FOR TOP FLIGHT TOURISM Miro Oblak is investing in Istrian tourism, and his luxury summer resort is managed by Kempinski Late last week Nacional did an interview with businessman Miro Oblak, a long-time tourism professional, who emerged in Croatia in the 1990s as a consultant for some foreign companies involved in the arms trade. At the time he was an advisor responsible for the sale of radars he aimed to sell to the Croatian Army. He also earned a tidy sum dealing in raw leather. He has been investing in tourism properties for some time now, above all in Istria County, where the Skipper Residence (Rezidencije Skiper) was recently completed, the first major tourism greenfield investment in Croatia.

Almost 250 million euro were invested into the site, managed by the Kempinski company. Oblak initially got into the business of renting luxury tourist villas in the Caribbean, where he lived for several years. The Skipper Residence is not his only project in Istria County. In addition to Crveni Vrh, he has also invested in the Stancija Grande project, and has purchased a part of the Vizintini Vrhi village. For a time he intended to build and complete additional tourism projects there in collaboration with the Kempinski company.

The Croatian press wrote about Oblak a few years ago after he confirmed for reporters that his Rezidencija Skiper company had donated 2 million kuna to the Croatian Democratic Union (HDZ) parliamentary election campaign. He has always insisted that the donation did not in the least influence the development of his investments. It can now be said that this was true, as he fell into major problems in 2006 created by the management of the Hypo Alpe Adria bank, the creditor of the Rezidencija Skiper project.

In his interview for Nacional Oblak spoke at length of the problems caused for him by people who were at the time the leading managers at the Hypo Alpe Adria bank. The bank's offices are doing a booming business in Croatia nowadays, even though the Hypo Group Alpe Adria recently passed into the hands of the Austrian government, above all as a result of the scandalous business dealings of a part of the Austrian management of the bank, which also created problems for Oblak.
A few days ago, in the context of the scandal, of which much has been written in Austria, the Austrian weekly Profil ran an article in which Wolfgang Kulterer, the former head of the Hypo bank, accused his colleague from the bank, Günter Striedinger, of having, together with Oblak, through the Rezidencija Skiper project in Istria County extracted some 15 million euro. Oblak gave Nacional an extensive interview in which he described the background to his problems with the Hypo bank and revealed that former Prime Minister Ivo Sanader helped his competitors in some Istrian tourism projects.

Strict bank control

NACIONAL: How do you comment Kulterer's accusations that you and Striedinger short-changed the Hypo bank for some 15 million euro?
- The long-lasting media campaign against the Skiper hotel company and against my person has continued these past days. A few days ago the Austrian weekly Profil ran part of a telephone conversation between Wolfgang Kulterer and an Austrian detective. That conversation was led in August of 2006. I did not learn of it until December 2009, when part of it was aired on Austrian state television station ORF, when the Thema show covered the scandal that had emerged surrounding the Hypo Alpe Adria group. I was censured as a brutal arms dealer that had appeared in Croatia as an investor. These claims are evident untruths, as are the claims that I financed the HDZ through some transactions, and Kulterer's claims that I had, together with Günter Striedinger, pulled 15 million euro out of a loan I had received from the Hypo Alpe Adria group for the two of us. I could not have done so even if I had wanted to, as the bank controlled every cent we received, especially during the period of time in which Kulterer claims we did it.

NACIONAL: Why were Kulterer and his Austrian detective even talking about you?
- I started investing in Croatia in the late 1990s in several phases. At issue is the Skipper Residence tourism project. In phase one we invested in three large houses with some 60 apartments. We did so in collaboration with the Italian company Ceit, with whom we parted ways, because they wanted to build more modest apartments for mass tourism and draw some of the money out of the company for their own needs. The Hypo bank was also unwilling to tolerate their behaviour. From the very start this was to have been a tourism project whose core was a luxury category hotel. We had to sell a part of the apartments, which we announced, but these were very luxurious apartments we sold at a price of 5,600 euro per square metre. The sale could not go through until all legal issues had been settled entirely, and everything was controlled by the bank. I marvel therefore at Kulterer's accusations that I extracted millions of euro from a loan the bank approved. We had excellent relations with the Hypo bank up to 2005, and with some of its officials. We were on very good terms with Striedinger, and worked a little less often with Kulterer, because, at the post he held at the time, he did not have much need to communicate with us. The first problems that arose in our communication with the officials of the Hypo bank emerged in 2006 when we got all of the papers we needed to move forward with the Skiper project. A coastal area protection regulation came into force in 2004. At the time we already had location permits for the hotel and the other facilities in the resort. After that the feasibility of the project had to be confirmed by an investment feasibility study, according to which the loan would be repaid for the most part from the sale of a part of the real estate, which would remain allocated to tourism, and that the remaining core of the project would be a 400-bed hotel, golf course and congress centre. At that phase, when we received location permits, that meant that each facility had to be independently registered into the land registry on its own parcel, so that it could be sold individually. Later on other projects did not have to procure this. A condition for the final realisation of the entire loan was to have a signed contract with the operator of the hotel, in our case Kempinski. We concluded this deal in Geneva in September of 2005. Everything was all right up to the moment when a similar tourism project, 50 kilometres to the south of our location, first appeared in the press.

