IN GROWING DIFFICULTIES Zagorec has found himself in difficulties because of the 'jewels affair', but that case was just the lead into a more comprehensive investigation of his suspicious dealingsThe State Attorney's Office on 15 March asked its colleagues in Austria to freeze all of Vladimir Zagorec's bank accounts in Austria, to temporarily freeze all of real estate that is established to be his property, or the property of his companies, and to suggest to the Austrian tax authorities that they look into his dealings and the way in which he came into his property.

Chief State Attorney Mladen Bajic also to the opportunity to express his desire to have a working lunch as soon as possible with his Austrian colleague, Chief State Attorney Stefan Florian Benner. Bajic also suggested that the top representatives of police directorates from both countries be present at the meeting and, if necessary, representatives of the central national banks. Along with this, Bajic asked his Austrian colleagues to react as soon as possible, to leave Zagorec and Günther Striedinger, the former head of the Hypo Bank in Klagenfurt as little time as possible to destroy documentation and bring documentation in line with the documentation in Croatia. All of this, and some as yet unknown information, is in the request of the State Attorney's Office for legal assistance in the case of Vladimir Zagorec, signed back on 15 March by the Deputy Chief State Attorney Lazo Pajic and sent to Austria. The integral content of this document reveals that the "jewel affair", on which account Zagorec initially found himself in legal straits, had been used by the State Attorney's Office only as a lead into a significantly more comprehensive investigation of all of Zagorec's suspicious business dealings, above all lucrative construction projects, which the State Attorney's Office suspects of being a front for the systematic laundering of money in collaboration with the Hypo Alpe Adria bank. A part of the content of that document was cited a week ago by the Austrian weekly Profil, saying that Günther Striedinger could be held responsible for suspicious transactions related to some projects in Croatia. At the start of last week, probably after it became clear to the competent institutions in that country that a part of that document would become available to the public, the Austrian State Attorney's Office announced an investigation of Zagorec and his associates in the Austrian Hypo Alpe Adria bank. If is not know what has been undertaken since then.

In the request for legal assistance the State Attorney's Office has asked its Austrian colleagues to send them information concerning several bank accounts in Austrian banks. The first account is at the Kärntner Sparkasse in Klagenfurt. Both are code named "Dragica" and are numbered 9981-410526 and 9981-582365. The State Attorney's Office has documents that show that US$2,813,837 were deposited on that account from 11 September 1991 to 16 April 1992, from the account of Unterstützungsfonds Kroatien to the Bank für Kärnten und Steiermark in Villach as payment for household necessities and foodstuffs.

Other accounts are at the Bank Austria in Graz, Am Eisernen Tor 1. The accounts are numbered 760-128-435/00/200 Aritmo Inc. Companies House, Tower Street, Ramsey/Isle of Man and 095-01117/00 Aritmo Inc. County of New Castle, Wilmington, Delaware 1982. According to the information the State Attorney's Office has 10.5 million dollars was deposited into these accounts from July of 1994 to May of 1996. The money was deposited by the RH Alan Company, led at the time by Vladimir Zagorec. There is also an account at the Bank Austria in Graz numbered 760-128-404/00/200. The account belongs to a company named Edokom based on the British Virgin Islands. RH Alan, based on what the State Attorney's Office knows, paid $5 million into that account in 1995. The last account is at the Bawag bank. This is the account Hrvoje Petrac referred to in his court testimony, on which there was allegedly $35 million.

MLADEN BAJIC, the Chief State Attorney, has launched a comprehensive investigation into the laundering of state fundsThe State Attorney's Office has asked its Austrian colleagues to tell them when and at whose request these accounts had been opened and closed and what persons were authorised to have use of money on these accounts and what persons had their power of attorney. Information has also been requested on the transactions made on these accounts, from which deposits and withdrawals of money could be see as could the overall transactions on the accounts. And finally, information has been sought that would help indicate what the basis of the deposits and withdrawals on these accounts were, what natural and legal persons were involved and which how much money. The State Attorney's Office has also asked that other possible documentation be submitted to it that could assist in reconstructing the movement of money on these accounts.

