WINNERS OF TRANSITION (3): Leading stockbrokers hidden behind bank accounts
The largest single owner of Eurofond hidden behind the NM omnibus custody account No. 8, who is the majority owner of three strategic companies in the fund’s portfolio, owning the real estate worth at least €290 million. This account is hiding an owner or owners of 15.5 percent of Eurofond, a 72.6 percent stake in Solana, about 76 percent in Izbor from Bar and 77.8 percent of the shares Bjelasica rada, recent publicly available data show.
Custody operations defined by the Rules on performing custody operations on the basis of the Law on Securities, according to which a custody bank, among other things, opens and maintains securities accounts with the Central Depository Agency on behalf of its clients, i.e. proprietary account of the client.
MAN Investigation Center and Vijesti published the previous day that out of the nine state-owned companies in which Eurofond took majority control during and after the period of mass voucher privatization, Eurofond kept only three as strategic ones with immense value of the real estate (real estate of Solana worth €257.8 million, Izbor from Bar worth at least 24.7 million, and Bjelasica rada 6.8 million).
The official data show that key persons who are part of the management and ownership structure of Eurofond and affiliates are businessmen Veselin Barovic, Boisa Sotra and their partner from Bosnia and Herzegovina Zijad Blekic and Slovenes Damjan Hosta, Peter Drasler and Roman Drasler.
Following persons behind NM omnibus custody account No.8, Monte Development Corp. from Vaduz in Liechtenstein is the second single largest shareholder in Eurofond with 5.68 percent, whereas Drustvo za upravljanje investicionim fondom Euroinvest holds 5.65 percent. The Slovene Roman Drasler owns 3.23 percent of Eurofond, Branislav Radonjic from Podgorica 3.01 percent, Veselin Barovic 2.6 percent, HP Fjord 2.51 percent, Comersa Podgorica 1.57 percent, while persons behind HB omnibus castody account No. 1 own 1.17 percent (behind that account are owners of 4.48 percent stake in Prva banka).
In 2010, the company Monte Development, managed by the investor Michael Brim, bought shares on the stock market. Companies and persons managed by Peter Drasler sold the largest number of Eurofond shares to Monte Development, according to the data available at the time. The company filed a complaint to the Commercial Court against Eurofond and Eurofond’s managing company Euroinvest, on the basis that as a dissenting shareholder, within a year, it did not receive €2.22 million for the shares it had in the fund.
According to the media, the company withdrew the complaint in May this year, since it reached an out-of- court settlement, which bounds Euroinvest and Eurofond to pay claims to Monte Development within five years.
According to the CDA data, the owner of HT Fjord (which owns a 2.51 percent stake in Eurofond) is Alpha invest (address: Bulevar revolucije 66, Podgorica) with 94.6 percent. According to the Central Registry of Business Entities, founders of Alpha Invest are Veselin Barovic and Damjan Hosta. Barovic set up the company Comersa (address: Bulevar revolucije 66, Podgorica) in 2002, and since July 2011, Goran Ristanovic has been the founder.
Kenan Terzic from Bosnia and Herzegovinam, with a 29.28 percent stake, and Podgorica-based company Flash with a 20 percent stake are the shareholders in the management company Euroinvest. Fadil Cosibegovic and Slovenian Ilirika own10 percent each, while persons behind NM omnibus custody account No.8 own a 8.57 percent stake. Azim Bujak and Adnan Husic from Bosnia and Herzegovina own 7.85 percent and Bar-based Izbor holds 6.42 percent.
The current owners of Flash, owning 20 percent in Euroinvest, are Aydogan Ibrahim Hakan from Turkey (66.28 percent), followed by persons holding NM omnibus custody account No. 8 with 23.71 percent and firm Absolute Bar, which owns a 9.99 percent stake. Former directors of Flash were Veselin Barovic, Boisa Sotra and Zijad Blekic. Flash holds a 5.35 percent share in Solana, and 0.93 percent in Bjelasica rada.
Owners of a 35.54 and 29.98 percent stake in Absolute hide behind omnibus custody accounts NM 8 and NM 3, Zijad Blekic has 14.75 percent, Vlatko Aprcovic from Podgorica 7.37 and Sandra Aprcovic 7.36 percent. Boisa Sotra owns 2.42 percent of shares, and Becir Perazic from Bar 2.42 percent.
MANS Investigation Center and Daily Vijesti published earlier this week an analysis on shareholding of Eurofond in privatized companies, which suggests that genuine motif of the owner of the investment fund was not ensuring survival of once respectable Montenegrin companies, keeping them operational and increasing employment, but acquiring ownership of their valuable real estates aimed at selling them and generating enormous profit.
Furthermore, over the last ten years, Eurofond has received at least €57 million from selling shares, out of which it invested 30 million in the purchase of shares and paid 19.2 million in management fees to the managing company Euroinvest. Dividends have never been paid to the shareholders.
