Croatian TV broadcasts Judge Ivan Turudic reading his verdict in the corruption trial against former Prime Minister Ivo Sanader (November 20, 2012)
Also available on: http://www.youtube.com/watch?v=4-QyuUkqUeI
IVAN TURUDIC (judge): It is determined that all summoned persons have now approached. We will now proceed to the announcement of the verdict. I ask all present to rise. This verdict is on behalf of the Republic of Croatia.
The Defendant, Ivo Sanader, personal information as in the file, is guilty because, in the period since late 1994 to 22nd March 1995, in Zagreb and in the Republic of Austria, during the Homeland war, at the time when the Republic of Croatia fell into a state of war, in the state of high inflation and exceptionally high interest rates for loans in the country, in the difficulties he faced in finding banks that would lend more favourably, as the Deputy Minister of Foreign Affairs of the Croatian Government, acting according to the order of the Minister of Foreign Affairs, Mate Granid, as a negotiator with Hypo Bank and Kärtner Landesbank Klagenfurt on behalf of the Croatian Government, in the loan agreement conditions under which the aforementioned Bank would approve a loan to the Croatian Government for the purchase of embassy buildings of the Republic of Croatia throughout the world, using the described difficult state of the country due to the armed aggression toward the Republic of Croatia during the Homeland war, with the intention of gathering significant material gain for himself, during negotiations on loan agreement conditions by which Hypo Bank would grant approval to the Croatian Government – the Ministry of Foreign Affairs – a loan in the amount at that time of 140 million Austrian Schillings, with the representatives of Hypo Bank, using his position as negotiator, with the representatives of the aforementioned bank, he agreed that Hypo Bank, for participation in the negotiations, on concluding the loan agreement, should pay out a cash commission as a counter favour for entry of Hypo bank onto the Croatian market, in the amount of 5% of the approved loan of 140 million Austrian Schillings, which is 7 million Schillings, with the proviso that 50 per cent of the commission be paid out to him on acceptance of the loan agreement to the budget of the Republic of Croatia, and the remaining 50 per cent during or after the signing of the agreement, after which Hypo Bank paid out the amount of 700 thousand Schillings on 4th January 1995 in accordance with the agreement and then, after the loan agreement between the Croatian Government and Hypo Bank was signed on 10th January 1995, by which the aforementioned bank approved a loan to the Croatian Government in the amount of 140 million Schillings, on 16th January 1995 in the amount of 2 million 800 thousand Schillings, 27th January 1995 in the amount 930 thousand, 22nd March 1995 the amount of 2 million 570 thousand Austrian Schillings, by which he was paid the agreed commission amount of 7 million Schillings, by which he obtained unlawful material gain for himself in the amount of 3 million 610 thousand 527.18 Kunas.
Therefore, as an official, by the described method of exploiting the state of war, with the motive of appropriating material gain for himself, he exploited his position of authority, and through a criminal offence obtained significant material gain, with the perpetrator acting with the goal of acquiring such gain. Under item two, by the beginning of 2008 in Zagreb, as Prime Minister of the Republic of Croatia, he agreed with Zsolt Tamas Hernadi, President of the Board of the Hungarian Oil company MOL Hungarian Oil and Gas PLC, that for the amount of 10 million Euros he would do everything he could to conclude an amendment to the Contract on the mutual relations of the shareholders, which pertains to the company INA d.d., in such a manner that without basis the Republic of Croatia would grant MOL Hungarian Oil and Gas PLC (hereinafter refer to as: “MOL”) prevailing influence over that company, and conclude a contract on the separation of the gas business from the company INA, by which that part of the gas business that creates a loss to the company Ina is separated, to be assumed by the Republic of Croatia in its entirety, after which in full knowledge that the conclusion of such contracts is against the interests of the Republic of Croatia, with the goal of realising his agreement with Zsolt Tamas Hernadi, using his authority as the Prime Minister of the Republic of Croatia and the President of the Democratic Union (HDZ), before the end of October 2008 at a meeting of the inner cabinet of the Croatian Government he presented the motion that the requests of MOL for cession of the majority in the governing bodies and separation of the non-profit part of the business should be accepted; and thereafter, at the beginning of November 2008, at a meeting of the presidency of HDZ he repeated this motion, and presented and imposed his previously prepared conclusions for amendments to the key elements of the contract on the mutual relations of the shareholders pertaining to the company INA d.d., and the contract on separation of the gas business, according to which the Croatian Government was to surrender control over management of the company INA to MOL, and regulate the gas business in such a manner as to separate that part of the gas business that is generating a loss to INA with the same being completely taken over by the Republic of Croatia, misrepresenting that the conclusion of such contracts is in the interest of the Republic of Croatia, even though by concluding these contracts the Republic of Croatia was allowing MOL control over the management of the company INA, a company of special interest to the Republic of Croatia with the undertaking to take over that part of the gas business that is generating a loss, due to which the present representative members of the HDZ shared his conclusions, as the Prime Minister of the Republic of Croatia and the president of HDZ have accepted, and then the members of the Croatian Government at their meetings held on 24th December 2008 and 29th January 2009, at which proposals were presented of the first amendment of the contract on the mutual relations of the shareholders pertaining to the company INA d.d., and the main contract of gas business, with consent being granted for conclusion of those contracts, so that on 30th January 2009 the first amendment of the contract on mutual relations of the shareholders was concluded, which pertains to the company INA, by which the prevailing influence in the company INA was given to MOL, as well as the main contract on gas business, based on which that part of the gas business that creates a loss for INA was separated from the company INA, which the Republic of Croatia undertook to take over in its entirety, by which all requests of MOL were entirely accepted, so for conclusion of such a contract in agreement with Zsolt T. Hernadi for the payment of the agreed amount of 10 million euros fictitious contracts were concluded for consulting services between a company from Cyprus and the company Xenoplast & Shipping AG from Switzerland, hereinafter referred to as Xenoplast, in the co-ownership of Robert Ježid, and thereby on 3rd June 2009 a contract on consulting services was concluded between the company Ceroma Holding and Xenoplast, and on 4th June 2009 between the company Hungarian Oil and Xenoplast from Switzerland, which money Robert Ježid needed to pay out according to his instructions at his request, after which on 17th June 2009 the company Hungarian Oil Production Trade Ltd Cyprus paid out the sum of 2 million 600 thousand Euros to the account of company Xenoplast, and the company Ceroma Holding to the account of the company Xenoplast Switzerland in the sum of 2 million and 400 thousand Euros, while the remainder of the agreed amount of 5 million Euros was not paid out to the account of the company Xenoplast & Shipping, because in the meantime the contract on consulting and other services had been terminated at the request of Robert Ježid.
Therefore, as an official, he received a gift to perform an official action within his authority that he should not have done, by which he committed a criminal offence against his official duties, namely an offence under item 1 by the abuse of his position of authority under Article 337, paragraphs 1 and 4 of the Criminal Law, in connection with Article 7, paragraph 1, in connection with Article 5, item 13 of the Law on the non-applicability of the criminal offence of war profiteering, transformation and privatisation, punishable under Article 337, paragraph 4 of the Criminal Law, and in part under item two of taking bribes, the described being punishable under Article 347, paragraph 1 of the Criminal Law, all with application of Article 60 of the Criminal Law, so to the defendant Ivo Sanader on the basis of the provision of Article 337 for an offence under item 1 a prison sentence is determined for a duration of three years and six months, for the offence under item 2 a prison sentence is determined for a duration of up to seven years and six months, so the defendant Ivo Sanader, by application of the provision under Article 6, paragraph 1 is sentenced to a single prison sentence over a duration of 10 years. In relation to item 1, pursuant to the provision of paragraph 4 of the Law on the procedure of the confiscation of material gains realised through a criminal offence it is determined that the amount of 3 million and 610 thousand Kunas is material gain, which the defendant Ivo Sanader achieved through a criminal offence, and it is determined that the same amount of money is the property of the Republic of Croatia.
