Published in Nacional number 751, 2010-04-06

Autor: Berislav Jelinić

Corruption scandal shakes the SDP

High-ranking SDP members says Linic knows all about Daimler

PROMINENT members of the former left-of-centre coalition government have confirmed for Nacional that Slavko Linic was the key man in making it possible for Daimler to close a direct deal on the purchase of fire-fighting vehicles in 2003

SLAVKO LINIC As the Deputy Prime Minister he was 'responsible for the economy, one of the most inventive executives and formally had seniority over all of the ministers. I do remember that then Minister of Finance Mato Crkvenac was definitely inclined towards the Daimler offer,' Nacional was told by one of the then cabinet ministersSLAVKO LINIC As the Deputy Prime Minister he was 'responsible for the economy, one of the most inventive executives and formally had seniority over all of the ministers. I do remember that then Minister of Finance Mato Crkvenac was definitely inclined towards the Daimler offer,' Nacional was told by one of the then cabinet ministersA corruption scandal in which the top people at Daimler, a well known auto industry firm, admitted to bribing politicians in Croatian Government in the period from 2003 to 2008 has caused panic in the SDP (Social Democratic Party) leadership, Nacional has been told by sources close to the party's top leadership. The panic has been caused because top SDP officials are afraid that the scandal could broach the question of just how responsible prominent SDP leader Slavko Linic is, with claims surfacing that he is the most to thank for the fact that Daimler closed the lucrative deal with Croatia in direct negotiation.
Several prominent members of the left-of-centre coalition government of the time have confirmed for Nacional that Slavko Linic was, by all accounts, the key man in making it possible for Daimler to close a direct deal through negotiated procedure in Croatia. "Who else could know all of the secrets of that deal if not Slavko Linic," Nacional was told by a prominent member of the left-of-centre coalition government of the time, during the term of which the controversial deal between Daimler and Government was concluded.


In 2003 the Daimler corporation signed a deal with Croatian Government on the procurement of 210 fire-fighting vehicles for the Croatian Interior Ministry, under whose jurisdiction the fire-fighting service was at the time. The deal was worth 85 million euro. The decision to conclude the deal was made by Government at a session in October of 2003.

Government held seven sessions in October of 2003, but on the official Government Internet site there are no minutes available from the 68th and 70th sessions of cabinet. In the minutes of the other session of Government held that month there is nothing to be read on the adoption of the decision, so that it can be presumed that the decision to conclude the deal was made at one of the sessions on which nothing can now be found on the official Government Internet site. It was decided then that the deal be concluded directly - through negotiated procedure, and the claim is that the Daimler offer was 30 percent, i.e. 182 million kuna, over the competition's offer. The job was formally awarded to a consortium of the Debis IT (Daimler Financial Service) company and IM Metal of Ozalj. In the contract the consortium undertook that the upgrades and equipping of the Mercedes vehicles purchased from Daimler would be carried out by IM Metal of Ozalj, working with Croatian subcontractors. That part of the deal was not, however, ever seen through.

One of the ministers from the Government of the time confirmed for Nacional that there was an animated discussion of the topic at the session of cabinet in question. "It was a vehement debate. But in spite of that I am convinced that the decision on the job had in fact been made at a meeting of some inner political cabinet of what was then the ruling coalition. The debate was heated, sides were taken, but it was evident that this was just the continuation of a much more heated debate that had already been led on the issue. As far as my memory serves me, there were two lines of thought that crystallised at the session of Government, representing different points of view. Because of the passage of time I cannot with certainty say who took what position, but I do remember that then Minister of Finance Mato Crkvenac was definitely inclined towards the Daimler offer. And there is no doubt whatsoever that Slavko Linic was the key figure in the transaction. He was the Deputy Prime Minister responsible for the economy, one of the most inventive executives and formally had seniority over all of the ministers," Nacional was told by one of the ministers in the Government of the time.

Ljubo Jurcic, then the Economy Minister, told Nacional that at the time the decision was made he was focused on completely different topics, priorities at the time. He does not remember the details of the deal, but does know that he formally requested only that the idea that a part of the manufacturing connected to the deal be done in Croatia be abided by. Sime Lucin gave a similar statement for Nacional, and also does not remember the details of the deal. He claims that the deal was not of interest to him at the time as work was already underway to separate the fire-fighting service from the jurisdiction of the Interior Ministry. These statements from the two former ministers directly connected to the deal also indirectly push Slavko Linic into the hub of the events surrounding Daimler.

