The State Attorney's Office's request to launch an investigation into the Brodosplit affair which seeks that the protagonists of the affair, Drago Macek, Goran Vukasovic and Ante Luetic, be remanded to police custody, reveals a heated row between the State Attorney's Office and the Split police, which under Ivan Lozic's control, has for months obstructed the investigation into the case. The request to launch an investigation clearly reveals that information was leaked from the Split police on the processing of the case, which gave the suspects the opportunity to coordinate their defence and fabricate fictional covers for their activities.

The request to launch an investigation against Drago Macek, Goran Vukasovic, Ante Luetic, Mateo Tramontana, Ivica Donkov, Ivan Cesarac, Daniel Nikolic and Hrvoje Matovinovic precisely and comprehensively describes the chronology of the Brodosplit case. The affair has sparked widespread public interest, especially since the current economy minister, Branko Vukelic, was directly involved as the chairman of the Brodosplit Supervisory Board, as was Sinisa Poljak, Prime Minister Sanader's close friend and right hand for confidential behind-the-scenes private sector and lobby operations. Neither Vukelic nor Poljak are under investigation, probably so that the HDZ leadership could not admonish State Attorney Mladen Bajic that he had something personal against the officials of that party, or against persons who enjoy Prime Minister Sanader's confidence.

Vukasovic and Poljak were in fact to have been included in the criminal charges filed by the Split police, but as it obstructed the investigation from the very start, the criminal charges were never actually filed, while the case developed above all thanks to exceptionally useful information that came to the State Attorney's Office from abroad.

In recent Croatian history it has often been the case that the police have done their job fair and square but that there was no judicial epilogue to these dramatic affairs on account of the scandalous actions of justice officials, above all those of investigating judges. There has probably not been a single case, however, in which the police have spent months on a case and did not want to file criminal charges, but waited rather for the State Attorney's Office to submit a request to launch an investigation. All this was done with the aim of hindering as much as possible the detainment of the suspects in the affair. And that is how it is possible that Government, under public pressure, relieved Vukasovic and Luetic of their duties in the Brodosplit management, and that they still do not face criminal charges for money laundering.

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The State Attorney's Office connected the dots in the complex money laundering operation thanks above all to the Austrian authorities and to the Austrian, Dutch, English and US offices of Interpol. As such, the State Attorney's Office has succeeded in very precisely describing how the police obstructed the processing of the Brodosplit affair. The request to launch an investigation reads: "It can be seen clearly, as the investigations were carried out, when circumstances were established that incriminated the suspects, how purportedly new circumstances and documentation, various contracts, statements, certificates would suddenly surface, which justify their actions, and that no one had previously, although questioned to that effect, mentioned… So that in the beginning of the investigation the reason for the lateral letters was to secure larger loans from the buyer's bank. Subsequently, when it was established that the costs of the so-called buyer's delivery were significantly lower, the reason that surfaced, not previously mentioned by anyone, was the modification of tankers into training vessels. When the data on a bank account in Graz was confirmed, consultancy contracts suddenly appeared, while up to then Drago Macek had said that he had no connection to this account… After Interpol reported that the McArthur Company was fictitious, a statement by Douglas Thomas suddenly appeared in which he states that he is the owner of the company, as does the power of attorney giving Drago Macek the authority to represent the company, to conclude contracts on the company's behalf and to have free use of the company's finances. Previously, Drago Macek had claimed when questioned how he had only worked with the McArthur Company from time to time, and denied having any connection to the account."