Unjustifiable project crediting

NACIONAL: What project is this?
Wolfgang Kulterer- It is the Barbariga-Dragonera project, which to this day is not even close to implementation. Milan Naperotic led the project behind the scenes, and some top people at the Hypo bank were, by all accounts, also on board, Kulterer above all. In an interview to the Glas Istra daily in the summer of 2004 Kulterer said that when purchasing the land he had been promised in advance that it would be re-zoned for the requirements of a tourism investment. After the launch of this project was announced we found it increasingly difficult to get into contact with the bank's management in order to continue the realisation of the already approved loan for the development of our project. I do know that the Hypo bank invested about 50 million euro into this project by 2007. There is, however, nothing there to this day, and it could be said that the investment is an exceedingly dubious one, that it was money thrown away. I think that this is why some high-ranking officials in the bank wanted to take our project from us, to join it to the Barbariga-Dragonera project and thereby justify the unjustifiably abundant crediting of that project. At the time Milan Naperotic set up a meeting between then Prime Minister Sanader and Reto Wittwer, the top man at Kempinski. Sanader extended a written invitation to Wittwer that he visit him. They accepted the invitation, and Sanader was visited by Reto Wittwer and the then executive director at Kempinski, Michel Novatin. Novatin told me that at the meeting Sanader guaranteed that the project would be realised. Based on these promises from Sanader Kempinski signed a contract with the investors into the project. The contract was cancelled, however, after the project did not enter the realisation phase following several delays. There is another interesting detail. Even thought the Hypo bank was never linked to the project in an ownership relation, Kulterer always indicated that it was his project in his public statements. Even though it all fell through in the end, after the signing of that initial contract my real problems with the Hypo bank began. First they began accusing me, by way of newspapers, that I was laundering money for right-wingers in Croatia and making similar false accusations.

Contract cancellation without economic grounds

NACIONAL: How did your relations with the Hypo bank develop afterwards?
- Parts of the loan were approved for us based on realised and announced work on the project. The bank was very pedantic in checking on everything, and we even had to pay 250 thousand euro for these monitoring services. Problems escalated without explanation, even though we already had tidy documentation and the possibility of launching construction on the most demanding parts of the project. Relations worsened and in the end we received a telefax on 6 October 2006 from the Hypo bank in which they stated that they were discontinuing all loans and that we had to repay all 90 million euro of credit we had been approved to date within eight days. Instead of providing an explanation they wrote in the message that the bank would not, in the mutual interest, state why it had made such a decision, so that both sides could be spared possible embarrassment. This shocked us. We had to notify our associates, after which we notified the bank that we would sue them, because we considered this cancellation of the contract to be without legal or economic grounds, and incomprehensible. We then sued them for reparations of damages and that, four months later, led to an out-of-court settlement. The bank then continued to credit our project, but our relationship was everything but friendly. Nevertheless, we withdrew our lawsuit, and then continued to provide credit. In spite of it all, rumours began spreading that I was developing the project thanks to the fact that I was financing the HDZ.
Cooperation continued in this atmosphere, and Kulterer just rotated from post to post in the bank. From that point on Kulterer began spreading negative rumours and lies about myself and my companies. I all hurt me deeply, because I had been investing gradually in the area for years and had developed all of the projects entirely in line with the law. In 2008 I left the ownership structure of the company that was developing the Skipper residence project. My position in the ownership of the company was taken by the Slovenian company Vegrad, which we brought on board because it had made the most favourable bid in a positive tender to carry out construction work. Vegrad, however, fell into problems over time, as it did not pay its subcontractors on time. This led to new delays in seeing the project through. There were four extensions of the deadline. We wondered at the fact that the Hypo bank had very intensive collaboration in Slovenia with Vegrad, because rumours had already begun to emerge that the company was deeply in the red. Vegrad is one of the larger users of Hypo bank loans in Slovenia, and their debt to Hypo is allegedly about 300 million euro, and some projects have not been completed, and it is unknown where the money wound up. At one point I asked the Hypo bank to throw Vegrad out of our project and said that if that did not happen I would leave the project. In the end in 2008 it was I who left, but they nevertheless allowed me to sell my stake in the company, even thought it was blocked because of the loan. Then, after a time they called me from the bank to come back so that the project could be finished by some kind of decent deadline. In the end the project was completed, the hotel was conditionally awarded a five star rating, but it is an open question how it will develop in the future, because some more details are required. In the end I grasped that I had been a collateral victim of sorts of relations within the Hypo bank's management.