LJUBO JURCIC was Minister of the Economy in 2003, but says that he was on other assignments and that he has no recollection of the details of the Daimler dealLJUBO JURCIC was Minister of the Economy in 2003, but says that he was on other assignments and that he has no recollection of the details of the Daimler dealThe scandal in this case broke a few days ago because Daimler AG agreed to a plea bargain deal with the prosecution before an US district court in Washington that will see it pay an 185 million dollar fine for bribing Government officials when striking deals in 22 countries, including Croatia. As far back as in 2004 Daimler was under criminal and civilian investigation by US authorities under suspicion that it had violated US anti-bribery laws. Daimler was represented before the court by Gero Hermann. In the frame of the plea bargain deal approved by the Daimler board he also plead guilty on behalf of two Daimler subsidiaries in Russia and Croatia that admitted to bribery. Hermann admitted that Daimler had spent a total of 4.7 million euro on bribes in Croatia. For bribery in Croatia judge Richard Leon fined the Daimler subsidiary in Berlin 29,120,000 dollars, to be paid within ten days from the day the verdict was handed down. Han Tjan, the Daimler spokesperson for North America, said recently that Daimler was very satisfied with the plea bargain hammered out with US authorities.

Informed sources in the judiciary have confirmed for Nacional that the court documentation states that payments to Croatian government officials in fact went by way of the IM Metal company of Ozalj and via the US companies Biotop and MRC from Delaware and Wyoming. 3.02 million euro was allegedly paid out via IM Metal of Ozalj, while a further 1,673,349 euro were paid out via the American firms. Payments by Daimler to the accounts of these companies started immediately following the signing of the directly negotiated deal on the delivery of fire-fighting vehicles to Croatia. Both of the American companies in question were incorporated just prior to this. The MRC company was, for example, set up on 4 March 2004, and its first job was that with the consortium supplying the fire-fighting vehicles in question to Croatia. American sources say that there was no reason for Daimler to have paid that much money to these companies, and that these were bribery funds for Croatia.

As a result of it all USKOK (Bureau for the Prevention of Corruption and Organized Crime) has requested international legal aid of the USA in the form of documentation concerning Daimler operations in Croatia. Not long after the scandal broke it was learned that the Tehnomehanika company, purchased in receivership in 2002 by Marijan Bozic, de facto went under as a result of the annulment of the initial tender for the procurement of fire-fighting vehicles. The company was involved in the manufacture of fire-fighting trucks, and was even promoted by the then coalition Government on foreign markets. In 2002 Tehnomehanika submitted a bid for the job that was 150 million kuna cheaper and won the contract, but the tender was annulled and a direct deal was subsequently struck.

After top Daimler officials admitted to bribery in Croatia the scandal recently became the focus of public attention. The people that the press has started connecting to the scandal have all denied taking bribes. An investigation into the matter was also requested by SDP leader Zoran Milanovic. But panic has begun to spread in the SDP as the scandal is escalating, and Slavko Linic has now been brought in connection with it.

Slavko Linic did find himself criticised during his term at the post of Deputy Prime Minister as a result of his way of working. Linic was deemed responsible for some allegedly dubious decisions, and his autocratic methods in decision making saw him come under fire from members of the HSS, then the SDP's coalition partner. He was criticised for his brusque style and for employing numerous local associates and friends from Rijeka. Linic recently found himself the centre of attention over a scandal that has broken concerning dubious business arrangements between the Rijeka city authorities and the privately-owned company that was awarded the contract to manage a parts of Rijeka's marketplaces. Under fire from the police and the State Attorney's Office is Linic's party colleague, and it was stated explicitly that Linic would have found himself in court had his suspicious dealings in the context of the scandal not fallen under the statue of limitations. Linic's reaction to the accusations were very nervous and he used an inappropriate vocabulary in criticising the work of the police.

MEMBERS OF THE GOVERNMENT of the left-of-centre coalition with Prime Minister Ivica Racan at a photo op 100 days into their term in officeMEMBERS OF THE GOVERNMENT of the left-of-centre coalition with Prime Minister Ivica Racan at a photo op 100 days into their term in officePeople close to Linic say that he is convinced that he is being set up by Chief State Attorney Mladen Bajic, in collaboration with Ranko Ostojic and Interior Minister Tomislav Karamarko. The word is that Linic and Ostojic are not on good terms with one another, and that they are fighting for influence within the SDP. Allegedly, Linic is saying within the party that Ostojic would not be a good candidate for the new interior minister if the SDP was to win power. That is why Linic is convinced that Ostojic has of late begun a rapprochement with Karamarko and Bajic, and that he is backing their efforts to weaken Linic. In return Ostojic would guarantee them prominent positions if the SDP does take power, say the people close to Linic. And that is why Linic is convinced that Bajic and Karamarko have unjustifiably started bringing him in connection with various scandals. That is why Linic claimed that he was being framed for political reasons in the scandal concerning the Rijeka marketplaces, and referred to Karamarko as a common little spy. He will, however, be hard put to it to defend himself with these kinds of arguments if he is brought under serious suspicion of corruption in this case. Perhaps this too is one of the causes for the disconcertedness that the Daimler plea-bargain in a US court has created in the ranks of the SDP.

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