Although this is not written in the request for legal assistance, the State Attorney's Office, by all accounts, suspects that money also went from these accounts to some companies based in Lichtenstein, opened, among others, by Günther Striedinger. The connection between Striedinger and Vladimir Zagorec is described in detail in the request for legal assistance. Lazo Pajic wrote the following about this connection: "We posses information that Zagorec has, with the mediation of various companies in Croatia, from 2001 to the present purchased construction sites for the construction of business/commercial/tourism buildings, and that construction on these has been launched in Zagreb, Pula, Rovinj, Dubrovnik and Hvar, and that these projects are being financed by the Hypo Alpe Adria Bank International AG of Klagenfurt to a total amount of EUR 260 million. The loans were approved based on a deposit, which is concealed by the claim that the basis of the loan approval were the projects, without any monetary deposit or other property submitted in the bank's deposit. We have found out, however, that it was precisely the money Zagorec misappropriated while serving as assistance defence minister that represented the deposit in Austrian banks. This is apparent from the statements made by persons who claim that Striedinger, the executive director of the bank in question, in collaboration with a relative of his serving as a tax advisor at the bank in question, Gabriel Hermann, financed Zagorec's projects based on their knowledge of the fact that he had financial means deposited in Austria and in the Principality of Lichtenstein. For the moment we have information that Hermann and Striedinger opened companies in Lichtenstein, one of these being Sambuca Establishment with offices in Vaduz, that money from Croatia was deposited on the accounts of these companies, and that these funds represented the deposit based on which the banks in question approved loans to the Sambuca companies and to companies in Croatia. These actions indicate a reasonable suspicion that classic money laundering was in question, through the deposit of money gained by the abuse of Zagorec's position and authorities into accounts unknown to us abroad. A loan is then paid out to Zagorec's companies by the Hypo bank, allegedly without deposit collateral, and these companies purchase properties in Croatia, so that these funds, of criminal origin, are "laundered" upon the completion of these projects, and after the sale of the real estate on which commercial/residential buildings have been built is restored to the system as legal money."

Nacional is in possession of loan contracts based on which the Hypo Alpe Adria bank of Klagenfurt gave a loan of EUR 11.3 million to the Hvar građenje Company. The company in question is based at the address Pavla Hatza 1, also the Croatian address of Vladimir Zagorec. The company was founded by the Sambuca Establishment Company of Lichtenstein, which the State Attorney's Office claims was in fact founded by Striedinger and Hermann. Formally the Hvar građenje Company is managed by Roman Binder, who also serves as Zagorec's front in other companies. The mortgager of the Hvar građenje Company is in fact Sambuca. From the contract it is evident that EUR 7 million of the loan were earmarked for the purchase of about 145 thousand square metres of property in the cadastral municipality of Grablje on the island of Hvar. The remainder of the funds were allocated to cover the costs of developing a project for the construction of 62 luxury villas. The loan was to have been paid back in one instalment on 1 July 2011. What is interesting is that the money was earmarked for the purchase of properties that were at the time of the purchase still classified as meadows and forests.

And so the Hypo Alpe Adria bank in fact gave money for something that might have, but did not necessarily have to, become a lucrative construction zone with 62 luxury villas. The project is because of these problems still awaiting implementation. Nacional has learned on the island of Hvar that a part of the land in question was, prior to its sale, in the ownership of the family of the local official responsible for the re-classification of land on the island. The contracts on the sale of the properties allegedly state that the former owners would initially be paid 10 percent of the land's value, and the remainder after the land was reclassified into a construction zone. What Zagorec does with so much money in the meantime is unknown. The bank has secured itself through contracts on the establishment of a lien on the business share of the company that purchased the land in question. Also involved in the complex relationships between the three companies is the phantom Espada Holding fund, founded at the same address as Sambuca Establishment.

Financial experts say that it can be established from the project that the Hypo bank of Klagenfurt had undertaken a risky venture. If the claims of the State Attorney's Office that Günther Striedinger is one of the founders of Sambuca are true then he as the top man at the bank was in fact working for his private benefit, as he was directly connected to Zagorec in the project. As the top man at the bank he secured the approval of large loans for high-risk ventures, from which he himself hoped to benefit – the State Attorney's Office claims that he personally administered the company in Lichtenstein, on the account of which the deposit, for the moment of unknown origin, for the loan approval was.

The evidence of the movement of money to Sambuca, Espada and similar phantom companies and funds in Lichtenstein, who appear as a rule as sponsors and guarantors of the projects, is not yet manifest. But Striedinger must have, by all accounts, known what kind of money was in question. The State Attorney's Office suspects that the money comes from Croatia. It is probably suspected that the money could in fact have come from precisely those accounts in Austria to which Zagorec, as the head of the RH Alan Company, sent money from the state budget, accounts that the State Attorney's Office has now requested be investigated. The authorities in Lichtenstein are not known as being particularly cooperative in cases like these, but even without their good will, the origin of money in these funds could be reconstructed if the money was transferred to their accounts from Austrian banks. It is interesting that, as a rule, phantom companies and funds from Lichtenstein appear as the founders of Zagorec's companies. The founder of the PZ ulaganja Company, for example, is Altus Invest. The Fidias ulaganja Company was founded by the Ergon Invest fund, and the founder of Molteh is Sintra Invest Establishment. The Dubrovacke vile Company was founded by the Wintage Group fund. The lion's share of the Croatian companies are based at Zagorec's address in Ulica Pavla Hatza 1, with Roman Binder serving as their director. All of the phantom companies and funds from Lichtenstein also share a common address. They are all based at 9490 Vaduz, Pflugstrasse 7. Like the majority of other funds and companies in this tax haven and well-known sanctuary for financial manipulators, all of founders of Zagorec's companies also have something else in common – it is rarely, or almost never, known who in fact is behind them and whose money they manage. They are, as a rule, represented by legal firms for whom discretion and the safeguarding of client identity is their chief concern, which they "cover" with platitudes of business secrets.

