the police were part of an investigation related to alleged criminal offences against the economy and fraud. The investigation is targeting 15 people.

“We point out that this is a continuation of a multi-month survey based on verified facts and the beginning of a comprehensive investigation that involves complex business relationships in a business entity,” DORH said.

More than 300 police officers are said to have taken part in the raids, HRT reported. Further searches are expected to be carried out on October 17 given the magnitude of the operation, a statement on the interior ministry's website said. 

Agrokor’s former vice-president for strategy and finance Ivan Crnjac was detained, according to Total Croatia News. Alongside Crnjac, the police officers also detained Ljerka Puljic, a long-time executive vice president of Agrokor who has been referred to for years as Todoric’s right hand. She has been a member of Agrokor’s supervisory board since 2015 and has been named for ten years in a row the most powerful woman in Croatian business.

Former members of Agrokor’s management board Damir Kustrak and Tomislav Lucic were also arrested, as well as former management board members Piruska Canjuga and Damir Kustrak.

However, the prosecutors failed to find Agrokor founder Todoric or his son Ante, a prominent board member. According to HRT, the two are out of the country.

Todoric reacted to the raids by issuing a statement on his blog, calling the situation a “political process”. 

“Alongside my Croatian and international legal team, I am preparing my defence and lawsuits which will… bring light and bring justice to all those who, by criminal activities and unconstitutional law, have created the screen for the biggest robbery of private property in modern Europe,” Todoric wrote, adding that his human rights have been violated.

He said he is willing to put himself at the disposal of the judiciary and a parliamentary commission. 

On October 11, the Croatian parliament approved plans to set up an inquiry commission that will look into alleged wrongdoings at Agrokor. The commission is expected to carry out technical work until October 30. It will have six months to find out how the food and retail giant ran into trouble.

Todoric has recently said that he wants to file criminal charges against the company's extraordinary commissioner Ante Ramljak. Todoric also accused the government of using the Lex Agrokor law to steal his company and the emergency management of deceiving prosecutors with “inaccurate and incomplete data”.

Earlier this month, the deputy CEO of Russia’s Sberbank, Maksim Poletaev, said in an interview with Russian news agency Interfax, quoted by Total Croatia News, that Agrokor owes Sberbank around €1.1bn.

Back in August, Sberbank initiated arbitration proceedings against Agrokor and 11 guarantors in respect of €450mn lent to Agrokor Group by Sberbank which the Russian bank claimed should be repaid as a result of the Croatian extraordinary administration proceedings.