What regional media wrote about owners
Last year, a Slovenian portal Portal plus (founded by an economist Boris Meglic) published a series of articles which deal with related businesses activities of Slovenian citizen in Montenegro.
“Montenegro’s capital was originally accumulated through tobacco smuggling. This money is then poured through the Montenegrin privatization according to the Slovenian model and the authorized phenomenon of Montenegrin tycoons. The first and greatest of them is Veselin Barovic, a man identified by the Italian judiciary as the mastermind in cigarette smuggling operations. Privatization fund Eurofond had all that it takes: political background for Djukanovic, the greatest number of privatization vouchers and huge amounts of money from criminal activities, but did not have the famous Slovenian know-how. And here’s where Damjan Hosta comes in, a man who in the first decade of this century became the chief financial operative, together with a Bosnian Boisa Sotra, ” an article from 2015 reads.
According to the Bosnia and Herzegovina media, Barovic’s partner Zijad Blekic has been linked to several affairs in Bosnia and Herzegovina and Montenegro concerning buying and trading shares of a number of companies which collapsed and which workers were not paid. An example is a former construction giant Vranica, which was co-owned by the company Absolute, owned by Barovic, and where Blekic is one of the shareholders. The employees believe that Blekic is one of the major culprits for the failure of the company. On several occasions, Blekic has made statements to the prosecution about trading shares, but formal charges against him are still missing.
According to the documents on Eurofondinsajder, the website of minority shareholders, Eurofond invested the money from the sale of shares in Elektroprivreda in Elektrogrupa Jajce, buying 42.7 percent of the company, at a price 39 times higher than the nominal price and misleading Eurofond shareholders who believed that they were investing in Elektroprivreda BiH.
Elektrogrupa Jajce was established only four months before Eurofond sold its shares in EPCG to the Italian company A2A. The main job of Elektrogrupa was the construction of a power plant on the Vrbas, but due to the lack of the construction permit for hydro power plant the inspection closed its construction site on several occasions.
The transaction was carried out on the Sarajevo Stock Exchange (SASE), where the chair of the supervisory board is Zijad Blekic, through a brokerage house Eurohaus, where he occupies the position of the director. In 2010, after the auditor found a series of irregularities in the operations of Sarajevo Stock Exchange, a measure of conditional suspension of the permit was imposed.
According to the media reports, Eurohaus is linked to Fahrudin Radoncic, whereas the company Vranica has just built his business tower.
No reply from Eurofond and government
Eurofond has not replied to the questions concerning its original purpose, besides collecting as many vouchers as possible from citizens, nor if the acquiring ownership of valuable properties of the companies only to sell them and make possible profit.
One of the questions was why Eurofond did not secure survival of once respectable Montenegrin companies. They were also asked to comment on the allegations that Eurofond had been established from the money earned from cigarette smuggling and that owing to the friendship between Veselin Barovic and the prime minister Milo Djukanovic it enjoyed all the privileges and support from the government. Finally, they were to answer where the money of the Eurofond’s founders came from.
The government did not reply to a question regarding today’s perspective on establishing investment funds in Montenegro, and whether they were satisfied with how the funds had been managing major companies.
Eurofond is one of the funds where the prime minister Milo Djukanovic invested his voucher during the privatization process, since, as he put it, his friends were managing it.
Income tax interest still not paid
On 23 February this year, after six years, Eurofond paid the debt for income tax in the amount of €1,065,599.82, thus repaying the main debt in full. This tax was created as a capital gain on the sale of shares in EPCG.
The Ministry of Finance officially replied to the question asked by Vijesti that the interest on the debt was €533,735.50.
“Given that it repaid a significant portion of the main debt, the Ministry of Finance, on the request of taxpayers, issued a decision that allows paying the said amount in six installments. The said decision was adopted on 23 April 2016, and the Regulation on the basis of which it was adopted, according to the court decision, ceased to have effect on 8 April of the current year, as well as the documents on the basis of which it was adopted. Therefore, the decision to delay paying taxes on the interest, ceased to have effect on 8 April 2016,” the Ministry said.
Small shareholders demand payment
Dissenting shareholders in Eurofond filed complaints to the Commercial Court against Euroinvest and Eurofond, demanding enforced collection of €5.8 million. The debts were already due on 16 January 2016, in accordance with the Law on Investment Funds.
Subsequently, Euroinvest challenged before the Constitutional Court the constitutionality of the Law on Investment Funds, which guarantees the payment of equity dividends in proportion to the quarterly average net asset value at the end of 2014, which is 14 cents per share.
Recently, the fund paid the first installment in the amount of €850,000 to 161 dissenting shareholders of the fund.
Authors:
Ines Mrdovic
Biljana Matijasevic
This text is created with the support of the European Union within the project “Zero Tolerance to Corruption”. Network for Affirmation of Non-Governmental Sector – MANS is solely responsible for the contents of this article, and the views taken herein shall not in any case be considered as those of the European Union.