The defendant is ordered to pay out the aforementioned amount of money to the budget of the Republic of Croatia within a period of 15 days. In relation to item two, it is determined on the basis of the same legal provisions that the monetary amount of 5 million euros in Kunas counter value represents a material gain that the defendant Ivo Sanader achieved through a criminal offence under Article 347, paragraph 1, it being determined that the aforementioned amount in Kunas counter value is the property of the Republic of Croatia, and it is ordered to the company Dioki Holding as the legal successor of the company Xenoplast to pay out to the Republic of Croatia the monetary amount of 5 million euros in Kunas counter value to the benefit of the state budget of the Republic of Croatia within a deadline of 15 days. Pursuant to the provisions under Article 148, paragraph 1 of the Law on criminal proceedings, the defendant Ivo Sanader is obligated to compensate the costs of the criminal proceedings in the amount of 31,698 Kunas and ... a lump sum in the amount of 5,000 Kunas.
Also the Council reaches a decision pursuant to the provisions under Article 123, paragraph 3 of the Law on criminal proceedings, it being determined ... imprisonment against the defendant Ivo Sanader, the son of Anto and Iva born Vučica, born 8th June 1953 in Split with residence in Zagreb, Kozarčeva 21. Please be seated.
Did you understand the verdict?
Therefore, you have been found guilty of committing both criminal offences that you have been charged with in the indictment. The court has partially amended the factual description in relation to item 2, colloquially regarding INA-MOL, in such a manner that it has excluded from the part under the factual description that 5 million Euros was paid to you in the precisely determined way.
Namely, during the evidentiary hearing, the prosecution did not provide any evidence that would incontrovertibly contribute towards the conclusion of this Council that indeed it was just so, apart from the fact that some photos from the mobile phone of Robert Ježid were presented, and you were indeed in Zurich in a hotel room with your brother Vlado Sanader. In these criminal proceedings, which lasted slightly more than a year, there were approximately 50 trial days, and many witnesses were questioned slightly more than that, court interpreters or language experts were also questioned who can be considered as expert witnesses.
Also, slightly more than 6,000 pages of files and all documentation was read, which is in that file. Based on the results of the evidentiary hearing, therefore precisely on the basis of those aforementioned actions that we undertook, the reading of documentation, the questioning of witnesses, this court decision has been reached. It was not reached on the basis of anything else that would happen outside of the courtroom, or that could affect this court council. In the explanation of the decision that follows, I will deal only with the most important things due to time constraints and the fact that it is usually done in such a manner, and also because the oral and short explanation is followed by the written explanation of this decision.
Therefore, in relation to item 1 of the indictment, you in your defence completely deny committing the criminal offence for which you have been charged. In relation to item 1, it is indisputably determined that Hypo Bank has given to the Republic of Croatia, for the purchase of embassy buildings, or diplomatic representatives, a loan amounting at that time to 140 million Schillings.
You don’t deny that, however you claim that there are no reasons for criminal proceedings at the beginning of your defence because, if any commission was paid, the paying of such commission did not damage the Republic of Croatia, and you subsequently deny that you were the person who would request or receive the commission. That is actually the summary of your defence.
Indeed it is indisputably determined in these proceedings that commission has been paid out in the amount at that time of seven million Schillings. The questioned witnesses confirmed this; former and present employees of Hypo Bank, and you yourself, which may also be determined from the documentation in the file, namely those notorious four withdrawal slips that are in the file.
You deny that you would be the person who would even accept the commission. You have also issued an objection of the occurrence of an absolute statute of limitations respecting the prosecution, stating that it is not a case of a criminal offence of war profiteering and the Law of non-applicability of the criminal offences of war profiteering. Your defence was not accepted. It is contrary to the aforementioned material evidences in the file, as well as to the statements of all witnesses having the relevant knowledge, apart from the witness W. Kulterer. It is necessary in the explanation of this decision to respond to several rhetorical questions. The first question is whether this is a case of the criminal offence of war profiteering.
According to the opinion of the court council, you have committed a criminal offence under the Law of non-applicability of the criminal offences of war profiteering. It is undisputed, it can be said incontrovertibly, that the Republic of Croatia during the period of indictment was in a state of war. The aggressor occupied a large portion of the territory, there was great devastation, hundreds of thousands of residents were exiled and banished. It was a time of extremely difficult economic adversity in the Republic of Croatia, high interest rates; a large portion of the budget was set aside for essential defence of the country.
However, over this same period, a necessity was imposed due to the need for purchasing embassy buildings, because 98 or more per cent of the embassy buildings of the former country remained in the hands of the enemy around the world. Those facts you confirmed in your defence. I remember that you have said that it was almost rude at that time to request from the budget the funds to be allocated for the purpose of the Ministry of Foreign Affairs.
Regarding the criminal offence committed during the state of war, war profiteering is also a criminal offence under the quoted law itself, and it should be noted that not every offence committed during a state of war is simultaneously considered a criminal offence of war profiteering, toward which quoted law automatism could be applied. For example, it is not every theft, it is not every traffic accident, it is not even every act of abuse of position or authority for which you have been found guilty and convicted. There is therefore no automatism in the conclusion that the criminal offence committed during wartime corresponded with the criminal offence of war profiteering. Whether there is or isn’t a criminal offence of war profiteering, the court should deliberate according to each individual case.
Therefore the war profiteering must be observed and determined extensively, in a broader sense. War profiteering is not merely the classic form that we have been witnesses of, especially in the early periods of the 20th century and earlier. It is not artificially inducing shortages, it is not creating a black market, it is not only the purchase and procurement of weapons, as it was the case in the Republic of Croatia, followed by exorbitant selling to the people who are seeking to get involved in the defence of the Republic of Croatia. Therefore, apart from the legal component of determining war profiteering, there is also a factual component as the key, which requires the evaluation of all circumstances in each individual case. This was precisely the guiding thought of the court council while deciding whether there has or hasn’t been war profiteering in this case. For it to be a case of the criminal offence of war profiteering, it is necessary to determine that the criminal offence was committed during the state of war, that the perpetrator was then aware and acted with the intention of gathering unlawful material gains, that he had exploited such a state of war allowing him to commit the criminal offence. In your actions in this case you have fulfilled all previously mentioned necessary conditions.
During the period indicated in the indictment, the Republic of Croatia was a newly formed country, subject to brutal Serbian aggression. Apart from the fact that it daily needed to allocate enormous funds for defence, it became necessary to organise a wide diplomatic network. The priorities for this network were the European countries and international institutions. Such an urgent, extraordinary need came about precisely due to the fact of the break-up of Yugoslavia, the founding of an independent Croatia, which had completely lost its embassies throughout the entire world because Serbia had assumed these by proclaiming itself to be the legitimate successor of the former Socialist Federal Republic of Yugoslavia, as a sequence of that break-up of Yugoslavia, and a fact that also precisely followed the determined state of war.
If it wasn’t for those circumstances, if it wasn’t for such a fertile ground for the committing of a criminal offence, and especially the aforementioned state of war and shortages in the state budget that Croatia could also have as a newly-created country, for example such as the Czech Republic and Slovakia, dividing the embassies of a former country so that the aforementioned reasons of urgency and uniqueness would also subside. You were following the role that you performed, the political function that you performed at that time as the Deputy Minister of Foreign Affairs, and you were aware of all aforementioned circumstances. Therefore, the war and the Serbian aggression directly furnished the optimum conditions for the realisation of your intentions. You have therefore acted with wilful intent as the only possible form of guilt for committing the aforementioned criminal offences.
The following question for which it was necessary to give an answer is: who was the main negotiator in the procedure of obtaining the loan from Hypo Bank for the Croatian Government or the Ministry of Foreign Affairs? You claim that you weren’t the main negotiator, but merely the person who was negotiating the technical details long after the negotiations had actually been rekindled, and after all the important conditions and relevant facts of the aforementioned contacts were determined. Witnesses including Kovačid, Striedinger, Hasslinger and Mate Granid, whose statements the court has completely accepted, have established the untruthfulness of this.
The witness Miroslav Kovačid was your secretary, and he testifies about ten meetings over which you presided in the Ministry of Foreign Affairs, and at which the then Minister of Foreign Affairs, Mate Granid, was once or twice in attendance. Therefore, Mate Granid was the Minister of Foreign Affairs.
