PM: Now it's up to judiciary to investigate nature of irregularities at Agrokor

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Prime Minister Andrej Plenkovic, speaking on Monday after the publication of audited financial statements for the Agrokor Group and the Agrokor joint stock company, said that now it was up to judicial authorities to investigate the nature of the irregularities identified by the audit.

"The loss for 2016 is 11 billion kuna, the equity decreased by 22 billion kuna, and there were undisclosed costs for the past few years. An independent audit of this kind by a prestigious global firm was obviously necessary. According to the information we heard today, the emergency administrator has filed a criminal complaint with the State Prosecutor's Office, so now it is up to the judicial authorities to specifically investigate the nature of these irregularities, which according to the auditing firm could be an illegal nature," Plenkovic told reporters in the southern city of Split after the emergency administration at the debt-laden Agrokor conglomerate presented audited consolidated financial statements for 2016.

Plenkovic said that the crucial government move had been to propose that parliament adopt the law on emergency administration at Agrokor. He said that ever since January, when Moody's downgraded Agrokor's credit rating and when discussion began on the situation at Agrokor, the government had been very considerate and cautious in its public communications in an effort to calm the situation and not allow markets to be seized by panic.

He said that the government's response came at a time when Agrokor was unable to obtain fresh liquidity and was facing a possible bankruptcy, which would have led to job losses and caused a chain reaction affecting not only family-run farms and small and medium businesses but also large suppliers.

"There would have been a negative domino effect which I am certain would have adversely affected the tourist season, considering the importance of the Konzum retail chain," the prime minister said.

All this was prevented by a bold government move to adopt the law on emergency administration, Plenkovic said, recalling that the law was triggered in early April at the request of the former management and the owner.

"What followed was the process of consolidation and of auditing financial statements, and the process of restructuring is now moving forward towards settlements within a time frame set by the law, and that is 12+3 months. Therefore, the judicial authorities will do all they need to do independently of the government and any political party. On the other hand, what the emergency administration needs to do, together with the creditors' council and everyone else who has any claims on Agrokor, is to continue the process of restructuring and reaching a settlement. I, therefore, expect the emergency administration to continue its work and keep the government regularly and transparently informed of these activities in monthly reports, which are available on the Economy Ministry's website," he said.

Responding to a question, he said Agrokor's debts, which exceed the value of its assets, would not be paid by citizens.

He dismissed arguments that the government had nationalised the group, saying the government did not draft a law on the nationalisation of systemic companies but a law on emergency administration in them with a precisely defined duration and mandate.

Taxpayers are not paying for the ongoing restructuring, the payment of partners, suppliers and employees, and the fact that the companies within the group are in business, Plenkovic said.

He said the past tourism season, the best in the country's history, with over 15 million arrivals and over EUR 11 billion in revenues, would not have happened had the government not responded in a timely manner.

He said it was time to value the "purgative character" the law on emergency administration in systemic companies and the "transformative effect" of the Agrokor crisis on the way of doing business in Croatia.

Plenkovic said it was necessary to make the market economy what it should be. "That's the key, the main essence and the effect of this whole process, which isn't simple. There are many stakeholders and many different interests."

Plenkovic said he was working in the interest of citizens and the stability of the economic and financial system, respecting the separation of powers. "In that context, I guarantee you that everything we will gain from this process can only be positive for Croatia in the 21st century."

Asked about Agrokor founder Ivica Todoric's accusations that Plenkovic had met with Agrokor people behind Todoric's back, Plenkovic said the only meetings with someone from Agrokor had been with him at the government, one in late February and one in late March, and that it was known who attended them.

Text: Hina