Dr. Ivić PašalićPasalic has invested great efforts to hid just how greatly he profited as one of Tudjman’s closest advisors
After political marginalization and five years of waiting, Ivic Pasalic, once the mighty presidential advisor for internal policy and protagonist of key affairs which cost HDZ power in 2000, has begun to show the enormous capital he controls thanks to his political influences in the 1990s. After extensive research in Austria, Nacional has learned that the company Adriadrvo, in which Pasalic is nominally the director, recently received an injection of over 20 million in equity, of suspicious origin.
This money, which sat into the account of Pasalic’s company in the form of an untransparent loan from abroad, shows the great right between Pasalic’s everyday life and his claims that he did not get rich through politics but is instead one of the greatest victims of a media conspiracy. Though he was only presidential advisor for internal policy, in the 1990s, Pasalic was one of the most powerful Croatian politicians, who knew exactly how to use his influence and power.
Until his entry into politics, Pasalic lived a humble life. As a young doctor in the Lepoglava health clinic, he first lived in the attic of his father’s house, all by 24m2. However, his financial troubles ended soon after he entered politics: soon after he moved into a luxurious 3-bedroom apartment in an elite Zagreb neighbourhood and his wife left her job as a teacher and became an advisor in the Foreign Ministry. Since 1998 when the legal obligation was implemented to publicly list all assets held by politicians, Pasalic has invested great efforts to cover just how greatly he profited as presidential advisor. Many times he has doctored the information on his Assets card, deceiving both his party colleagues and the public, try to give the impression he leads a humble life.
This illusion, with minor deviations, he maintained for a full five years. After Ivo Sanader defeated him in the battle for HDZ, Pasalic formed his own party. However, due to the loss of his reputation, he experiences a true debacle in the last parliamentary and local elections. Pasalic, though, was recently resurrected as a successful businessman, nominally as a partner for mysterious foreign investors who had invested tens of millions of euro into the company he controls. Pasalic recently presented himself to the public as a potent construction investor, who planned to use loans to build 300 flats to house 1000 people in Odra, a Zagreb suburb. However, this is only one part of his business activities. With the help of Austrian business circles, Nacional has succeeded in reconstructing how Pasalic actually began to take control over lucrative business in the wood industry, which he helped to create using his political influences during the Tudjman years. Formally through the company Adriadrvo, he has already taken over control of the company Zagrebdrvo, which at the pinnacle of his political career was generously financed by Privredna Bank Zagreb (PBZ), without any business logic to do so, and later those claims were written off. Pasalic is nominally director of Adriadrvo, and his ownership his likely covered up by representatives from Vaduz in Liechtenstein.
The documents Nacional published six years ago show that PBZ gave several loans to the failed investments of Zdravko Pasalic – first for the construction of a large Zagrebdrvo factory in the Vrbovec settlement of Gradec, and later for the finishing and purchase of raw materials, and later to return the debt to the bank. PBZ gave 16 million DEM to help achieve the business dreams of Pasalic’s incompetent brother Zdravko. Another 6 million DEM in loans were approved to his late father Ante. Both men were incapable of returning such amounts, and the collateral offered was the symbolic value of the Pasalic family home in Sesvete.
Due to such decisions, PBZ found itself in serious trouble in the 1990s, and required rehabilitation using taxpayer money. The debts of the Pasalic family were written off only six days prior to the constitution of Racan’s coalition government in 2000. After this information was published in spring 2000, Pasalic gave a jumbled response and changed his explanation – first he said that he had nothing to do with the business affairs of his brother and father, and several days later, he denied that any of his family members had ever received a loan from PBZ. In the end, he was never held accountable. The bankers removed all traces of the unsettled claims, the citizens rehabilitated the bank which was later sold to the Italians.
Due to his secret partnership with Miroslav Kutle, and Kutle’s involvement to help collect on Zdravko Pasalic’s claims, there were suspicions that Kutle and Pasalic were in fact the ones running the show in Zagrebdrvo. Proof that this was likely true came in summer 2000, when Zagrebdrvo changed owners. Pasalic used his phantom company Plako seated in Lichtenstein to cover his brother’s ownership. One year later, Zagrebdrvo was transformed into a limited stock company and began cooperation with Adriadrvo. Today Pasalic is director of Adriadrvo, which was founded in Zagreb in 2002 with base capital of 20,000 HRK. It was formally established by the company Südost Holz Beteiligung (Southeast wood holding).
