October 16, 2017 / 8:49 AM / 9 months ago

Croatian police detain eight former executives at Agrokor

ZAGREB (Reuters) - Croatian police arrested eight former senior executives of Agrokor[AGROK.UL] in a series of raids on Monday as part of an investigation into alleged financial irregularities at the heavily indebted food producer and retail conglomerate.

The state prosecutor’s office DORH said in a statement the investigation targeted 15 individuals “suspected of economic crimes and fraud”. Local media reported that some 300 police officers were engaged in the operation.

DORH did not issue any official statement after the arrests but local media said those detained would be taken to DORH premises for questioning on Tuesday.

Among those arrested were Ivan Crnjac, Agrokor’s former deputy finance and strategy president, and Ljerka Puljic, the ex-supervisory board member and top aide of founder Ivica Todoric, as well as the board member Tomislav Lucic, the state news agency HINA said.

The police also detained Agrokor’s former management members Piruska Canjuga and Damir Kustrak, former vice-president Mislav Galic and another two executives, Marijan Alagušić and Alojzije Pandžić.

Todoric’s lawyer, Jadranka Slokovic, said that his residence was also raided but she could not provide any more details. She said the arrests of Agrokor’s former executives was “the start of a political showdown with Todoric,” HINA reported.

But Prime Minister Andrej Plenkovic dismissed such allegations, saying: “There is no political persecution.”

“It is in our utmost interest to fully disentangle this issue. It is important to establish its causes and consequences and how to proceed further,” Plenkovic added.

FULL RANGE OF DEBT STILL UNKNOWN

Agrokor, the biggest employer in the Balkans with around 60,000 staff, was put into state-run administration in April after suffering a liquidity and debt crisis.

Todoric said in a blog post on Monday he was not currently available but was willing to put himself at the disposal of the judiciary and a parliamentary commission. He denied any wrongdoing by himself or his associates.

Croatian lawmakers approved the appointment of a parliamentary commission to investigate how Agrokor ran into trouble, after crisis manager Ante Ramljak said he had pressed for criminal charges against those responsible for financial irregularities. [L8N1MH1ZY]

An audit ordered by the company’s state-appointed management and performed by PricewaterhouseCoopers (PWC), also showed a net loss in 2015 of 3.6 billion kuna ($565 million) against a net profit of 1.2 billion kuna released by the previous management.

In the audit the value of Agrokor’s net worth for 2015 and 2016 was reduced by 22 billion kuna.

Agrokor has yet to say how much it owes. Creditors include suppliers, bondholders and banks, with the biggest portion of debt, around 1.1 billion euros ($1.30 billion), held by Russia’s Sberbank, creditors have said.

Reporting by Maja Zuvela and Daria Sito-Sucic; Editing by Jeremy Gaunt, Greg Mahlich

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