He, and probably also his predecessor Zdenko Škrabalo, contacted the Vice-Chancellor Alois Mock, the Austrian Minister of Foreign Affairs, and it is really neither vital nor logical that the Ministers of Foreign Affairs’ Vice-Chancellors, Deputy Prime Ministers would deal with the details of an individual contract, negotiated with the bank, with its higher and lower officials who are named in order in this indictment, and most of whom have been questioned in these criminal proceedings. It can be said that in 1994 Hypo Bank was virtually unknown.
It was no longer a savings and credit cooperative, neither was it much more than that. It was called in these criminal proceedings a bank on the rise. Therefore, with such a bank or even with any other more established bank, to refer to it in such a way, it would not be expected for ministers of foreign affairs to discuss the conditions of one contract that is 20 million German Marks. Really, such a claim doesn’t seem logical and convincing. Therefore it is entirely regular for such negotiation dealings to be delegated to lower-ranked persons. In that respect you were the ideal choice, also due to the fact of your yearly stays in Austria, your excellent knowledge of the German language, as you demonstrated during these proceedings when you were explaining the meaning of the famous word “fungieren,” as well as when you intervened for, in your opinion, the inadequate translations of the court interpreter.
Indirectly, in your defence, you also confirm that you were the main negotiator when you stated, when you talked about that bank, the consortium compensation in the amount of 250 thousand Schillings, then you yourself said that you threatened that you would even terminate the contract if such compensation was to be stipulated, such compensation that you deemed inappropriate. Mate Granid testified to the fact that you were the main negotiator, not to mention a witness respecting whom we can certainly determine that he is credible and that he has no reason for false expression, i.e. the witness Franz Simon Hasslinger, also confirms it. He testified that you had the potential to terminate the contract, and you therefore conditioned the provision of commission.
The following question is: why was the commission given at all? Firstly it must be said that the commission was given. It is simply a fact, which nobody in these criminal proceedings denies. The one that gives the commission has a reason to give it, if nothing else than to give it under force, because nobody gives up their money for no altruism, and banks especially are notorious for not acting in this way. Banks are the ones that take the money and earn. It is their work, they deal with money, and money is their commodity. Wolfgang Kulterer, although he later denied it, stated that you promised him the favourable position of Hypo Bank on the Croatian market. You haven’t completely dismissed that sentence, or claimed it to be untruthful; you have tried in these proceedings unsuccessfully to diminish its relevance.
Also on indictment, after that, actually I’ll say it is necessary to say, that all events after that, after 1994/1995, indicate that Hypo Bank was expanding enormously, that its growth in this area was almost exponential. That is simply a fact. I will not directly say that it is a fruitage of your activities, because in the extreme case you could have promised something, and then not fulfil it. However, it is an incontrovertible fact that Hypo Bank experienced a meteoric rise in the Republic of Croatia. Surely this loan also contributed to that end during a difficult time for the Republic of Croatia, but also the fact of the engagement of the Deputy Prime Minister and Vice Chancellor of Germany. If certain high officials say it is a good bank, it has helped us, then certainly that is a favourable gust of wind in the sails toward conquering the Croatian market.
With the indictment and verdict, you are also now charged that you have also received the commission due to your participation in the negotiations. In negotiations, parties will negotiate on different details, and the following facts point to the fact that there was also room for different provisions of the contract
than those concluded between the two sides. All witnesses to the agreement, who have been questioned about those circumstances, state in agreement that the interest rate in Croatia was enormously high. Whether it was 17.18 or 20 %, actually is not even especially important. In Austria the interest rate was tenfold, especially on loans with government guarantees, and many times lower, and numerous submitted evidence also speaks to the fact that there were state guarantees for this loan. There were meetings at the Croatian National Bank, the guarantor was Privredna Bank Zagreb. Croatia kept its foreign exchange reserves abroad, precisely because of that state of war, therefore, it was not some risk of Hypo Bank, very little or there wasn’t any at all that the loan would be returned.
Therefore, with an interest rate of 20% in Croatia, and let’s say the business or technical version is 1.2% in Austria, an interest rate that is ten times higher, therefore, with this loan there would be an arranged interest rate of 7.8%. There is a significant difference between 1 and 8 %, and considerable room for negotiation. Although once 20% in Croatia is taken into consideration, 8% for Croatia looks fantastic, so it seems that those are great conditions. However, that surely could have been more, if those guarantees and the amount of the Austrian bank are taken into consideration. And for the Austrian bank, for Hypo Bank, 8% is also a fantastic job, and they could surely, if it had been negotiated that way, and they would have been satisfied if it was 6 or 7 % on 20 million Marks or Euros of which one per cent represents 100 or 200 thousand Euros difference. Therefore it is a case of a significant difference in money.
The following question is: who was the recipient of the commission in this case? Previously we determined that the commission was actually given. You denied that you were the recipient, rather you allege Eugen Laxa as the recipient, a man who was 78 years old at that time, a mason of Croatian origin, a Croatian nationalist who ran from the Republic of Croatia in 1945. We are not to elaborate on that here actually, that is hot ice, that it is one statement that is self-contradictory – someone who is a mason and at the same time a Croatian nationalist. That is irrelevant for such a narrow explanation and for these criminal proceedings.
You claim that Wolfgang Kuterer and Günter Striedinger informed you of this detail. W. Kulterer did not say that. Only at the hearing did he begin relating something about that, when questioned before the Austrian prosecution in Klagenfurt he said that he doesn’t know anything of the name Eugen Laxa, it doesn’t mean anything to him. When he came to one legal situation, as he calls it, then he remembered that there was a person Eugen Laxa, whom he describes completely differently to what Laxa looked like. The meeting itself at which W. Kulterer… the way itself in which the meeting is described by W.Kulterer is very strange, the court naturally did not accept it because it is completely unconvincing, untruthful and not substantiated by absolutely anything.
Apart from with those notorious withdrawal slips, but not even with them, of that I will talk later. Therefore Kulterer says that he was alone in Zagreb in 1994 at some time. There was some meeting; he doesn’t say that anyone there introduced him to Eugen Laxa. However, after that meeting he was approached by a man who said, “I am Eugen Laxa.” They went for a drink in some bar, probably at Zrinjevac. There they had a drink and during that time Laxa said, “I will be the protestor for giving commission for the aforementioned loan.” After that, that is the only meeting and contact between W. Kulterer and Eugen Laxa. Months pass, Kulterer himself says that nothing was happening. On being questioned in the courtroom, “have you heard from each other?” “We haven’t heard.” “Have you called each other?” No they haven’t called, they haven’t met. Nothing, absolutely nothing, therefore was happening. If that was true, any man could have come, and credulously say to Kulterer, “listen I would like to be, no I WILL be the, one who will fix that loan for you, and you will give me 5% commission for that loan.”
The question is then asked: on whose behalf, before whom would Eugen Laxa even have lobbied? If all facts are already determined, as you together with your defence state, already in 31st August, during the offer, for what would Eugen Laxa then have lobbied at all, and on whose side? And the final and most important issue is actually: this removes Laxa as any real lobbyist or recipient of commission, because he had no power to make that commission.
What are, or which are those actions that he could have done? Why, if he was an internationally respectable business man, the President of the Chamber of Commerce of Brazil, a member of a Masonic lodge in England, and so on and so forth, as such a financial consultant would it not have been simpler for him to conclude the contract by means of mediation? To be duly rewarded, to be paid, and for that to be an item under the loan agreement? There was none of that, there was merely the fact of one meeting in Zrinjevac Square between two persons who didn't really know each other, they saw each other for the first time and they never saw each other again.
The notorious withdrawal slips of the paid-out commission, in which it is stated that the commission is to be paid to you, that it must be paid in cash, and that he would be fungierened (served) as the recipient of the commission. Let’s return to the word “fungieren,” as applied to Eugen Laxa. On four withdrawal slips there are four different signatures. Neither of those signatures is the signature of Eugen Laxa. A handwriting expert irrefutably determines this, and neither side raised any objection to it, and it was not requested either from your side or from the side of the prosecution for your handwriting and comparisons of your handwriting with the handwriting on those withdrawal slips to be subjected to expert opinion. Why that has not been done is actually not even a problem of the court council, and we don’t even need an answer to that question.
