Cause and Effect in European Politics and Law

A First Member of Ivo Sanader's Government Is in Jail

Adelina Marini, October 17, 2012

Damir Polančec, former deputy prime minister and minister of the economy in the government of former Croatia's prime minister, prosecuted for corruption and embezzlement, Ivo Sanader, is already in jail. But not for the charges on which he was convicted two years ago - corruption - but because of the Vegetagate, also known as the "Spice" affair, related to Podravka. In 2010 Polančec was convicted by the Zagreb Regional Court to 15 months in prison for paying half a million kunas (around 70 thousand euros) public money for an expert analysis no one needed. A conviction the Supreme Court reduced five months later. Polančec also has in his record one year on parole, again for corruption.

The Vegetagate

Podravka is a semi state-owned company in which the state owns 21% of the shares. The company produces food and pharmaceutical products, the most famous of which is the spice "Vegeta", consisting of dry vegetables. In March this year the government of Socialist Zoran Milanovic announced plans to sell all the state's shares in companies where they were less than 25%. Podravka is one of them. In 2009 the Vegetagate looms up after the specialised body for the fight against corruption and organised crime, USKOK, reveals attempts by the Podravka management, with the participation of deputy premier Polančec, to buy up 75% of the company's shares with company's money in several steps. The purpose was this to happen before any plans for privatisation of the company came true.

Polančec is closely involved with the company, in which he worked since 1992. The company itself is established in 1934 in the town of Koprivnica and Polancec is born in a village near that town. He graduated from the Agronomic faculty in the University of Zagreb. Initially he worked in another big company from the food-processing industry in Croatia - the milk processing firm Dukat - but then he went to Podravka, where he rose in the hierarchy and in 2000 became a member of the managing board of the company with a main responsibility to expand the market in Croatia and in south-east Europe. He became a deputy prime minister in Sanader's government in February 2005. On October 30th, 2009, already in the government of Sanader's successor Jadranka Kosor, however, he resigned because of the 'Spice" affair. Sanader himself is a defendant in several trials for embezzlement, which are ingoing.

According to the prosecution, the company's management has robbed it of 400 million kunas (approx. 57 million euros). The Vegetagate trial is one of the big ones by the specialised anti-corruption body USKOK, established in Croatia in 2001 as part of the state prosecution. The body is also part of the country's efforts to respond to the EU requirements for membership. In the European Commission latest report of October 10th this year, it is said that the bureau works pro-actively and in general is doing its job. Privatisation, however, is the first out of 10 tasks Croatia has on its way to full fledged membership, planned for the 1st of July 2013.

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