Public spat erupts between Croatian PM and Agrokor founder

Public spat erupts between Croatian PM and Agrokor founder
By bne IntelliNews September 25, 2017

Croatia’s Prime Minister Andrej Plenkovic has become embroiled in an extremely public war of words with Ivica Todoric, the founder of troubled Agrokor, after the businessman accused the government of scheming to take over his food and retail empire. 

Agrokor, Croatia’s largest company and one of the largest employers in the SEE region, is undergoing restructuring after a debt crisis pushed it to the brink of collapse earlier this year. This has seen control removed from Todoric, who for decades had run Agrokor like a private company, and handed over to the government appointed trustee Ante Ramljak and his team. 

Months after the debt crisis at the company erupted this spring, Todoric took to his blog on September 22 to slam the government, accusing it of “lies and manipulations” aimed at taking control of Agrokor.

“The planned spreading of fake information and negative rumours through statements of the highest level officials … in the first months of 2017 destabilised Agrokor,” Todoric wrote. 

“The aim of such actions by the highest level officials of the government and parliament, through pure political interventionism, was adoption of the unconstitutional law — Lex Agrokor — and nationalisation of private ownership. Such an example of capturing private ownership hasn’t been seen before in modern Europe,” the tycoon said. 

Without providing further details, Todoric claimed that he and Agrokor’s management had approved the activation of the law “under blackmail, force, threats” and a “media lynching”. 

“Lex Agrokor" is how the emergency law adopted in April with the aim of protecting the stability of the country’s economy by offering assistance to systemically important companies that cannot repay their debts is commonly know. It was seen as being adopted to address the situation at the troubled conglomerate even though it does not specifically refer to Agrokor. 

The aim of Lex Agrokor was to protect the interests of the Croatian economy, and stakeholders such as workers, employees and suppliers Plenkovic said ahead of the parliament vote on the new law this spring.

Having remained quiet for months, Todoric said he was speaking to the public for the first time about “the biggest scandal in Croatia’s recent history”, and would continue to “illuminate events” over the coming days and weeks. 

In August, Croatian media reported that Todoric was planning to sue the government due to Lex Agrokor, which saw management of the company transferred to the state. 

While he has blamed the government for the near collapse of Agrokor, analysts say the group was brought down by its over-reliance on debt financed expansion. The crisis followed the takeover of Slovenia-based rival Agrokor, which coincided with the entry of numerous West European retail giants to the Balkan market. 

The day after Todoric’s blog post was published, Plenkovic denied the businessman’s words in a statement to journalists. 

“There hasn’t been any pressure and especially not from the side of the government,” Plenkovic told reporters, adding that his government wants the restructuring of Agrokor to have a transformative effect on the Croatian economy and way of doing business.

The prime minister also stressed that Lex Agrokor was adopted in line with the constitution.

“What we did was the only correct and possible thing at that moment. Take note of the fact that didn’t we go to Agrokor but that Agrokor came to us,” the prime minister added.

“Our main goal was to protect the interest of Croatian economy and finances. We have succeed in this thanks to this law,” he concluded.

However, Todoric then lashed back at Plenkovic, calling Lex Agrokor a conflict of interest the like of which has never been seen in modern Europe. In an open letter distributed on September 24, Todoric harshly criticised the circumstances under which the law was drawn up and implemented. 

He also disputed Plenkovic’s claim that Agrokor had approached the government for help, saying that Bozo Petrov — the leader of the Bridge of Independent Lists (Most) which at that time was a junior partner in the government — had been calling for a meeting for several weeks. 

In the letter, Todoric describes a meeting on February 26, as reports of the growing crisis at Agrokor were beginning to surface, with Plenkovic, Minister of Economy, Entrepreneurship and Crafts Martina Dalic, Petrov and Agrokor board member Ivan Crnjac. Todoric wrote that meeting took place “secretly, under the veil of the night”.

Another point of criticism was the speed with which the law was adopted, with the group’s founder implying that plans had already been drawn up by the time ministers approached him. 

At the beginning of March, Todoric says, Finance Minister Zdravko Maric visited him at Agrokor, saying he had come on behalf of Plenkovic. “I informed him that Agrokor doesn’t need the government’s help and that I’m thankful to the PM for chocolates he served us during the [Ferbuary 26] meeting,” Todoric said. 

Dalic later revealed in a presentation to the government that work on Lex Agrokor had started on the day Maric visited the company. 

The restructuring process at Agrokor has already seen expensive assets used by Todoric, such as the Riva 85 Opera model motor yacht and Bell 427 VFR model helicopter owned by the group, put up for sale.