The State Attorney's Office's request to launch an investigation has very precisely reconstructed the money laundering operation of which Macek, Vukasovic and Luetic are charged. The reconstruction of this criminal activity aids in better understanding the scale of the scandal into which the Split police has drawn itself in obstructing the investigation into the case. In the request to launch an investigation it reads that Goran Vukasovic and Ante Luetic, recently dismissed members of the Brodosplit management, at the request of Drago Macek, sought and secured from the Supervisory Board the signing of four contracts with lateral letters on the construction of four of the so-called Panamax tankers for the transport of crude oil products in July 2005. The ships were to have been constructed under contract by the Brodosplit Shipyard Company, with the buyers being the Kippis, Vakhtanguri, Salute and Skol companies, all of the Shipping Company Limited of Limassol, Cyprus. The owner of these Cypriot companies is the W-O Nederlang B.V. Rotterdam group, owned by German national Reinhard Wessels. Drago Macek, as the director of Iceberg International Trading, appears in the deal as the representative of the buyer of the vessels. Vukasovic and Luetic are accused of suppressing information from the Supervisory Board that there had been two better offers to build the ships.

It also reads in the request to launch an investigation that they in other ways also deceived the Supervisory Board "and in doing so untruthfully stated that lateral letters 2 and 3, which were concluded simultaneously with the contracts, were customary, and untruthfully stated that it was customary to finance the costs of the buyer's delivery, even though they knew that these costs were always covered by the buyer, and that it was customary to cover the cost of the buyer's consultant even though that cost is always covered by the buyer." The State Attorney's Office claims that Vukasovic and Luetic, together with Macek and persons as yet unidentified, created the conditions necessary to have the amount of US$4,745,544, of the contracted price for the purchase of one tanker of $51,560,498, paid out to their private bank accounts opened in Austria for the supposed financing of the above cited costs.

The payment was implemented gradually and in several phases. First each of the four buyers paid out $5,156,050 for the first tranche of the purchase price. Then, based on the lateral letters, four payments of a million dollars each was approved, on the basis of fictitious pro forma invoices delivered by Drago Macek. Four additional invoices to the amount of $760,760 were delivered on behalf of the buyers by the Uniship Holding Company, nominally to finance the services of its consultants. Based on all this, Brodosplit paid out $4,760,760 to the accounts of the Cyprus-based companies Kippis, Vakhtanguri, Salute and Skol, opened at the Hellenic Bank Ltd. in Limassol, Cyprus. From their banks, the money was subsequently paid out to the account of the phantom Florida-based company McArthur Industrial & Marine Technologies L.L.C., opened at the Graz-based Volksbank Graz-Bruck.

Drago Macek is the only person authorised to withdraw and use these funds. When the money was paid into the account, Macek withdrew it. It is still uncertain how much money he paid to Goran Vukasovic and Ante Luetic. Macek paid $187,307 into his own account and put at least 100,000 euros into his safe deposit box. He paid $174,327 to Mateo Tramontana, $42,361 and 176,500 euros to Ivica Donkov, $7315 and 97,773 euros to Ivan Cesarac, $50,000 to Daniel Nikolic, 45,000 euros to Hrvoje Matovinovic and 200,000 euros to another unknown person in the Rederij Wessels B.V. company in Rotterdam. Those that received the money wrote up fictitious contracts on operational and technical cooperation with the McArthur Industrial & Marine Technologies Company to cover for the payments.

A further $1,019,156 and 567,000 euros remain on the company's account, at the exclusive disposal of Drago Macek. It is interesting that they all got the money in one payment, even though their cooperation contracts foresaw payments in instalments for the alleged consultancy services. Most of this was discovered by the State Attorney's Office. Ivan Lozic and his team at the Split police department did their best to lead the investigation into other directions. Their priority became the work of earlier managements, and just how much they irritated the State Attorney's office is most evident from the fact that it decided to go forward with its own request to remand the suspects to police custody, as it became clear to them that the Split police did not wish to process them. The main player in the obstructions carried out by the Split police is Ivan Lozic who, thanks to the political backing he enjoys from some HDZ officials, has for years managed to move up through police ranks in spite of accusations that he was corrupt.

