Without Urgent Changes, Croatia Awaits Blackest of Scenarios with Agrokor

Lauren Simmonds

If action isn’t taken immediately, the much anticipated information revealed last week points to a potentially devastating situation for the entire country.

As Poslovni Dnevnik reports on the 10th of October, 2017, the correction of Agrokor’s capital, as the review showed, amounts to a an eye watering 21.7 billion kuna.

The political party Pametno (Smart) stated that these devastating numbers are evidence of catastrophic mismanagement and deliberate fraud. Politics has built up this monster for years, and now everyone is marvelling at the fact that it has all finally exploded into what it has. Finance Minister Zdravko Marić is the first who should be leaving.
The biggest message from the report is that Agrokor completely ruled out the corporate governance institute, and did that [despite being] the largest company in the Croatian economy, cited Pametno upon analysing the highlights from 2016’s audited financial statements. No internal control of the company or the supervisory board or the auditors’ committee functioned. How? What happened? All the financial and operating costs are an integral part of Agrokor, tied only to Agrokor and [they] had to be unconditionally depicted in Agrokor’s financial statements, and they’re not. As far as credit is concerned, it is intentionally shown that there is less debt than there is in reality, which has damaged the creditors and all the other investors. This is, unfortunately, the most important part for creditors, as the debt projections are now far bigger than they were after the introduction of Lex Agrokor.

”There are so many disputable things in this report, and Croatia, if it doesn’t urgently change direction, will face the same scenario as Agrokor,” stated Maja Vehovec, Vice President of Pametno.

”The difference between the bookkeeping and the fair, market value of assets is also listed wrongly. Even the loans have been recorded as actual cash, which isn’t accurate. The creditors and potential investors have been damaged for the sake of showing a greater liquidity than [what there was] in reality, and the loans have never been returned. The accounting errors are catastrophic and point to deliberate fraud in order to deceive the [Agrokor] group’s stakeholders because at all times, the impression [given] is that there is more money, and there is actually no money. That’s why we call upon the institutions to finally do their job and prosecute all those responsible, without exception.

The question is, how will Agrokor continue to operate? As it is now required to provide new funds for additional obligations or to negotiate a write-off with the creditors,” stated Pametno, pointing out that it is impossible that nobody in the entire country knew about the sheer velocity of this situation for years.

With such corrections, it is obvious that Minister Marić was, in his position, aware of the problems in Agrokor, for which he’d have to take responsibility and after that, depart [from his position]” concluded Maja Vehovec.


Translated from Poslovni.hr


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