The signature of Eugen Laxa is not even on the letters that were sent with his name to the companies Bishopsdale and Avensia. Therefore, simply to mention that not even the witness Mr Striedniger said that, that Eugen Laxa was the person receiving the commission, precisely to the contrary, Mr Striedinger and Mr Hasslinger as witnesses confirm that you were the person who received the commission. Mr Striedinger, the person in the hierarchy of Hypo Bank at that time was only one step beneath Wolfgang Kulterer. He states that W. Kulterer asked him to make an official note that a conversation took place between you and W. Kulterer, and that in this conversation a commission in cash was agreed by which the amount of 5% would go to you.
The note was prepared in 1994, I repeat, it was prepared by Striedinger, the man over whom Kulterer is boss, by Kulterer’s order, and he states what I just said he stated. Why would Striedinger in 1994 falsely cite some facts in that official note? Well I guess that Striedinger didn’t know that in 2012 there would be a criminal procedure against you for obtaining unlawful commission from Hypo Bank. Not even W. Kulterer himself knew how to explain why it was stated that way in the official note prepared by his order. I guess Striedinger placed that official note clairvoyantly conspiring to falsely charge you in 2012. Neither does the witness Franz Simon Hasslinger have any reason to falsely charge you. He said that, already on the loan committee, there was talk that you are asking for 8% commission. This caused great concern and disgust for the members of that loan committee. Therefore, not only Striedinger but also Hasslinger knew that you were asking to be paid commission. That was, actually, revealed at a meeting of the most important people of Hypo Bank. It was a case of a wide circle, and there wasn't actually any special conspiracy. Then Hasslinger heard that Kulterer, that it was ordered to him that he was authorised to talk to you in private, and to reduce the commission from 8% to 5%. Now let’s go to the word “fungieren.”
According to the opinion of the court council, the term “fungieren” could mean, and it does mean, there is no reason not to be accepted as such, also what you stated and which the prosecution claims, and what Mrs Ivančevid Ježek claimed, I think that was her name. Therefore “fungieren” could mean what in Croatian means “pretend”, as though it represents itself as, performs the role of something, and fungieren could mean, this is also what you claim, that when it's said that the attorney Prodanovid is fungieren as your defender, that doesn’t mean that he is falsely representing or that he performs the role of your defender, rather that he is indeed your defender. Therefore, both claims seem founded and accurate.
However, it is important what the word “fungieren” means in this case. It indisputably means what it means in the Croatian language, and that is pretend, therefore to perform the role of someone, represent oneself as the recipient of commission, without really being that person. What this suggests, well it suggests as already determined, namely that Eugen Laxa was not the recipient of the commission, but that it is the case of commission that is intended for you. Regarding that notorious recipient of the commission, in the end that was you. The handover itself, the tradition itself, namely the delivery of money from hand to hand, is not actually the decisive factor in these criminal proceedings, it is not decisive who gave to whom the money in the end or how the money finally arrived in your hands.
Obviously it was received by different persons, in those four cash payments, because the different persons definitely signed the different withdrawal slips, and the witnesses who were there, I can’t remember anymore who it was, Makula, have already entirely independently corroborated the person who it was claimed was Eugen Laxa. When we responded to these basic questions, the unmistakable conclusion of the Court was that, in these criminal proceedings, it is determined that you have committed a criminal offence in such a manner that you were charged with an indictment.
We will discuss the punishments later. However, I wish to point out that your claim in defence, that it is not really important whether the commission was even given, and that the Republic of Croatia was not damaged due to the aforementioned reasons, was evaluated as particularly unacceptable. What is important is that a criminal offence was committed.
Item two. Also in relation to item two, you are entirely denying having committed a criminal offence. You state that for the entire time of your political office you have worked in the interests of the Republic of Croatia, that you have won, that you gained two elections to parliament, that you were the Prime Minister of the Croatian Government, before that you performed a number of other significant duties, from Representative of the Presidential Office, to Secretary of VONS, Deputy Minister of Foreign Affairs and Minister of Science, and it is inconsequential if I inadvertently miss out some other position.
These contracts, according to your own testimony, you have proposed to be adopted, to be concluded in the same manner that they were adopted, to strengthen the position of the Croatia in INA and to strengthen and achieve energy independence for the Republic of Croatia. Here it was also necessary to determine relevant facts, certain pillars that hold up such a convicting verdict. The first question is whether the amendments to the cross-shareholding contract and contract of separation of the gas business are dealings that run contrary to the interests of the Republic of Croatia, or whether they are useful as claimed by you and your defence.
The Court deems that it is a case of contracts that are contrary to the interests of the Republic of Croatia. Firstly, a matter of principle is that in the event of there being two co-owners, two bigger, most
important main co-owners, it is better to have managing rights than to not have them. That fact is confirmed by the witnesses from the Hungarian side, that is how we called them also for technical purposes, without other thoughts in these proceedings, particularly now the last witness, Pal Kara, who most convincingly testified that the goal of INA was to completely control the managing rights. This fact is written in their acts, strategic acts, that are entirely legitimate and lawful acts, however, such things cannot and should not be achieved by committing criminal offences, which the Court determined to be so in this specific case.
Did it have to come to amendments in the cross-shareholdings contract? You falsely claim that, already in the contract from 2003, which was made on the basis of the Law on the privatisation of INA, it was mentioned that after one side falls below 50% there must be amendments made to the cross-shareholding contract. It does not have to. It was stated that it must come to amendments if one side goes over 50%, which is an important and crucial difference. Therefore, negotiations were not necessary at all, especially not any urgent negotiations, or “rushed” as I would call them. The emphasis of the lock up period of which you are talking, with emphasis on the lock up period, of five years, which is nota bene, with amendments to the cross-shareholding contract and reduction to a two-year duration, nothing too dramatic would have occurred. Namely, as it arises from the testimonies of a number of witnesses, MOL simply didn’t have the intention to either reduce its ownership share, or give it to someone else. It was precisely to the contrary. The trend of MOL was to acquire as many shares of INA as it could.
That was also confirmed for example by the witness Fodor, who said that on the voluntary public sale, if it was possible, MOL would also buy 50 percent or more of INA shares. Polančec, who was the Vice Prime Minister while you were the Prime Minister, was the alpha and omega in managing those negotiations, he managed them according to your order, he was doing that consciously and zealously, and he wanted to achieve success by force, probably to satisfy you. That’s also why he described that it was a case of difficult, lengthy and exhausting negotiations that were painstaking and through which he achieved spectacular results, which is my expression, through which the interests of the Republic of Croatia were not only protected, but also even defended. That of course is not true. He was saying that a committee was founded, I think on 14/02/2008, and that precisely this committee was the one that was managing such lengthy, painstaking and exhausting negotiations. Such a claim is completely untrue.
A committee was founded including, among others, the then Minister of Finance Šuker who never came to a meeting of the committee but sent his Secretary of State, I think Dragid, there was the then President of the Fund for Privatisation, Vedran Duvnjak, there was, whether he was Secretary of State or already Minister of Justice, Dražen Bošnjakovid. There were only two or three meetings of that committee, and no minutes were taken for these. No conclusions were reached, and Polančec didn’t attend a single one of them, rather it was presided over by Vedran Duvnjak. The last meeting of that committee coincides with the announcement of a voluntary public tender, and was some time at the end of spring or beginning of summer, 2008.
After that, the committee didn’t meet at all. Regarding the separation of the gas business in the INA negotiations, the committee for that business, no committee was even founded. Damir Polančec managed it, by himself. Surely he didn’t manage this all by himself, just as he didn’t manage the further negotiations with INA at his own discretion. The court did not believe you, the defence, when you said that you gave no instructions or orders to Polančed on how to work. That is simply unnatural, incorrect, that is contrary to the nature of the matter. It is contrary to your position as Prime Minister, and to the position of Polančec. The importance lies with the contract itself, the contracts themselves and the business itself, which had such huge consequences, as much for Hungary as for Croatia. But of course, with different omens.