ROMAN BINDER is formally the director of Zagorec's companies in CroatiaThat the Hvar project was not the only one carried out with phantom funds or companies from Lichtenstein guaranteeing with their solvency that the money would be returned if something went wrong, is demonstrated by Zagorec's project in Dubrovnik. The Dubrovacke vile Company got a loan of just under EUR 18 million from the Hypo Alpe Adria bank of Klagenfurt for the realisation of a lucrative construction project, backed by the Wintage Group fund.

This complicated whirl of complex business relations could be very easily elucidated by Vladimir Zagorec and save the State Attorney's Office a great deal of work. If he is as clean as he claims to be, and if he is truly the victim of political persecution, the smartest thing for him to do would be to show his cards and tell the Croatian and Austrian public who is behind the phantom companies and funds in Lichtenstein whose money is backing his business ventures financed by the Hypo Alpe Adria bank of Klagenfurt. This will, however, probably not happen for a very simple reason – Zagorec is in fact by all accounts behind it all with the money he misappropriated.

CROATIAN STATE ATTORNEY'S OFFICE has tracked down transactions worth millions in three Austrian banks

The State Attorney's Office has requested of the Austrian authorities data on several bank accounts. Two of the accounts are in the Kärntner Sparkasse of Klagenfurt and US$2,813,837 were deposited on them account from 11 September 1991 to 16 April 1992, from an account in Villach as payment for household necessities and foodstuffs. There are three accounts in the Bank Austria in Graz. The RH Alan Company deposited $15.5 million into those accounts from July 1994 to May of 1996. One account was opened at the Bawag bank with US$35 million in it.

All The General's Companies
Zagorec's Austrian Octopus
Through an analysis of official Austrian data Nacional has managed to reconstruct that Vladimir Zagorec, Günther Striedinger, Hermann Gabriel, Gerold Hoop and some other persons have direct business ties not only in Austria but also in Croatia. The State Attorney's Office has asked of its Austrian colleagues that they also submit data to them on all Austrian companies they link Vladimir Zagorec to. They are interested in the number of employees in these companies from their founding to the present, what exactly Zagorec's relationship to them is, how these companies are doing business and acquiring real estate, how and in what projects they are investing, and what the bank account transactions and operating profits of these companies are. In question are the following companies: • Scorpion, Schottenfeldgasse 23, Vienna • Aktor Immobilienverwertung, Schottenfeldgasse 23/1, Vienna • Capital Investment, Münzgasse 1, Salzburg • 4 media holding, Opernring 4, Vienna • Timehouse Project Development, Opernring 4, Vienna • MT Log consult, Nonntaler Hauptstrasse 52, Salzburg • Hotel Investment, Nonntaler Hauptstrasse 52, Salzburg • PZ Investment, Nonntaler Hauptstrasse 52, Salzburg • ProLoft Immobilienentwicklungs, Wallnerstrasse 2, Vienna • Mercurius Immobilieninvest Wallnerstrasse 2, Vienna • Aristo Liegenschaftsverwaltung, Wallnerstrasse 2, Vienna.

Zagorec was arrested in Austria precisely at the Wallnerstrasse 2 address in Vienna, in one of the most expensive and most elite quarters of Vienna. Many other well-known companies are located there, among which the Austrian branch of Louis Vuitton. There is another of Zagorec's companies at that same address – the Borseplatz 1 Company for acquisition and development. In question is in fact the old postal building that Zagorec has purchased, valued at several tens of millions of euros. Companies in Austria are often called after the address at which they are located. In this case too, after purchasing the building, Zagorec called the company after its address, even thought the company's official seat is at Wallnerstrasse 2. The chief shareholder at the Borseplatz 1 Company is the Proloft Company, whose operations are led by a certain Iletschko Peter. The Proloft Company has two part owners. These are the CEE and Mercurius companies. Both were also at the same address, although CEE recently moved its headquarters. The largest single owner of the CEE Company, with 99 percent of the stock, is Hermann Gabriel, a person the State Attorney's Office claims opened the Sambuca Company together with Striedinger, that using capital of for the moment unknown origin is practically financial guaranteeing Zagorec's construction project on Hvar. This means that Hermann Gabriel is a 50-percent owner of the Proloft Company that purchased the old postal building at Borseplatz 1. Hermann Gabriel is nominally a tax advisor. In Austria he is linked to some companies in which Günther Striedinger is present, as is his brother.

Also appearing in Mercurius is Zagorec, while Hermann Gabriel is on the company's supervisory board. Mercurius is the whole owner of the Aristo Company, while the owner of Mercurius is the Vitox private fund. If the owner's do not wish to reveal this themselves, there is no way in Austria, through public an officially available sources to find out who really is behind a private fund. The director of Mercurius is Gerold Hoop. Documents in Nacional's possession show that Gerold Hoop appears as the representative of both Espada and Sambuca, two phantom companies from Lichtenstein. The same documents show that Hoop's office in Lichtenstein is at the same address at which all of the companies and funds that appear as founders of Zagorec's companies in Croatia are.