When Nacional warned of these circumstances in late January, the publishing of the article was followed by the arrival of upwards of ten denials to the Nacional editorial board from all of the persons mentioned in the article. It is likely that more effort was invested into writing these denials than in the entire criminal processing of the affair. That these denials were sent to deceive the public is best demonstrated by the following excerpt from the request to launch an investigation: "Drago Macek on 23 May 2006, in questioning indicated to the police that he is not the bearer of a power of attorney for the McArthur Company's account, and during the tax supervision procedure of 13 July 2006 states that the Iceberg Company is not linked to the indicated financial transactions between Cypriot companies and the Shipyard, even though the pro forma invoices of the Cypriot companies to the Shipyard were sent from the fax of the Iceberg Company, the president of the board and shareholder of which is Drago Macek. Only on 29 September 2006, when the investigations were near closing, did Drago Macek send an e-mail statement according to which he carried out all transactions related to the account in Graz following the instructions of the owner of the McArthur Company, Douglas Thomas, that he did withdraw a part of the funds from the account in Graz but handed that money over to the owner of the McArthur Company, Douglas Thomas. The name of Douglas Thomas, as the owner of the McArthur Company first appears in the police report of 27 September 2006, at the conclusion of the investigation, after an official letter was obtained from Interpol according to which that company was fictitious. Besides, the statement by Douglas Thomas pertaining to the ownership of the company and the power of attorney whereby he purportedly authorises Drago Macek to have free use of the funds on the account is dated 10 July 2006, after the time at which Drago Macek already had free use of the money."

Had the Split police wanted to do its bit in the Brodosplit affair fair and square, it could have, after filing criminal charges, very easily justified the way it went about the affair. The State Attorney's Office in Graz, Austria has initiated criminal proceedings number 2 St 241/06 against Macek on suspicions he was involved in the laundering of money. In criminal case number 20 Ur 122/06 the Regional Criminal Court in Graz on 18 September 2006 adopted a ruling freezing funds in the Graz accounts of the McArthur Company, which Macek has at his disposal, ordered that Drago Macek's safe deposit box in the Graz bank be opened and ruled on the temporary confiscation of money and documentation found in the safe. These criminal acts were discovered after an action by the Austrian Internal Affairs Ministry and its Office for the Prevention of Money Laundering. The Croatian State Attorney's Office therefore also sought the blocking of the same account and safe deposit box. In the request to launch an investigation it reads that a part of the money, in the sum of $1,019,156 and 567,000 euros, is still on the accounts of the Volkbank Graz-Bruck, for which only Drago Macek has authorisation. Macek has a safe deposit box at the same bank containing 100 thousand euros and bank documentation. Perhaps it contains information on who else took advantage of the money that Macek and the other suspects illegally extracted from Brodosplit, a state-owned company employing 4,000 workers and on the state dole in order to survive on the open market.

The State Attorney's Office has cited a long list of witnesses whose questioning suggests investigation work that should be undertaken with the aim of confirming their knowledge pertaining to this case. Since there are no criminal charges and the suspects have not been detained, investigating judges do not have the case among their priorities, and the complexity of the procedure anyways will guarantee a lengthy investigation. The Slobodna Dalmacija newspaper, which also recently analysed some parts of the request to launch an investigation, says that the procedure could fall under the statute of limitations, and that there was practically no more use in seeking the detention of the suspects, especially as they have anyways had plenty of time to corroborate their statements or get rid of any evidence. But it may still be early to draw these kinds of conclusions. If they behave professionally, even a cursory reading of the request to launch an investigation will leave investigating judges with little justification for not detaining Macek and the others. Besides, they will have to bear in mind the fact that proceedings have been launched against Macek in Austria for money laundering, and that his account there is already blocked, as are the contents of the safe deposit box he had access to. It will take a good deal of effort to come up with an explanation of why something that has already seen its judicial epilogue in Austria has only an investigation in the offing in Croatia. There are elements for a ruling on detention and the real setting to this affair might only start to unravel if Macek and the other suspects end up in police custody. Who knows, perhaps in that scenario someone might offer to become a witness.