INVITED TO STEP DOWN Milan Bandic and Ivo Covic, President of the Board of the Zagreb Holding company, whom Mesic has asked to resignThe race for the Zagreb mayorship kicked off last week, and the man to find himself unexpectedly at the centre of the first days of the campaign is Ivo Covic, President of the Board of the Zagreb Holding company. Covic was put in the spotlight by the HDZ (Croatian Democratic Union) candidate for the mayorship, Jasen Mesic. Last week he publicly invited Covic to step down from his post for moral reasons, saying he had caved in to pressure from Mayor Milan Bandic and begun using the Zagreb Holding to finance commercial projects, which is not the primary function of the company. Jasen Mesic then indirectly put Covic to task in last Sunday's episode of the TV show “Nedeljom u 2” (Sunday at 2), where he spoke critically of the way the Zagreb Holding was being run and called for its reform and break-up into four separate entities. It was not just the public statements made by Jasen Mesic that put Covic in the spotlight. Former Zagreb councillor Tomislav Jelic recently filed charges against Covic. Covic also "earned" the charges thanks to his cooperation with Milan Bandic, who is also the only member of the Zagreb Holding assembly, the body that determines what the company will do and under what priorities.

Mesic demanded that Covic submit his resignation because he allowed Milan Bandic to meddle in his affairs. Bandic's political opponents claim that Covic initially did not include some projects advocated by Mayor Milan Bandic in the firm's business plan, and that their disagreement culminated when Covic drafted an investment plan for the Zagreb Holding company that did not include Bandic's projects. Bandic's opponents say that Bandic was unwilling to sign such an investment plan, and that he forced Covic, against his personal and professional convictions, as a result of a higher political force, to accept Bandic's projects, which are not financially founded and legitimate. At issue are the construction of the Green Market, a congress centre and the Podbrezje development. The Zagreb Holding company has decided to put aside an additional 300 million kuna from its budget for these projects, bringing the total investments up to 3 billion kuna. The problem is that this money should be spent on developing municipal infrastructure, and not for commercial undertakings such as the three cited projects. And although it is unrealistic, Mesic and his coalition partner from the HSLS, Darinko Kosor, have announced that they will move to get Zagreb city council to kick Milan Bandic out as the single member of the Zagreb Holding company assembly.

Commenting the initiative for Nacional, Ivo Covic said that it was "not unusual for party leaders to try to discredit the actions of their political competitors, in this case Mayor Bandic, in an effort to affirm themselves and to win voter approval. That is why I do not attach much importance to the call for my resignation from Jasen Mesic and Darinko Kosor. The president of City Council has, in line with his competences, sought an increase in the funding of some of the projects we have included in the 2009 Investment Plan. After considering these requests, the board of directors and the supervisory board of the Zagreb Holding company adopted the proposed amendments. This increased the total amount of the investments by less than 10 percent. I do not believe that any of the opposition politicians are opposed to the construction of an emergency medical clinic or a kindergarten in Sesvetski Kraljevec or a social welfare institution for needy families. They probably also support the other projects as they are not expressly opposed to them. One should keep in mind the fact that the election campaign has begun and that statements from politicians should be taken in that context. I am on good terms with the Mayor. In all that has been done to date I have had not only his support, but also a good part of the activities, such as the new organisation, were carried out as his initiative. At this point in time I have no reason to doubt that that will also be the case in the future."

Charges were filed at the State Attorney's Office against Covic a few days ago by Tomislav Jelic. He accused Covic of abusing his position and authorities, and violating a sales contract for half of the land owned by the Zagrepcanka company on Heinzelova Street. In the charges it states that Covic is responsible that the Zagreb Holding company, contrary to the provisions of the tender, returned security money to the Ingra company and to United Europe Investments before the Croatian Civil Engineering Institute (IGH) had paid the 45.6 million euro it had offered at the tender. As the IGH did not pay the agreed upon sum within the 30 day deadline, Covic, state the charges, could have sold the other candidates the Zagrepcanka land, but failed to do so. Instead he returned the other candidates their 2.5 million euro security and closed the tender procedure ahead of time. The charges state that Covic put the IGH in a much more favourable position by doing so.

The IGH cited the global financial crisis and unresolved ownership issues, and succeeded in securing a one-year delay on payment, under the condition that they pay only 10 percent of the price and an annual interest rate of 6 percent. Experts consider this interest much more favourable than market conditions, and see it as inappropriate assistance to the IGH. And, IGH was the only one not to offer a preliminary design for what it intended to do on the land. IGH offered the most money, but was unable to pay it. This outcome of the project has created additional financial problems for the City of Zagreb and the Zagreb JASEN MESIC, the HDZ candidate for Zagreb mayorHolding company. They needed the money to patch holes in the budget that are the result of unrealistically ambitious investments there was not enough money for. Jasen Mesic, and Bandic's political opponents from the HNS, are increasingly pointing to the seriousness of the city's financial problems. Bandic's political opponents from the ranks of the HNS (Croatian People's Party) have a better insight into these issues of late, as the party has been joined by Dragan Kovacevic, a former member of the SDP (Social Democratic Party) and the former financial director of the Zagreb Holding company. Kovacevic, in his own words, left the Zagreb Holding company because of Bandic's megalomania and the excessive amount of debt being taken on. During his appearance on the “Sunday at 2” show, Jasen Mesic said he was confident he would work well with Kovacevic and the HNS, although he said there would not be a formal coalition.

Bandic's opponents also criticise him of continuing to take on new debt from banks even after issuing Zagreb Holding bonds. They say he put new debt on the backs of Zagreb's denizens, on unfavourable terms, for the Sesvete Sopnica project, to lease trams, new buses and fleet vehicles, and for infrastructure on EBRD (European Bank for Reconstruction and Development) loans – there is talk of as much as 4 billion kuna of new debt. Bandic's opponents are convinced that the City of Zagreb will find itself in a very dire situation by the end of the year as a result of Bandic's indiscretions. They say, for example, that no one knows for the moment how wages are to be paid out to ZET (Zagreb Electric Tram company) workers through to the end of the year. They need 1.1 billion kuna to function normally in the current year, and only 700 million have been secured to date. They also say that it is unrealistic to expect that the city budget of 8 billion kuna will be financed because it is based on an annual GDP growth of 4.5 percent, which is in the present conditions completely unrealistic. Bandic is not worried by these dark forecasts. He plans to spend 2.4 billion kuna to implement social policies, which makes up about 30 percent of the city budget. That is almost half of the 5.4 billion kuna Zagreb reaps in tax and surtax revenues. Over 500 thousand of Zagreb's inhabitants are to get part of that money – veterans, new mothers, students, the poor, the socially threatened and pensioners.

Perhaps that is the secret to Bandic's good showings in opinion polls, which indicate that he will not face serious contenders at the elections. At the HDZ they hope that Jasen Mesic's appearance in the “Sunday at 2” show is the start of his political rise. His party is also optimistic because they succeeded in registering 4,000 new members, of which they expect a significant contribution in the campaign, as volunteers in call centres and for election canvassing. Former Government spokesman Ratko Macek has taken a more intensive role in creating Jasen Mesic's political profile, as a result of which Mesic has started making more frequent appearances in the media.