The witness Zoran Markovid himself, who was also at the meetings of that committee, testified that they had already stopped working by the summer of 2008, that the negotiations have continued but on lower levels of decision-making, namely concerning technicalities. Well of course, when the basic decisions have already been reached, and when it has been said that it should be done as MOL requested. Also, the witness Damir Polančed, questioned before this Court, testified that you told him that he should accept the requests of MOL, and the witness Zoran Markovid, legal consultant to the Croatian Government, was also surprised at the rapidity of the decision-making. However, he unsuccessfully attempted equally to diminish his claim at the hearing, claiming that he was not all that much surprised, that it was wrongly conveyed, or something. The contents of the amendment to the cross-shareholding contract itself is actually the key point, the key matter with which I will try to explain why the Court council has taken the position that it is a case of interest, of a contract that runs contrary to the interests of the Republic of Croatia.
A new composition or new number of governing body members was introduced, the Supervisory committee now has nine members, and Company Management now has six members of which three members are from the Croatian side, and three are from the Hungarian side, however, the most important fact is that the Hungarian member, the President of the Management, has that golden vote. Therefore, in the event that the vote is taken in a 3:3 ratio, he has the deciding vote. It is very logical and vital that his vote will always be taken in the interests of the Hungarian side, which is nothing anybody would complain about, God forbid. It is especially significant that a new body has been founded, the Board of Executive Directors. Therefore, on the Board of Executive Directors are directors for individual areas who are employees of MOL, and they are not employees of INA, they receive a salary from MOL, and not from INA. They are presiding at MOL, they are not presiding at INA, and they are coming here to Zagreb.
According to the Law on companies, according to the dual model of management, which that law has accepted, it is possible for the management to found such body. However, such a body must be an advisory body. That would therefore be a body that advises the management, serving the management in making certain decisions, and it would not reach these independently. In particular, it does not reach these according to the orders and consultations of MOL, the company MOL. To make things clearer, INA and MOL are also now two companies, independent of one another. The fact that MOL has a 47% share in that company does not mean that the employees of MOL decide on the business policies of INA.
The employees, people who are in the management bodies of INA, create these, the policies. This complicated LODO system, the system of decision-making, has caused a situation whereby, before some decision could be adopted, before it could be reached, its draft was sent to Budapest so that the Hungarians at MOL could say this can, or this can’t. Therefore, INA was effectively reduced to being just one branch of a larger company, MOL. What I said was that founding such a body was possible according to the Law on companies, and it is also possible today. This is also determined under the rules of procedure at INA, where it states that the Board of Executive Directors is an advisory body. However, it was not that in practice. That body was more powerful than the Management itself. I will provide a few examples by which that may be proven. The Board of Executive Directors reaches some exceptionally important decisions that don’t even have to go to the Management for approval. This is despite the Management being responsible for the business of the company. Therefore, the executive directors are not responsible for the business of the company, but they are reaching their decisions, and not the Management.
Such decisions are admittedly, with the passing of time, in terms of some general conclusions, delivered to the members of the Management. However, this is only done after a certain period of time. This is especially reaffirmed by the witness Pal Kara, the defence witness, a current member of the Management, stating that there are decisions that are being directly made by the Management, which is not in dispute, however there are some decisions that, without any knowledge or influence of the Management, are being reached by the Board of Executive Directors. One decision here is very important, let’s say the procurement of oil. The Executive Directors, using the complicated so-called LODO method of decision-making, reach their decision, and they send their decision in advance to the headquarters of MOL in Budapest for consultation. This I have already said.
There were initiatives from the area, on the part of the members of the Management of INA, I think at this point Dragid, Krešid and Majer were questioned as regards the changes to the management method. Those initiatives were not passed. It is actually understandable as to why they didn’t pass. Well, MOL acquired such a right through negotiations, and it really wasn’t, indeed it was not forced to work against its interests or to accept initiatives that would actually represent a change of amendment to the cross-shareholding contract, or to give greater rights than those determined under that contract. Therefore, nobody complains to MOL regarding such action. That action is actually natural. The problem is specifically that it came to such a possibility, that MOL has, or the Hungarian representatives, and MOL AND the Hungarian representatives, to have all key management rights over INA, and the greatest problem that led to these criminal proceedings is that it was all caused by the committing of a criminal offence.
Members of the Management from the Croatian side have requested, imagine this, they requested to be present at the meetings of the Board of Executive Directors. This was refused; the Executive Directors refused it. Therefore the Management is superior to the Executive Directors, however, the Executive Directors refused the request of the Croatian members of the Management of MOL to be at the meetings of the Board of Executive Directors, because by so doing they would distract and upset the Executive Directors. Therefore, the advisory body of the Management, it truly sounds bizarre, the Board of Executive Directors assumed the right to refuse to allow the members of the Management to be at their meetings. To actually do their job and to control what the persons that are below them are doing. Furthermore, the members of the Management cannot adequately monitor what the Executive Directors are doing. From several witnesses on both sides, when I say from both sides I always say that conditionally, we admittedly heard that they can get information, a member of the Management from the Croatian side can go in one room, and there he is given information about the oil trade.
The oil trade annually is worth some fifteen billion Kunas approximately. That is the basic and the most important business of INA. However, there is no trust in the member of Management from the Croatian side, and he cannot adequately analyse that information, he can get in front of some laptop or get some documentation that he reads and then takes away with him what he has remembered. I think, I have no other expression than to deem such relations as disparaging. That is according to the statements of the other side, interpreted as a need for the protection of confidential information. Therefore, those who are below, being advisors to the Management, keep the information that the Management could potentially leak to someone.
This is truly absurd. The amendment to the cross-shareholding contract of 14 pending matters, namely of matters where a decision was reached by a qualified majority, according to the contract of 2003, 17 pending matters were introduced. Therefore, this contract is from 2009. At first sight, that looks very good, tempting, and then I suppose it arises that now INA would be in a more favourable position. However it is not like that. In a more favourable position, MOL had more managing rights under its contract dated 2003, when it had a 25%+1 share, then INA now, when it has only 3% less shares than MOL. Why is this? At the aforementioned meeting of the Government, the Management has, then Deputy Prime Minister Damir Polančec has, triumphantly presented to the other members of INA the details of the tremendous negotiation success, while emphasizing that without the consent of the Croatian members of the INA Management the headquarters of the company cannot be changed, nor can the basic business of the company, well I guess that INA will not deal with cinematography rather than its oil business. The motif of the company logo.
The disposal of petrol stations, etc, and as being of particular importance he states the pending matters of the rights to pre-empt and repurchase shares. It has already been said about the rights to pre-empt and repurchase shares. This is a case of issues for which the Croatian side are not especially relevant or important; precisely due to the aforementioned completely opposite trends toward the change of ownership structure at INA. The questioned witnesses from among the members of the Management from the Hungarian side in support of this, I’m saying that, unanimously claim that the intention of INA was to assume control of the ownership structure by even more than 50%. Well it was not the case of any misappropriation or sale of their shares.
The Republic of Croatia, considering the economic opportunities, it can be said over the past several years, but surely also during the period from 2008 onwards, had no intention, nor really any possibilities to increase its ownership shares in INA, to the contrary, by the law on privatisation a threshold has been determined of 25% +1 shares on which the ownership of Croatia will come in due course, on its entry into the European Union. That MOL had an intention to acquire more shares than the 25% +1, which it eventually succeeded in doing, is testified by the fact of the voluntary public tender by which it arrived at the number of shares that it now has according to current information. You also confirm such a claim, the claim that the goal of everything was to allow MOL the acquisition of a hundred percent management rights, and you especially confirm when you say that it is not important who controls INA, that it is better if it is managed by competent Hungarian managers and not the incompetent Croatian ones.
