Croatian Environmental Projects Take a Bribery Hit

In the Manichean struggle between the forces of light and dark, energy companies are frequently portrayed as accomplices to Darth Vader with their disregard of the environmentalists, whilst everyone else cheers on those allying themselves with Mother Nature.

But, sad to say, sometimes environmentalists, particularly those in government, can fall prey to practices more identified with energy issues, like bribery.

Such a case is now wending its way through Croatia’s courts, with Zagreb being regaled with tales of high level embezzlement and corruption.

The story starts back in November 2010, when Croatian national police chief Oliver Grbic startled reports with the announcement that four people had been arrested on suspicion of their involvement in malfeasance, abuse of power and embezzlement of $4,560,000 from the state-owned motorways operator (HAC). Grbic said that the investigation fell under the jurisdiction of the Office for the Suppression of Corruption and Organized Crime (USKOK), which was why he could not reveal the names of the arrested suspects.

Fast forward to 4 April. Former Minister of the Interior Ivica Kirin, former HAC officials Mario Crnjak, Jurica Prskalo, Josip Sapunar and Zlatko Korpar, along with the former director of the Environmental Protection and Energy Efficiency Fund Vinko Mladineo, and a former director of the Hrvatske Sume forest management company Darko Beuk were formally indicted for involvement in the Fimi Media corruption case. The case was named after Nevenka Jurak, the owner of the Fimi Media marketing, who was indicted last December with two of her associates by USKOK in a 60,000-page document laying out the charges against the Croatian Democratic Union (HDZ) party, its former president and former Prime Minister Ivo Sanader and others for illegally diverting $8.1 million from state companies and institutions into the party's slush fund.

In an update of the December charges, the prosecution alleges that the indicted men covertly siphoned off the money from state institutions and state-run companies before forwarding it on to the slush fund of the Croatian Democratic Union (HDZ) between late 2003, when it came into power, and July 2009. USKOK contends that part of the funds were used to finance the party's election campaigns.

In January Police Director Grbic confirmed that the Interior Ministry was one of the clients of the private Fimi Media company, which was being investigation on suspicion of receiving millions of dollars from state companies and agencies in rigged tenders for public contracts, adding that, besides the Interior Ministry, the investigation had broadened to a total of 22 public companies and ministries. Former Interior Minister Kirin, who is the current mayor of Virovitica, was charged with ordering his ministry to work with Fimi Media despite knowing that the deals served to collect money for the former ruling HDZ party, according to a statement from national anti-graft prosecutors.

Mladineo is charged with making illegal deals with Fimi Media from April 2008 to late 2009 and violating the Public Procurement Act, being aware, as were the HAC executives, that the money was intended for filling the HDZ's slush fund. Mladineo allegedly signed three contracts with Fimi Media for promotional activities, including the making of video clips and advertisements for Planet Earth Day and the prosecution alleges that he arbitrarily accepted Fimi Media's offer without comparing the offer with the price list of the Croatian Radio and Television, under which the Fund could have been given discounts of up to 50 percent, which is alleged, defrauded the Fund of around $298,500.

Established in 2003, the Environmental Protection and Energy Efficiency Fund’s mandate is the “financing of preparation, development and implementation of programs, projects and similar undertakings in the fields of environmental protection, waste management, energy efficiency and use of renewable energy sources.”

Sanader and several other HDZ senior officials will go on trial on April 16 on charges of abuse of power, in the first such a case against a political party in Croatia. Quite a character, Sanader, Prime Minister from 2003 until mid-2009, is already on trial for two other major corruption cases, which is causing his former party, ousted from power by a centre-left coalition in the December 2011 elections, to portray Sanader as “rogue.” Whether or not the whitewash takes, the trial could reveal the extent of the corruption within the HDZ, which had ruled Croatia almost continuously since its independence in 1991.

Caught in the potential collateral corruption fallout might well be the Croatian national oil joint stock company Industrija Nafte (INA). The Croatian government owns 44.84 percent of the firm, and with its 2010 revenue of $4.28 billion, INA is Croatia's largest company, which doubtless caught the attention of HDZ officials seeking “funds.”

And those environmental projects deprived of funds because of the corruption? They’re just going to wait awhile longer.

By. John C.K. Daly of Oilprice.com