NACIONAL: How do you mean that?
- I was not the only one to experience similar problems with the bank's management. Several investors went through the same hell. Sundry procedures were led in many places and many countries, and it all opened doubts about the way some of the members of the board were doing business, which had a negative effect on the bank's operations overall. I do not know all of the details of these situations, and as such do not wish to speak at length about it.

Hypo bank management relations

NACIONAL: Did you collaborate with the Hypo bank on other projects?
- We collaborated on a wine cellar project in Umag and on project near Porec. For the project in Umag they told me only that they had their man who was to continue the project. I understood what was at hand, and agreed to pull out with compensation. This man of theirs wound up with problems, and the project has not been completed to this day. A similar thing happened in Porec. We started developing the project, and then Milan Naperotic appeared indirectly with his interests. It was not long after that I was chucked out of the project, i.e. paid out, and it can be seen now in what phase that project is.

NACIONAL: How did they explain to you that it would be a good idea if you abandoned these projects?
PRESTIGIOUS HOTEL The Kempinski hotel also includes a congress centre, SPA centre, swimming pools, apartments and a large golf course - They told me nothing, but rather brought me into the situation of giving up. They would simply bring in a person at some phase in the project who they claimed would be the bank's employee on the project. When I caught on to what was going on, I would simply ask them to pay me out and leave the project. What their interests could have been you can conclude yourselves. It is possible that they figured that the projects would produce excellent profits, and decided to get on board and push me to give up. But seeing a project through is not always a simple task, and various problems crop up, which in the end make the profits relative. At the time, six or seven years ago, the bank had no problems. It is, however, evident that the problems had started accumulating. By my assessment, the bank got into significant problems because of frequent managerial rotations, and it all rapidly worsened with the recession. But the biggest cause of the problems in the Hypo bank are not the shady transactions in Croatia, but rather the lack of transparency and the strange business practices of the Austrian management.

NACIONAL: How can you corroborate your claims about the management's strange business practices?
- When, at the launch of the project, I presented the leadership of Kempinski to the representatives of the Hypo bank, they agreed that Kempinski would submit to the bank an offer to buy up the hotel. Reto Wittwer, the President and CEO of Kempinski, submitted a letter of intent to the bank three days later. He sought to buy the hotel quickly and at a relatively favourable price. The bank's management began dallying and the deal fell through. Now they say that the bank lost 250 million euro just on that project, but Kempinski would have surely paid at least 180 million euro for the hotel, at the worst point in the crisis. Perhaps something would have been lost on the project at the worst point in the recession, but it certainly cannot be said even today that the bank lost 250 million euro on the project. The second question is why the bank did not chuck Vegrad out of the project, even though it could have. The Hypo bank has a 25 percent stake in the project and Vegrad a 75 percent stake. But up to February 1st they could have taken over the 75 percent ownership held by Vegrad for the price of 1 euro, because Vegrad was behind schedule in completing the project and they had not paid the bank back 60 million euro, as was stipulated by the contract. I warned the bank to do so if it wished to run the project in good faith, but they failed to do so. Instead, after the scandal broke, which resulted in the nationalisation of the Hypo bank, they continued to systematically smear me through the media, and I am not the only person who should now bear the burden of the responsibility of other people for the problems that have befallen the bank. In spite of it all, this project was completed and now employs 250 people, and will employ more when all of the hotel's capacities are activated.