It is truly sacrilegious how you yourself were expecting that your claim of patriotism would be taken seriously, of such a state of affairs it is not necessary to speak. At the aforementioned meeting of the Government, the Government session, Damir Polančec, who was especially important and significant, did not mention at all that pending matters are no longer the most important issue. Those are the questions of reaching the business plan and annual budget. It should be said that, according to the contract from 2003 when, I repeat, MMOL had 25% +1 shares, those were the pending matters.
Those are the most important questions for every company, and precisely through those pending matters, through the decision-making process, through the possibility of reaching decisions regarding those questions, any real managing power is determined. MOL assumed complete control over the company through the omission of those pending matters from the amendments to the cross-shareholdings contract, and it now completely controls the finances. And the one controlling the finances manages the company in the absoluteness of that term. I have already mentioned that the goal of MOL for acquiring such rights is completely understandable and justified no their part, however, I emphasise again that this goal was reached through the committing of a criminal offence.
You knew all the facts, absolutely all of the key facts, of course not those technicalities that were discussed by people in much lower positions than you, but you knew the facts from the very beginning.
You sought that scenario, you were the co-creator of that scenario, and you did everything to make that scenario a reality. Regarding those pending matters of the business plan and budget, let us remind ourselves of the testimony of the witness Zoran Markovid, a recognised attorney, an expert in corporate law, a participant in the negotiations for the amendment of the cross-shareholdings contract. He testified admittedly that in those questions related to his work he was rewarded with a multi-million sum, he stated that of those questions admittedly there was some discussion, but he couldn’t remember, imagined he couldn’t remember why those pending matters, why the business plan and annual budget were omitted as pending matters.
I have now briefly stated the most important reasons why the Court council has determined that the amendment of the cross-shareholding contract ran contrary to the interests of the Republic of Croatia. In relation to the separation of the gas business from INA, it is also a case of dealings running contrary to the interests of the Republic of Croatia. Primarily it is incorrectly stated this was a case of separation of the gas business. It is a case of separation only of one segment of the gas business, actually the gas trade. The businesses of transport, production of gas and others have still remained within the scope of authority, those are still the businesses of INA and they have not been separated in the business enterprise, Prirodni Plin.
The gas trade is an activity generating losses. They are generated, that can be freely said, that is a fact, because the gas trade in Croatia is not only an economic activity but also an activity with certain social connotations, of consumer protection in the broadest sense. And so that activity is separated and all losses are borne by the state. The very fact that Croatia now bears 100% of losses in the gas trade instead of 44%, which it would bear in accordance with its co-ownership share in INA, proves that those legal business dealings ran contrary to the interests of the Republic of Croatia.
The defence during these proceedings has continually pointed at the existence of the evaluations that are in this file, of the foreign professional company KPMG which has admittedly stated that the gas business, or the company Prirodni Plin, which was to be founded in the first few years, will operate with a loss, but that it will still realise positive effects.
This Court council cannot agree with such an evaluation, because it contradicts the other presented evidence. We agree that it is a ridiculous matter to be expecting that a company would bear losses, as indeed it is now losing in the businesses of gas trade. However, it wouldn’t even come later, especially not before entry into the European Union, to the strengthening of that company and its profitable business. Namely through the first matter, through entry into the European Union, the Croatian market is exposed to foreign competition. The witnesses very convincingly explained, Vanđelid I think among others, that such foreign competition is more potent and would be more potent, and that it could sell gas for better prices than would be sold through the company Prirodni Plin.
With that one strange provision of the contract clause, the price of the gas would be calculated for 15 years. For 15 future years, which sounds completely, very bizarre, almost unbelievable, by Russian review, a formula for gas procurement that already incorporates a higher price by itself. Therefore, through application of that formula, gas would be sold at a higher price than it would be sold by the competition from the west. Also the mining royalties, a significant source of income according to the provisions under the main contract, whatever it’s called, is considerably lower than it is in Hungary. The explanation of the questioned witnesses, representatives and employees of MOL is that this is due to the fact that in Croatia the gas is sold at preferential prices, and in Hungary at the market price.
However this projection is also made for the future, and Croatia is obligated under the guidelines of the European Commission, on entry into the European Union, to sell gas by the market criteria, and this will completely eliminate that social component from the price of gas. In that way, in Hungary as well as in Croatia, it will be sold at the same or similar prices, however, there they have mining royalties even up to 60%, but here in Croatia under this contract they do not. Furthermore, a very important or one of the most important questions that must be answered is whether you accepted the bribe as your indictment is charging you.
Undeniably, in these criminal proceedings it has been determined that you did. Your defence was dismissed that both contracts involved in the indictment were contracted for the purpose of strengthening the strategic role of the Republic of Croatia, and the energy independence of the Republic of Croatia. Precisely to the contrary, the criminal offence that you committed is actually the fruitage of your previous agreement with Zsolt Hernadi, the President of the Management of MOL.
It has already been mentioned that it is not true that lengthy and exhaustive negotiations preceded the making of the contract; everything that actually followed was really only the operationalisation of your prior agreement. Robert Ježid, the court has completely accepted the testimony of the witness Robert Ježid. His testimony is also substantiated by other material evidence in this case, with books of entry and exit from the Croatian Government, with the recording of the meeting in the Marchelino restaurant, only not to cause any confusion, regarding the meeting in the Marchelino restaurant, that meeting, that recording, which the court evaluated as undeniably lawful evidence, does not testify to any handover of a bribe, rather it only testifies to the fact of a meeting between you, Hernadi and Ježid, and that is evidence that is actually substantiated by strong evidence, the strong testimony of Robert Ježid.
The content of the conversation is not at all relevant; it did not actually interest this Court council, nor was that evidence valued regarding those circumstances where the content cannot actually be established. It is partially also confirmed by the testimony of the witness Robert Ježid, and confirmed by the testimony of the witness Imro Fazekaš when he spoke about his meetings and trips to Zurich to Stefan Hurliman. Then, with the documentation obtained from the companies Hangar Oil and SIROMA LTD, with the testimony of the witness Stefan Hurliman whose testimony the court read because his presence at the hearing before this Court could not be ensured, nor the questioning in Switzerland, with the condition that the court has made all reasonable efforts to achieve this.
The witness was subpoenaed in writing to come here to give testimony via a video link, we did not succeed in that, and then we acted according to the provision of Article 431 of the Law on criminal proceedings. Equally, regarding the testimony of the witness Hurliman, it should be mentioned that his testimony is not of such character as to form the basis of this court decision exclusively or predominantly. So the reading of the testimony of the witness is also in accordance with the practice of the European Court for Human Rights. Your defence is that you were working in the interests of the Republic of Croatia for the benefit of INA, and that you did not request or receive any bribe, and that it is all fruitage, as you call it, of the purchase of freedom for Robert Ježid and a politically motivated proceeding by the state attorney, initiated by your successor, the person you personally named as the Prime Minister of the Republic of Croatia on your departure, Jadranka Kosor. Robert Ježid, as much it is known to this court, did not receive partial immunity, that is immunity under Article 286, paragraph 2 of the Law on criminal proceedings, and he is not the crowning witness of USKOK, he is simply a witness in these criminal proceedings, a witness whose testimony is important, but who does not have any special status.
Regarding your objections that he was buying freedom with his exit, and that he bought that freedom for five million Euros as arising from a result of these proceedings, I think that he paid a high price for that freedom in that case, he could have gone for much less, and he gave his testimony only after he came out from the remand prison, which was cancelled for him. He described in detail the circumstances of the process regarding obtaining the money that you agreed with Zsolt Hernadi. The stringency of the testimony of the witness Robert Ježid is especially supported by the fact that he himself, not in a certain way, but in a very visible way exposed himself to the prosecution. While giving his testimony he was also warned that he is not really, that he was not under compulsion to implicate himself, he was entirely aware of that. He said that he knew that he was engaged in suspect activities, but still he was doing them under the influence of your great authority and the fact that you were the Prime Minister.
