The affair of Dubrovačka Bank and the secret partnership contracts on the criminal takeover of the bank, which shook up Croatia in 1998 and determined its political future, including the future of today’s ruling party HDZ, has now received its final court epilogue. In early September, the High Commercial Court of the Republic of Croatia confirmed that the then president of the board of the bank, Neven Barač was illegally fired from his post at the end of February 1998. The court ruled that the listed reasons for Barač’s removal were completely unfounded and fabricated and that this was purely a political decision, initiated by the HDZers in power at the time, led by Ivić Pašalić and Miroslav Kutle.

Legally put, the appeal to the ruling of the Commercial Court in Dubrovnik has been rejected at the highest judicial level. This ruling nullified the decision by the Dubrovačka Bank Supervisory Board regarding Barač’s replacement. This has brought Barač legal satisfaction based on the lawsuit he filed in civil proceedings. The High Commercial Court ruling also stated that one of the members of the then bank Supervisory Board Pero Vican, a practicing attorney, had responded to the court’s question of what Barač’s responsibility was with ‘I don’t know’. He also made no efforts to explain why he had voted for Barač’s removal at the time, thus contributing to the demise of the bank and the catastrophe in the Croatian banking system.

With this ruling, the Croatian judiciary after six years has finally put an end to this stormy period in Croatian political history, which marked the beginning of the end of the once most powerful man in Croatia, Ivic Pašalić, who is today a candidate in the presidential elections. Neven Barač, who at the time dared to oppose Pašalić’s intent to block the bank accounts of Miroslav Kutle and his Globus group in order to collect the credit payments deposited, and in terminating the partnership agreement, he also revealed Pašalić as the fifth partner, owning a one-fifth share in the bank, which today has been completed rehabilitated.

Of course, as his long-time attorney, Stanka Matić, commented for Nacional, Barač has received nothing from this ruling except for moral satisfaction. He has been retired since 1999, and all his assets are still blocked based on the 1998 ruling. In the first instance trial, the Commercial Court in Dubrovnik established that the decision by the Dubrovačka Bank Supervisory Board regarding Barač’s replacement was “not based on relevant facts” of law, but was instead the “result of a political order”.

However, Barač still today cannot return to his old job, as the status changes in the bank in the meantime have made that impossible. After spending five months in a Dubrovnik jail in 1998, he experienced a period of stigmatization, from which he has still not been liberated. Neven Barač, who enjoyed the reputation of a successful banker before this affair, has suddenly become undesirable in business circles. Even though he is still considered to be one of the most successful bankers in Croatia and in the former Yugoslavia by those same banking circles. Together with his family, he has had to face the fact that his surname has become a poor recommendation for any work. Primarily for political reasons, as he destroyed Pašalić’s image of an untouchable, Barač has become a persona non grata and the punching bag in all the media controlled by Ivic Pašalić, Miroslav Kutle and Ninoslav Pavić, who are partners by the same formula in the secret media cartel ‘Grupo’.

Barač still today does not like to talk about the case, but he does agree with the assessment that the Dubrovačka Bank affair, in which he was a direct participant, announced a great turning point for Croatia. However, unlike these who recognized the key event for the later positive political changes and the determinant for setting Croatia on its path towards the European Union, this affair, according to Barač, marked the leading of the Croatian economy in the wrong direction.

This was to blame for the continued privatization and sale of Croatia’s national treasures, and he assessed that the most problematic was the sale of Croatian banks to foreigners. In this was, he commented for Nacional, Croatia was left without the primary instrument which could be used to finance its own development and create new jobs.

Dubrovnik was left without the majority of its hotels which, up until that event in 1998, were part of the Dubrovačka Bank portfolio. In other works, these hotels were owned by small shareholders and the citizens of Dubrovnik, who for years had successfully managed this wealth. Today, the majority have been sold off. Proof that small shareholders can be successful is seen not only in the privatization model that was applied in Slovenia, but also in the successful examples in Croatia, such as Kraš in Zagreb, concluded Barač.

In 1998, precisely on 23 February, after the news of Barač’s removal came to light, the clients of Dubrovačka Bank began to flood to the teller’s, withdrawing over 300 million German marks out of the vaults in only three months time, something few banks could survive. The result of this stampede was also felt by other banks, as their customers began to follow the example of those in Dubrovačka Bank out of fear of losing their savings. In short, the entire banking system in Croatia felt these consequences.

