Police raid homes of ailing Balkans retail magnate, detain 12

 

Croatian police on Monday raided the Zagreb homes of the owner of debt-ridden Balkans retail giant Agrokor, and those of former senior managers, detaining 12 people.

The authorities searched the castle where Agrokor boss Ivica Todoric lives, in an upscale neighbourhood of the Croatian capital, throughout the day.

Todoric himself was not found there.

A criminal probe is ongoing against 15 Croatian citizens suspected of "abuse of trust in business operations, forging of official documents and failure to keep proper business records," the interior ministry said.

Twelve people were detained and criminal charges will be pressed against them, the ministry added in a statement.

The other three wanted suspects were said to be "out of reach."

Last month, Todoric published a blog in which he accused the government of abuse of power and of illegally taking control of his company.

On Monday he labelled the probe against him a "political process," but pledged to remain "available to the institutions of the rule of law."

- Suspected financial irregularities -

Searches were carried out at nearly 30 locations and were set to continue Tuesday, the ministry said without identifying the suspects.

Todoric's lawyers, who arrived at his home during the search, said their client was not on the run.

Local (Stuttgart: 19549987.SG - news) media speculated that Todoric and his two sons, who also held top positions in the company, were currently in Britain.

Agrokor has around 60,000 employees in the Balkans, two-thirds of whom are in Croatia making it the country's largest employer.

According to an audit published last week, the debt-ridden food group made a loss of 11 billion kunas (1.5 billion euros/$1.8 billion) in 2016 and the value of its capital was cut by nearly 3.0 billion euros.

Ante Ramljak, who was brought in earlier this year to manage the company's crisis, said at the time he had filed a criminal complaint against "responsible people who were in Agrokor's management in 2016" over suspected financial irregularities.

Prompted by Agrokor's crushing debt crisis, Croatia in April adopted a law aimed at shielding the country's economy from failing key companies.

The law, applied with Todoric's approval, allowed the government to name a crisis manager to lead a restructuring process which would last up to 15 months. If it was not successful within that time frame, bankruptcy proceedings would be initiated.

Earlier this year, international rating agencies lowered Agrokor's credit rating, citing its high indebtedness and rising refinancing risks.

- Aggressive expansion -

Agrokor's revenues account for around 15 percent of Croatia's gross domestic product. But the impact of the Zagreb-based company's crisis goes far beyond Croatia, a European Union member of 4.2 million people.

The firm also has businesses in neighbouring Bosnia, Serbia and Slovenia, while its network of suppliers means tens of thousands more are affected in a region where unemployment runs high.

The food and retail group ran up its debt through aggressive expansion and expensive borrowing -- a snowball that eventually turned into an avalanche.

Its main creditors are Russian state-owned banks Sberbank and VTB, to which it owes some 1.1 billion euros and 300 million euros respectively.

Agrokor's operations stabilised in June after it secured a 480-million-euro loan, arranged by bondholders led by US-based Knighthead Capital Management and local banks.

Croatia emerged from a six-year recession in 2015 and its economy remains one of EU's weakest.

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