This is a company in Vienna with 35 thousand euro in equity, with a certain Franz Georg Hauninger in the Management board. Adriadrvo has its seat in the same place as Zagrebdrvo and they handle the same business. At first, Ratko Bubalo was director, but since 2005, Ivic Pasalic took over and is likely also the majority shareholder. Immediately after its establishment, the two companies began cooperation. In fact Adriadrvo began to take over Zagrebdrvo and invest 22 million euro of suspicious origin, which at the end of last year ended up in Pasalic’s company following several untransparent transactions. Adriadrvo began taking out foreign loans with the phantom company Croscan HandelsAnstalta (Croscan trading foundation). Croscan Handels was established in July 2003 with only 30 thousand CHF of equity. Among other things, this company deals with keeping shares and other rights for third parties – therefore, a legal front for untransparent capital and mysterious owners whose identity and capital are kept confidential.
In November 2003, Adriadrvo received a 9.2 million euro loan from Croscan Handels. In July 2004, the same company gave Adriadrvo another 8.5 million euro loan, followed by another 6 million euro loan. Adriadrvo gave a portion of this money to Zagrebdrvo, based on a short-term loan contract for 135 million HRK. This loan was later written off such that Zagrebdrvo transferred its complete assets to Zagrebdrvo, including all its commercial space and equipment. All that time, Ivic Pasalic could be connected neither to Zagrebdrvo not Adriadrvo. Only later did he become director of Adriadrvo. Just days before the decision to increase Adriadrvo’s equity by about 22 million euro, Südost Holz, the founder of Adriadrvo, waived part of its ownership of Adriadrvo. They retained only 26% of Adriadrvo, with the remainder transferred to Zdravko Pasalic and Croscan HandelsAnstalt. It is interesting that Croscan Handels increased the share of its base capital, but not its business share in the company. In fact, Zdravko Pasalic, together with Südost Holzom retained the same business share and became a shareholder in a very respectable company, run by his brother Ivic Pasalic.
The base capital of Adriadrvo was formally increased such that Croscan Handels entered its rights into the value of the base capital, based on three loan contracts which had earlier entered into the company. First the equity was increased to 166,686,000 HRK, and later 19,808,800 HRK was used to cover losses from previous company operations. Such that the equity of the company Pasalic is director of grew in value to about 20 million euro. In such sensitive legal affairs, Pasalic’s interests were represented by attorney Ivo Farcic, one of General Ante Gotovina’s attorneys, who also appeared in the Vecernji List affair in the 1990s, where Pasalic also played a key role. In a recent interview for Jutarnji List, Pasalic comment on Adriadrvo’s operations as future potential. He revealed nothing of the business activities he was involved in, nor did he speak of how he came to run this company, which virtually took over the company that was heavily financed by PBZ loans which were never returned at the time of his greatest political power.
Zagrebdrvo still exists as a company, but only on paper. Considering that Zagrebdrvo and Adriadrvo are registered at the same address – Gradec, J. Grabrića 17 – the author of this article called the Adriadrvo accounting office at the number listed on the company website and asked for the telephone number for Zagrebdrvo. In a short conversation, the person we spoke with stated that the company Zagrebdrvo in fact no longer exists, that only Adriadrvo is there. When asked about how one could get in contact with the members of the Supervisory Board of Adriadrvo, each by name, her response was “I’ve never heard of them”. Yet another detail from the webpage suggests that Pasalic as director also controls all of Zagrebdrvo. The website claims that Adriadrvo “has been earning the trust of its clients throughout the last decade”. However, this is not possible as Adriadrvo was established in 2002, unless Zagrebdrvo and Adriadrvo are considered to be one and the same.
