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WORLD NEWS Monday 27 noveMber 2017

Behind the Croatian bankruptcy that’s shaking the Balkans

By DUSAN STOJANOVIC shady privatization in the litical connections, Todoric disappeared. So many for expansion triggered
Associated Press former communist coun- took advantage of the people who didn’t have Agrokor’s financial col-
ZAGREB, Croatia (AP) — try, and close connections war years in the 1990s to any money now are very lapse.
Ivica Todoric will no longer between politics and busi- take part in the large-scale rich.” In 2014, Todoric bought 53
be living in his sprawling ness in the Balkans, which privatization process of Agrokor “became a big- percent of struggling Slo-
16th-century castle over- venian retailer Mercator
looking Croatia’s capital, for 550 million euros, using
flying in his private helicop- loans from Russian state-
ter to his luxurious coastal owned bank Sberbank
villa or taking his yacht for that carried a high interest
a trip in the Adriatic. rate. Analysts say the pur-
Croatia’s most wanted chase of Mercator was the
fugitive, known locally as death blow for Agrokor’s
“the Boss,” surrendered to finances as it made the
London police this month debt unsustainable.
amid accusations that he Croatia’s entry into the
mismanaged his food and European Union in 2013
retail multinational and also hurt the company, as
embezzled millions, lead- its supermarkets suddenly
ing it into a bankruptcy so faced tough competition
massive that it’s now an is- from large German and
sue of national concern for other foreign retail chains
several southeastern Euro- that were allowed to open
pean countries. in the country.
Todoric’s company, Agro- Agrokor’s financial col-
kor is collapsing under the lapse is a “combination
weight of $7 billion in debt, of fast expansion, overin-
a sum so large that bailing vestment, low profitabil-
it out fully would bankrupt ity and high-cost borrow-
the Croatian state itself. But In this Nov. 9, 2017 photo, former justice minister and head of the parliamentary commission for ing, which resulted in not
letting the company go un- Agrokor, Orsat Miljenic talks to the Associated Press in Zagreb, Croatia. Croatia’s most wanted enough cash flow to ser-
der would threaten 60,000 fugitive Ivica Todoric surrendered to London police earlier this month amid accusations that he vice its credit obligations,”
employees and thousands mismanaged his huge food and retail conglomerate and embezzled millions, leading to massive financial consultant Andrej
debt that is now an issue of concern for much of southeastern Europe.
more jobs through a supply (AP Photo/Darko Bandic) Grubisic said.
chain that includes farmers
across the region. Mean- is still recovering from the the state-run companies, ger power than the state RUSSIAN CONNECTION
while, the main creditors — bloody breakup of the for- which were sold for cheap itself,” Miljenic said. AND POLITICS
Russian banks — are on the mer Yugoslav federation in through shady and irregu- Running the company with Russian money played
war path to extract what- the 1990s. lar deals. his two sons and daughter, a big role in Agrokor’s fi-
ever value they can. With good connections to Todoric kept expanding nancing, prompting fears
“Croatia faces an eco- IT STARTS WITH FLOWERS the ruling elite, Todoric in aggressively, buying ev- in Croatia that the Kremlin
nomic and financial tsu- Together with his father 1993 bought several com- erything from agricultural has been strategically try-
nami that is beyond imagi- Ante, Todoric constructed panies, including super- land to water bottling firms, ing to increase its political
nation,” Prime Minister a greenhouse in 1976 sell- markets belonging to the meat-processing farms to influence in the EU’s new-
Andrej Plenkovic said dur- ing flowers throughout for- biggest retailer in the capi- ice cream-making com- est member.
ing a recent parliamentary mer Yugoslavia when the tal. panies and newspaper Sberbank is Agrokor’s big-
debate over the govern- country’s communist re- “The privatization that was stands. gest creditor with 1.1 bil-
ment’s handling of the cri- gime started introducing undertaken in the 90’s Agrokor also expanded lion euros. Another Russian
sis and calls for his resigna- market reforms. The busi- caused so many prob- outside Croatia, with assets bank close to the Kremlin,
tion. ness went well, prompt- lems in Croatia,” said Or- in neighboring Serbia, Bos- VTB, contributed with roll-
The story of Todoric, 66, ing the family to establish sat Miljenic, the head of a nia and other former Yugo- over loans worth about
and Agrokor, which ac- Agrokor as a joint stock parliamentary commission slav republics. 300 million euros. The oth-
counts for 15 percent of company in 1989. set to deal with political er main creditors include
Croatia’s GDP, has ex- Like many Croatian busi- aspects of the crisis. “So THE CRASH Austria’s Erste Group and
posed crony capitalism, nessmen with good po- many good factories just Analysts say Todoric’s zeal Raiffeisenbank and Italy’s