Therefore, he exposed himself to the risk of prosecution, showing himself as a person who helped you to receive the bribe, and later also consented with you, by manipulation with that money, to engage in a very dangerous and near criminal area in the covering of illegally obtained money, therefore money laundering. It should be said that Robert Ježid was the only person with you in the Republic of Croatia that knew about that money. He knew where that money came from, who sent it, and why. If he hadn’t spoken about it until this day, then that money would not be known about. It is very difficult to get information about money in a Swiss account. But probably considering all the aforementioned, it wouldn't even have come to these criminal proceedings. The decision of giving managing rights over INA to MOL and separation of the gas business in that case would be treated as yet another in a long line of catastrophic political decisions that were made, which are being made maybe even today, against which the only real sanction is the loss of parliamentary elections. The fact is bribery, the fact of giving money for something performed, is what distinguishes between a bad political decision and the committing of a criminal offence.
Therefore, those mentioned decisions are not only catastrophic political decisions, but they represent the committing of the criminal offence of taking a bribe, for which you have been found guilty and convicted. You are being charged, you are actually sentenced with the first instance verdict that you have used your influence and authority in performing Prime Ministerial duties. That your influence was huge is unquestionable, even to the level of notoriety. This is confirmed by the witnesses, among others Damir Polančec, who said that he doesn't remember any instance where someone would object to you. Similarly, almost the same, Ivan Šuker, even the witness Ratko Maček, who was by virtue of his position as co-defendant in the second criminal proceedings impelled to be inclined toward you, and certainly didn't have any reason to state such things with the intention of harming you. It was precisely this undisputed authority as Prime Minister and President of the then ruling party that you exploited to impose your opinion that this was a case of useful contracts in the interest of the Republic of Croatia.
You did this initially, I think it was at the ad hoc meeting in the room of the narrower cabinet of the Government, and then you did this at the meeting of the Presidency of the Croatian Democratic Union, where the most important political decisions are reached in the key strategic matters of the Republic of Croatia, and which further need to be implemented, I don't know whether anyone can think of a case where something that is concluded by the Presidency of the HDZ would not be implemented later, which is normal, which also must be like that, I don't give any value judgement on that, and then at a meeting with the coalition partners and finally at the Government meeting.
It should be mentioned that no records were made, apart from those at the Government meeting. Also, that fact alone of not keeping records, as soon as there is no keeping of records a discussion is rendered absolutely informal and is unverifiable apart from through the witnesses who actually happened to be there, records were kept at the Government meeting when the contract was accepted. It is left for us to determine what happened at those meetings according to the testimony of the witnesses. All meetings were happening approximately in this manner: you would preside at meetings over which you had a vested interest, for which you thought you needed to be present, not just those pertaining to your indictment, that are the subject of these criminal proceedings, but also others. You would present your introductory opinion, by which you would implicitly or explicitly state quite clearly what you wanted, which conclusions you wanted to be reached. There wouldn’t be any discussion, or the discussion would be very parsimonious, or often it would be reduced so that it could be said that you were completely right, and that your opinions must be supported.
That is how it was at the meeting of the Presidency of the Croatian Democratic Union, at which it was decided for the conclusion of the two incriminating contracts. The Court did not accept the testimony of the witness Luka Bebid, your close friend and associate, who also in that way spoke of hard and exhaustive negotiations, who said that it would sometimes happen that your opinion would not be accepted. Admittedly, he said that your opinions were not always upheld one hundred percent of the time, from which it can be concluded that your opinions were upheld ninety nine percent of the time. Contrary to that are the testimonies of the witnesses Šuker, Polančec, Marina Matulovid Dropulid, and I already mentioned Ratko Maček. Not Vlatko Maček, but Ratko Maček.
After that, after you, let us return to the meeting of the Presidency of HDZ, giving an introductory speech, Damir Polančec has prepared the presentation. Probably using PowerPoint. That presentation, that meeting in total, according to words of Damir Polančec, lasted 30 to 45 minutes. 30 to 45 minutes was the duration of a meeting concerning matters of vital importance to the entire country. Including the PowerPoint presentation. Only one discussion was registered. The discussion when the witness at that time, the Minister of Finances Ivan Šuker, asked a question as to how are we going to communicate these decisions of ours to the public. From this discussion it can be implicitly concluded that this was not really a case of a decision of which one should be proud and which is good, rather that everything must be done to present it to the Croatian public as being good. That was the discussion. There was no further discussion.
You say after that, I propose that the following conclusion be reached, it shall be concluded, by the contracts shall be ordered the execution of this and that, all in favour? Nobody was against it; nobody was ever against at this meeting, which is confirmed by all witnesses who attended. An almost identical procedure took place at the Government meeting when the final decision was reached. Now let’s return to the statement of Robert Ježid, and the attempt, I will say straight away unsuccessful attempt, of the defence to denigrate that statement. In particular, by cross-examining the witnesses, Imre Fazekaš and Mihajlo Gucerijev. Imre Fezekaš is a man who has been in the oil business since as far back as the Nineties, in various roles across various companies. He states that Hurliman, an employee of Ježid’s company in Switzerland, called him to offer them some job, which he accepted, went to Zurich and they agreed to conclude contracts for the provision of consulting services. Imre Fazekaš never saw Robert Ježid, he never spoke to him, not even by telephone, they never exchanged not even a fax message, or email. That is what the witness himself says.
However, he immediately accepted, for the consultation services, to pay ten million Euros. According to his claims, that had no connection with you, rather it was a case of lobbying for the Družba Adria project, and for the purchase of some land on the Island of Krk. The Družba Adria project is an international project. Countries participated in the project, so really there is no possibility or it is not in the interest of one businessman from Cyprus to lobby for this project. The project was abandoned several years before that, and the witness Nataša Vujac confirmed that the Družba Adria project collapsed for the further reason that the Russian delegation at the meetings in 2008/2009 expressed disinterest in reviving the project. During that opportunity on several occasions, and during that opportunity consultation contracts were agreed and were concluded between the company Hangar Oil and CEROMA with the company Ksenoplast.
And the sum of ten million Euros was contracted, to be paid out for consultancy services, so in that way five million Euros also reached the account of the company Ksenoplast. That has happened, the payment happened in 2009, by the beginning of June. Shortly afterwards you met with Zsolt Hernadi and Jozo Petrovid at the buildings of the Croatian Government as Prime Minister. They came to you for matters for which, due to some business matters, they stayed a certain time; the meeting ended, they went out and precisely at that time Robert Ježid entered the Government buildings.
He met with them, greeted them in the hallway, came to you, and in your conversation you discovered that not any, I quote what Ježid said, no money had yet arrived, and immediately you decide to go back, and Hernadi and Jozo Petrovide return back from the meeting they just left. They follow of course, unquestioningly they do, they return and stay with you for several minutes. You claim, and I think Jozo Petrovid also claims, that the reason for that was due to Ježid’s intervention, so that you could solve some problems related to the extraction of ethane, whatever that means, between Ježid’s company and INA. And you order the President of the Management of MOL, the company that is significantly bigger and stronger than INA, to solve that problem. However it was a problem between INA and Dioki, MOL had nothing to do with that, I am saying only what was said in this courtroom. But that wasn’t the real reason.
The real reason was what Ježid had said. You told Hernadi that the money hadn’t arrived, and that the money must arrive, he accepted that, he went and that is of course how it was later. If it was a case of any business relations between Ježid and INA, I suppose that Ježid would explain to Hernadi and Petrovid, especially Petrovid, the member of the Management of INA, and wouldn’t place him in the neighbouring room to wait for what you were going to say, for which you would speak with them. There were more meetings with Hernadi, there was a meeting in the Marchelino, there was one meeting when you had already become honorary president of HDZ, those therefore were not just meetings that were of a strictly business nature, those were meetings of two persons who had considerable mutual business and other interests that were not business-related.
Furthermore, regarding Gucerujev. Gucerijev is actually a man having very little knowledge of it all, he heard something, he is the owner of 500 or however many bigger companies, he came here to court and said that is my money, why that went, he is not really completely sure, but he can’t take care of every detail, but everything that, even if there were some disagreements between, discrepancies between his and Imre Fazekaš's testimony, that was only because he was dealing solely with strategic matters. He said, “that was the money that I gave and Ježid stole it.” He has no other knowledge. What happened after that? It happens that, after your leaving your position as Prime Minister of Croatia, the situation changed dramatically. Ježid is the first one to decide that he can no longer do business for you, and he communicated that to us. Very quickly, almost simultaneously, there arises a termination of the contract, a written termination of the contract of the Cypriot companies stating that they are abandoning the contract. And nobody is claiming anything from anyone else.