After assessing that the operation to bring this money of suspicious origin back into Croatia was successful, Pasalic began a new media action several days ago to present himself as a potent construction investor. As director of the company Kapital Consulting, he presented his plans to build an entire neighbourhood in a Zagreb suburb with 300 flats to house a thousand people. Ten days ago, Jutarnji List presented Pasalic as an ambitious construction investor planning to invest about 20 million euro in this project. Pasalic started this project with the company Kapital Consulting, which has equity of 20,000 HRK, where he also sits in the director’s chair. He announced that the project had received financial backing from a bank, which would also provide loans to the buyers of these flats. He stated that he started the project with the purchase of 40,000 m2 of land, which several owners united into a single parcel and sold via an agency. He did not reveal the selling price, nor whether this was paid in cash or by bank loan. He then presented the project to Hypo Leasing, whose Committee assessed it to be financially solid and decided to back it.
Drago Vidakovic, president of Hypo Leasing, commented for Nacional that the project has perspective and that Hypo Leasing does not look upon who the investor is, but what is being financed. Vidakovic did not reveal any of the financial details for Nacional. Pasalic recently stated that he covered the initial stages of the investment with a 5 million euro loan, while the remainder would be financed through the sale of flats, as this proved much more favourable than the initial idea to finance the entire project with loans. Pasalic described that he obtained his loan in the same way that Tomislav Horvatincic and Bruno Oresar had. “Large loans are obtained by presenting the bank with a business plan they can assess to be profitable, and with that the company guarantee and a mortgage on the property”, he stated. This suggests that Pasalic is a good business client of Hypo Alpe Adria Bank, and that a company backed his project with a guarantee. It is possible that this guarantee came from Adriadrvo, where Pasalic is also director.
This new neighbourhood “Odranska zavrtnica” is to be built by the model of saving energy – the buildings will have increased insulation and heating systems to reduce the emissions of harmful gases and energy consumption. The buildings could also have a green-roof, which is a heat insulator. The ground floor of the buildings will include commercial space for shops, cafes and the like, while the first and second floors will contain flats. The western side of the neighbourhood will also have seven large buildings while the eastern side will include six independent small buildings, each with eight flats. There are also two daycares planned for the neighbourhood. All flats will be from 35 to 95m2, with construction taking place in two phases: the first completed in one year, the second one year after that. The buildings are planned to have wooden elements on the façade, which is typical of the Turopolje region, and it is a reasonable assumption that the majority of wood will be supplied through Adriadrvo and Zagrebdrvo.
This will thus become a business synergy between the companies Pasalic controls, obviously without any troubles from the Croatian judiciary, which has not expressed any doubts as to the origin of the mysterious loans placed with Adriadrvo by the phantom foundation from Vaduz, Liechtenstein.
HIDING OWNERSHIP IN ZAGREBDRVO
With the help of well informed Austrian sources, Nacional has reconstructed that until summer 2000, the only shareholder in Zagrebdrvo was Kutle’s fictitious Austrian company Well Handels from Graz. Well Handels likely obtains its share of ownership by paying off a part of Zagrebdrvo’s debt to Privredna Bank Zagreb, as well as with taxpayer money, which Nacional wrote about in detail at the time. Rubinka Suprinovic, director of Well Handels, sold all that company’s shares on Zagrebdrvo for one kuna to the company Plako Anstalt für Planung und Konstruktion seated in Vaduz, Lichtenstein in July 2000. Plako is, in fact, a front for capital which keeps the origin of the money confidential. Plako was established in 1970 and was run by attorney Ivo Beck. Its base capital was 20 thousand CHF, and this company also holds shares and rights for third parties. Experts Nacional spoke with stated that this is classical financial engineering, as a company founded to be a front for other people’s capital. After Ivo Beck, Plako was taken over by Josef and Peter Sprenger from Triesen, who authorized Anton Gstoehl from Vaduz as a representative, and who represented Plako at the Shareholder’s Assembly. At that time, Zagrebdrvo was transformed into a limited stock company. In buying Zagrebdrvo from Kutle’s Well Handels, Plako in fact bought shares which were pledged with Kärntner Landes- und Hypothekenbank from Klagenfurta. Well Handels took out a 12.2 million CHF load from that bank for the takeover of Zagrebdrvo, and with the sale of those shares, it also sold the obligation to pay back the loan. Who is paying that loan back in Plako and with whose money, will also likely remain confidential information.

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