Croatia’s ‘secret club’ scandal exposes cronyism, corruption

The house in the Croatian capital Zagreb where the secret club operated. [Ronald Gorsic / CROPIX]

A secret club in the Croatian capital where the elite flouted lockdown rules and escorts were brought in from Serbia. Vintage wine and whiskey flowed. Bribes changed hands. A recent ‘club scandal’ rocked Croatia’s political and business scene more than any other in the past decade.

It all started on 17 September when police arrested Dragan Kovačević, CEO of JANAF (Adriatic oil pipeline operator), on suspicion of influence peddling and bribery. At first, it looked like just another corruption scandal to which Croatia has become accustomed.

But then it swiftly evolved beyond anyone’s expectations.

Soon after the arrest, it transpired that Kovačević had been under police surveillance. And EURACTIV’S partner Jutarnji list started publishing juicy details about the unfolding affair.

Kovačević left the Social Democratic Party (SDP) in 2008, after an unsuccessful run in the country’s presidential election, to join the pro-business HNS (RE). After an SDP-HNS coalition won parliamentary elections in 2011, Kovačević was appointed to manage JANAF.

JANAF oil pipeline and storage system was built as an international crude oil transport system from the Omišalj Terminal on the northern Adriatic island of Krk to both local and foreign refineries in South-Eastern and Central Europe.

Police tapping Kovačević’s mobile phone got one big hint last year: he asked the owner of a private electrical installation firm, which worked almost exclusively with state-owned companies, to bring him 1.9 million kuna in cash (€250,000, or 5% of the total agreed business) “and everything will be as agreed”.

The owner called the bank and asked them to prepare the money. He picked up the money, put it in an orange bag and drove to the “club”. He was then seen leaving the club without the orange bag. No arrests were made at the time.

The Club, the public soon learned, was a two-storey apartment where powerful people came together, for business and pleasure.

One of them was Jakov Kitarović, husband of former President Kolinda Grabar-Kitarović, who frequented the club while she was still in office.

Then it became known that her successor, incumbent President Zoran Milanović, also visited the club on several occasions.

Milanović said he had gone there because “a friend had had too much food, and it should not go to waste, so I went there because it was a practical solution”. Needless to say, memes and parodies of Milanović soon went viral.

The president then launched into a war of words with the police, state prosecutors and the government. He publicly asked why the police and the state prosecutor’s office (DORH) had not made an arrest when the money was dropped off.

DORH replied that “some critical comments… we have seen in recent days transgress acceptable standards in a democratic society that respects the rule of law and the tripartite division of power as the highest value guaranteed by the Constitution”.

Milanović then accused Prime Minister Andrej Plenković that he had known, or should have known, about the ongoing investigation, yet he reappointed Kovačević at JANAF’s helm in February.

Both Plenković and Interior Minister Davor Božinović denied this, with Božinović saying he had only been informed “the night when that preliminary investigation had been completed”.

“Had I known anything about [the investigation], Kovačević would not have been appointed chairman of the management board,” said Plenković.

No mobile phones

According to Jutarnji list, the club was in the wider centre of Zagreb and everybody who entered had to leave their mobile at the door. The lower level was filled with all kinds of alcohol that “just flowed”, as one of the regular guests confirmed.

It was operated by one of the companies owned by Kovačević.

Parties were laid back, with live music, a lot of catering and hostesses. From time to time even escorts. Police overheard Kovačević saying that there would be three prostitutes from Serbia “for friends” in a motel on the Zagreb-Belgrade highway. The same women were coming to the club as well.

Among the guests was also former President Stjepan Mesić, who is now 85.

“I don’t remember when I went to the club, perhaps it was in the midst of the coronavirus epidemic. However, if you keep your distance, everything is all right, and we did keep our distance,” he said, prompting a debate about why the guests were allowed to disregard lockdown rules.

Three ministers in the current conservative government – Transport Minister Oleg Butković, Economy Minister Tomislav Ćorić and Minister of Labour Josip Aladrović – were confirmed to have visited the club during the lockdown, when all bars were closed and citizens were advised to avoid large gatherings.

More importantly, the scandal brought to light one of Croatia’s systemic problems – political appointments in state-owned companies. They feel shielded by politics and this creates fertile ground for corruption, going beyond party affiliation.

Two mayors were apprehended with Kovačević. One from the SDP, the other from the HDZ.

The prime minister said that the “latest arrests in the JANAF corruption affair were proof of the government’s active policy of zero tolerance to corruption, regardless of names, positions or party”. Still, the government soon appointed another politician as the new JANAF director, this time from the HDZ.

[Edited by Zoran Radosavljevic]

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