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Privatization Schemes
Croatia's small privatization agency, established in 1992, was supposed to help oversee the nation's transformation from socialism to free enterprise. Instead, it became a headquarters for institutionalized looting, officials here now say.
Djuro Njavro, an economist and top adviser to Tudjman's political party, the Croatian Democratic Union, said that communist managers "used the privatization process to create a new elite, the same as in other transition countries." He also acknowledged that "some people who were close to" the party took advantage of "the lack of transparency" in the transactions and the fact that "everyone in that period . . . didn't ask for the sources of the money."
Perhaps the biggest of all the tycoons minted by Tudjman's government was Miroslav Kutle, a onetime bartender hired as a clerk at the privatization agency. Kutle was allowed to buy company after company at a discount with little or no cash of his own, allegedly in exchange for payoffs to party officials. Eventually, he acquired about 170 businesses, including the nation's largest grocery store chain and its monopoly newsstand company, a firm that in its heyday grossed $1 million a day.
Like other well-connected officials who tapped into easy money, Kutle bankrupted the firms he controlled by pocketing the profits while refusing to pay suppliers, many of which failed in turn. Kutle spent some of the money on a corporate jet and a fancy house in the capital, while some has been traced to banks in Austria and corporations in the Virgin Islands, officials here say. But Kutle successfully hid most of the money by forging documents.
Kutle was arrested shortly after the new government took power and now sits in a Zagreb jail. He has denied any illegal conduct. But the U.S. ambassador to Croatia, William Dale Montgomery, said Kutle "nearly bankrupted the whole country" and described him as the embodiment of Tudjman's view that "anybody who helped build [the party] deserved to have all the riches this country had to offer."
Kutle and other well-connected officials were able to fund their acquisitions by buying controlling shares in banks with government help and then obtaining hundreds of millions of dollars in loans from the banks. Throughout Tudjman's tenure, banks were allowed to operate with little supervision, diplomats and officials in the new government said, and many eventually collapsed. Investors lost millions.
http://www.balkanpeace.org/index.php?in ... leid=10378
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