They are therefore not asking for five million Euros, but unilaterally abandoning that contract. The very composition of that contract, the very action by that, the very termination of the contract indicates that this was the case of a fictitious contract. A fictitious contract that Ksenoplast and two offshore companies drew up to actually hide the real purpose of the contract. That it was a case of an entirely clumsy, amateurish contract can be seen from the arrogant tone, and the naivety that nothing will be discovered, as demonstrated by the fact that the date of entry into force of the contract was determined as 2008. However, as the date of conclusion you have 2009. Therefore, the contract came into the force before it was even concluded. I think that this claim doesn’t merit any particular comment either.
Additional comment. The court therefore did not accept the testimony of the witnesses Gucerijev and Fazekaš, whose testimony was directed only toward the removal of criminal liability from you, but not only from you, actually more from the other side, from the side giving the bribe. It is beyond doubt that the companies CEROMA and Hangar Oil, as well as Fazekaš and Gucerijev, are deeply connected with MOL through business and in all other ways, so Gucerijev stated that Hernadi is his close friend. Only two years after that termination of the contract, watch, for two years the money stands, the companies emerge, the companies CEROMA and Hangar, and request the return of the money although they gave it up in the termination of the contract. The claim of the witness that payment of ten million Euros had been agreed is incredible, five million Euros had been paid out to Robert Ježid, the man who they never saw in their life, nor communicated with him by phone or orally, for one job which they couldn’t have concluded due to insufficient capacity, because it was the case of an international project.
I would be remiss not to mention, it was a grotesque claim of Imre Fezekaš when he stated that Mihail Gucerijev instructed him that under no circumstances should he bribe politicians with the mentioned money, even though Robert Ježid was highlighted as a person with strong political connections particularly among Croatian politicians. Once more your influence was huge and indisputable. You were the authority to all ruling structures of the Republic of Croatia at that time. You could have imposed an opinion, and you could implement your opinion, precisely by using that authority, to conclude business deals that were contrary to the interests of the Republic of Croatia, which was previously explained and for which there is personal as well as material evidence. You, under your mandate, proposed all members of the Government, who the Croatian Parliament, in which your political party held the majority, naturally confirmed.
You were selecting all members of the Government according to your own criteria; the event in connection with these criminal proceedings indicates that the basic criterion was the criterion of obedience. They have, it can be said freely, blindly listened to you. Damir Polančec claims that he doesn’t know of anyone who opposed you, he stated that he was aware that what he was saying was actually to his detriment, however, this is how it was he could not say otherwise. You, the defendant Sanader, were the architect of a system in which the decisions were reached solely and exclusively in the manner you wanted, a system was a mere illusion of democratic decision-making. The ease with which you achieved and reached those decisions in that manner is intolerable. You were lucky, and had a perfect medium through which, without any objection, thought or discussion, were accepted not just your orders but, not only your opinions but your barely-expressed wishes. In that respect I am thinking of a great majority of the Government members.
Regarding the contract, I just want to mention one thing. MOL was no saviour of INA, that inter-company loan of a billion dollars was given almost a year after amendments to the contract. The Croatian Government was the one that held INA, the head of INA, above water by not charging excise duties, taxes and other charges. The loan given by MOL was entirely according to market conditions, and with the market interest rate, and it has been returned regularly and as prescribed. The claim of MOL, or witnesses who testified for the benefit of the defence, is not correct, that MOL too could not give any other loan, because it is not a financial institution, however it is worthwhile noting that, in the guarantee they submitted for the loan of OTP Bank to Podravka, they acted in precisely the opposite manner, when they had no need to be consolidated, since they stated it was a condition for issuing the loan to MOL.
Consequently I say this is, as I said, that is the shorter explanation, the entire file has, I said, six thousand pages, and the explanation will be more fully explained in writing. Following the summa summarum, following all the aforementioned, the court has determined beyond doubt that you have committed both criminal offences as charged in your indictment. So you have been found guilty of the act under item 1, a prison sentence of three years and six months is determined, for the act under item 2 - seven years and six months, so by application of the Provision of acquisition you have been sentenced to a single ten-year prison sentence. In relation to the act under item 1, the fact of time passing since committing the offence was taken into consideration as mitigating circumstances. In relation to both items of your indictment the fact that you are a family man and a father of two children was taken into consideration as mitigating circumstances.
We could not take into consideration the issue of prior convictions as mitigating circumstances on your part, since those circumstances have no special impact, namely that for your position as Deputy Minister of Foreign Affairs and as Prime Minister it was expected that there were no prior convictions. However the sum of aggravating circumstances completely overshadows the few listed mitigating circumstances on your part. First and foremost, the offence under item 1 that you committed as Deputy Minister of Foreign Affairs, and the act under item 2 that you committed as Prime Minister of the Republic of Croatia, as a high official of the Republic of Croatia, through your behaviour you have caused damage not just to the vital strategic interests of the Republic of Croatia, you have also caused damage to the reputation of this country throughout the world. It is a case of both criminal offences in which you have shown certain persistence.
Namely, it is a case of criminal offences that must have been committed, the execution of which indicates that they must have been implemented with one premeditated plan, with the use of intellectual capacities, with the prediction of events, with a number of actions, it is not a case of one random offence that you decided on the spur of the moment, in one moment, “now I will commit it,” as for example, somebody seeing an expensive thing and taking it with the intention of keeping it for himself. It is a case therefore of carefully planned and organized actions, and it is also one of aggravating circumstances on your side. With this behaviour of yours, without any need for sentimental moralizing, you have truly contributed toward the disillusionment of the people in the institutions of the system, and toward creating general apathy and an atmosphere of hopelessness in society. You have created a motivation, especially among young people, that it is not worth working, that some desired goals can be achieved in other ways, shortcuts, by breaking the law and even the morals of society in general.
The basic purpose of the punishment is to cause the perpetrator not to do criminal offences in the future. With this convicting verdict, through a long-term prison sentence, you are certainly prevented from any possibility of committing criminal offences. However, in specific and in general, it seems to me that the other purpose of the punishment is much more important, and that is the impact on all others not to commit criminal offences, and that the consciousness of citizens to the danger of criminal offences is influenced by application of the prescribed punishments, by the justice of punishment against perpetrators. Every verdict sends a message, and this verdict also sends a message that it is not worth committing a criminal offence, that perpetrators will be punished, if it is determined through legal proceedings that they are guilty of committing some criminal offence. Considering the fact that you committed the mentioned criminal offences as a high official, a message is sent by such a verdict that is mostly or primarily directed to precisely the persons performing political functions at any level of authority.
From the Municipal Mayor to the President, right to the top, I will not now single anyone out, but to the highest holders of political office. You have used your function for personal gain, and not for the greater good, which should be the goal of every holder of public office. Therefore, this verdict sends a message to the those with authority, equally to those with authority now as to those with authority in the future, to use it for the greater good and interests of society, and not for personal gain by the principle that nobody can achieve material gain through some criminal offence.
As already in mentioned in the pronouncement of the verdict, material gain in the amount of 3.6 million Kunas, on behalf of the commission received from Hypo Bank, is seized from you, and five million Euros in Kunas counter value on behalf of the bribe that you received for conclusion of the contract under item 2 of the indictment. Considering that you have been charged to a prison sentence of over five years, it is a case of obligatory prison, so pursuant to the provisions under Article 123, and pursuant to the provisions under Article 123, paragraph 3 of the Law on criminal proceedings, remand prison has been determined for you.
Considering the convicting verdict, you are obligated to bear the costs of the criminal proceedings in the amount that I have read to you in the pronouncement of the verdict of 31,698.00 kunas, and you are obligated by way of a lump sum to pay the amount of 5,000.00 Kunas. The pronouncement of the verdict is over, you may go.
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