In this critical period of only a few months in 1998, about 2 billion German marks were withdrawn from the Croatian banks. This money was then moved to banks in neighbouring countries: Austria, Hungary and Slovenia, and the Croatian economy was completed depleted.

Barač warned the main participants of these events, primarily Vinko Brnardić, one of the partners and president of the Supervisory Board of the bank, that the banking sector is very sensitive and that the consequences of his forced removal could be harsh. However, this entire group collected in the partnership contracts did not understand the seriousness of this radical move in the business policies of the bank, which are viewed through the removal of the top manager.

Barač did not keep track of what really happened with the partners from the Dubrovačka Bank affair, other than through the information available in the press. Barač was the one to terminate the partnership contract and attempted to make its contents public. The remaining four partners included the former greatest Croatian tycoon Miroslav Kutle, then president of the Supervisory Board Vinko Brnadić, former head of Dubrovnik SZUP Petar Luburić and current presidential candidate Ivic Pašalić.

With respect to the provisions of the partnership contract, which foresaw an annual amount of 200,000 DEM per partner per year, according to Barač, this was only activated once prior to the termination of the contract. This possibility was never used by him or, as he added, by Miroslav Kutle.

In thinking today about how certain moves in his life were crucial, Barač is not sure that if he could do it again, that he would have again taken the same steps as to uncover the Dubrovačka Bank affair. Even back in 1998, there were people who warned him not to go to war with Ivic Pašalić. At the time, though, he believed that these threats were not serious, he was convinced that the rule of law would win in the end and that each man should be left to work in his own profession – he in banking and Pašalić in politics.

Then he refused the first of two offers from his partners. After the decision was made to remove him, first Brnadić asked him what he wanted for a painless exit from the company, an offer which Barač rejected. Later, when they saw the problems that had arose in the bank with his removal, a second offer was made. Miroslav Kutle personally called him to return to the bank, but as a member of the Supervisory Board, assessing that the bank would like go under without him, and warning that someone could end up in jail.

As there was no turning back by this point, Barač rejected Kutle’s offer, not thinking that he could be the one to end up in jail. Which is exactly what happened. Two days after Nacional published his interview, in which he labeled Pašalić as the fifth partner, thereby fully opening the Dubrovnik Bank affair, he was arrest, exactly by the scenario described by Kutle. On the day he was removed, 23 February 1998, he had warned Barač that if he said a word about his firing, that they would put him in jail. Which they did. He spent a full five months in the Dubrovnik jail, from 3 April to 3 September 1998.

At that time, much was written about his responsibility in the uncontrolled and risky investments of 3.5 billion kuna through loans to Dubrovnik hotels. At that time, Dubrovačka Bank was majority shareholder in 27 hotels in that area. Today, however, when Dubrovnik is again considered one of the most desired tourism destinations in the world, this story about risky investments seems ridiculous, commented Barač.

He agrees that it was not logical to expect the hotels to return that money within 5 years, the loan terms at the time. However, his goal was to permit economic development, and the loans would have easily been reprogrammed later, Barač says.

Proof of just how much the situation in Dubrovnik has changed since then is best seen in the example of the sale of the import/export and trade company DTS. While that company was in bankruptcy proceedings, the building was sold at 600 Euro per square metre, while today this cannot be sold, after a few cosmetic repairs, at a price under 4000 Euro per square metre. Barač stressed that the situation today has completely refuted the claims made back them about risky investments into the Dubrovnik hotels, which were later sold off.

How today does he explain the motive by which he agreed to sign the partnership contract? He lists the same arguments he gave back in 1998 when this affair broke out. He says that this was simply the only war under those circumstances to remain at the head of the bank and to continue the investment projects in reconstructing the Dubrovnik hotels that had been devastated during the war when Dubrovnik was just off the front line. He believed that the later sale of shares of Dubrovačka Bank on the free market would create such an ownership structure within the bank to make this partnership contract inapplicable.

With this epilogue before the High Commercial Court, Neven Barač has received judicial justification for the second time. The first instance occurred in 2001 in the criminal proceedings against him, for which he spent 5 months in jail. Now the same case has been resolved in the civil suit, filed by Barač himself before the Commercial Court, in negating the legal foundation of the decision to remove him as President of the Board of Dubrovačka Bank. Finally, the question must be posed – who can compensate him for all the material and moral damage incurred over the past six years of constant prosecution? All this occurred to serve politics and in the attempt to protect Ivić Pašalić and his political future, his easy life, power, money and most importantly – protection from judicial and police prosecution.