Gratis kilowatts for Lijanovići: A million KM debt nobody saw

The family of four, including Ivan Grbešić, a laid-off worker from Široki Brijeg, almost had their electricity cut off this summer due to unpaid bills of 226 KM. After receiving a notice from Elektroprivreda Hrvatske zajednice Herceg Bosne (EPHZHB) that they would be disconnected if they did not settle the debt, he had no choice but to borrow money and pay the bills, reports the Patria News Agency.

The public company that threatened the Grbešić family with disconnection of electricity due to a few unpaid bills has been regularly supplying electricity to his former employer for four and a half years, despite a debt of one million KM. This refers to the meat processing plant of the Ivanković Lijanović family in Visoka Glavica near Široki Brijeg.

The Lijanovići family stopped paying electricity bills in March 2011, when Jerko Ivanković Lijanović became a member of the Government of the Federation of Bosnia and Herzegovina (FBiH), which owns this power utility company. At the end of the same year, the FBiH Government appointed two of Lijanović's associates as directors of Electricity Supply and Electricity Distribution in EPHZHB, thus expanding the family's influence to the management of this company. The industrial plant in Visoka Glavica was not disconnected from the power grid, although Elektroprivreda's rules stipulate disconnection after just two unpaid bills.

They only started paying their electricity bills regularly in the spring of 2013, after the documentation of the debts fell into the hands of inspectors from the FBiH Financial Police. However, the debt incurred up to that point has still not been paid.

According to an anonymous report that prompted a police investigation into EPHZHB Mostar, this public company intended to forgive the Lijanovići family's debt. Although Elektroprivreda did not do so, the Široki Brijeg family still profited. Data obtained by the Center for Investigative Journalism (CIN) show that EPHZHB will have difficulty collecting the consumed electricity because the debtors – companies connected to the Lijanovići family – are no longer operating and have no money or assets to compensate Elektroprivreda for the loss.

The Factory and the Party

The meat processing plant in Visoka Glavica belongs to the company "Lijanovići", owned by brothers Jerko and Slavo Ivanković Lijanović.

Production at "Lijanovići" was halted 13 years ago due to unpaid taxes and debts. However, the family continued to operate through related companies to which they leased workers, facilities, and equipment in Visoka Glavica. After one of these companies accumulated debts, including unpaid taxes to the state, the Lijanovići family would terminate the lease agreement with it and lease the factory to another company. "Farmko" and "ZD. I. Produkt" from Široki Brijeg are among the last companies that used Lijanović's property and were under their control, according to data from the Indirect Taxation Authority of Bosnia and Herzegovina (UIOBiH).

"You fall asleep in one company and wake up in another," explains Grbešić, who was the head of the packaging department in the companies "Farmko" and "ZD. I. Produkt" from which he was laid off last year. He is owed 12 salaries.

In one such transfer of assets and personnel, "Lijanovići" terminated the factory lease agreement with "Farmko" at the beginning of 2011 and leased it to "ZD. I. Produkt", whose formal owner is Zdravko Ivanković. Workers previously employed at "Farmko" also transferred to the new company, which also received a license for meat products.

Although others used the facilities for years, "Lijanovići" were obliged to pay electricity bills. However, they neglected this duty in the first half of 2011, thus accumulating a debt of 280,000 KM. After six months of non-payment, in July of the same year, they transferred the obligation to pay bills to "ZD. I. Produkt". In the contract regulating this transfer, the directors of the companies, Slavo Ivanković Lijanović and Zdravko Ivanković, signed that the previous debt had been fully settled. However, this attempt at concealment was unsuccessful. To ensure payment, Elektroprivreda signed an agreement with "ZD. I. Produkt", obliging this company from Široki Brijeg to settle the debt jointly with Lijanovići.

However, this did not happen. "ZD. I. Produkt" incurred an additional debt in just over two years, despite generating sufficient profit during that period to pay its bills.

A longer interruption in payments occurred when the FBiH Government, in which Jerko Ivanković Lijanović was the deputy prime minister, appointed a temporary management of EPHZHB Mostar in November 2011. Miroslav Prusina, a former employee of "ZD. I. Produkt", became the acting director of Electricity Supply, the department responsible for collecting bills. Another former Lijanović employee, Miroslav Galić, became the acting director of Electricity Distribution, responsible for disconnecting non-payers.

After six months in their directorial positions, both withdrew their candidacies for permanent management, citing the stress of the job. However, Prusina moved to the position of Head of the Southern Supply Area, which includes Široki Brijeg, and Galić became one of the managers in the Office of the Director of Distribution.

Prusina told CIN that "ZD. I. Produkt" began paying its bills during his tenure. However, according to Financial Police data, only one bill from 2011 was partially paid at that time, while other due bills were not paid, increasing the debt by an additional 344,000 KM.

Robert Majić was appointed permanent Director of Supply in May 2012, while Damir Leko, also a former manager at "Lijanovići", took over Distribution. A year later, Leko passed away, and Galić temporarily took over his duties. By the end of the former management's term in August of this year, the debt of "ZD. I. Produkt" and "Lijanovići" was approximately 900,000 KM, which, with late fees, amounts to at least 1.1 million KM.

The "Enchanted" Substation

Over four years, Supply formally sent reminders to "Lijanovići" and "ZD. I. Produkt" for non-payment. When the bills remained unpaid, Distribution was ordered to disconnect the Visoka Glavica plant from the grid. According to available data, Distribution received 19 orders to disconnect Lijanović's factory from the grid during that period, but none were executed.

Prusina claims he sent the disconnection orders, while former Distribution Director Galić says he did everything to disconnect the plant.

"You see, it's a specific substation, a difficult disconnection, requiring major work and so on," says Galić.

The substation supplying Lijanović's facilities is owned by them and located within the company premises. Distribution operators could not access it without the owner's permission, explain EPHZHB.

Laid-off worker Ivan Grbešić says he saw Elektroprivreda employees within the company premises, but the facility was not disconnected from the power. "I don't know how they don't allow it. What would happen if they came to me? How could I deny them access to the meter?" says Grbešić.

Igor Glibić, Head of the Tariff Sector at the Energy Regulatory Agency in FBiH (FERK), says that non-payers can be disconnected from the grid in various ways. One of them is disconnection from the pole supplying electricity to the substation.

Elektroprivreda states that this was not possible because it would have disconnected other consumers as well. However, they add that this problem could have been resolved with an investment of up to 70,000 KM for technical changes in the network. They also state that the former management did not seek police assistance in disconnection attempts, although they had the option. Police were called for the first time on October 9th of this year when the last disconnection order for the Visoka Glavica plant was issued. Elektroprivreda employees again failed to enter the Lijanović factory premises. The police drew up a report, which Elektroprivreda attached to the Municipal Court in Široki Brijeg, requesting an order for entry into the Visoka Glavica factory premises, according to the new management of EPHZHB.

The old management of EPHZHB, which included Lijanović's appointees, inherited 41 million KM in uncollected bills from public institutions and private companies at the beginning of their four-year term, and by the end of the term, the total amount had increased by about four million KM.

The Financial Police discovered that Elektroprivreda had filed lawsuits for debt collection against most debtors, including public health institutions and utility companies such as hospitals, health centers, and water supply companies, which owe the largest sums of money. However, "Lijanovići" and "ZD. I. Produkt" were not among those sued.

Elektroprivreda only filed lawsuits against these companies after the Financial Police began its inspection following a report about an attempted debt write-off for Lijanovići. Ruling on these lawsuits, the Municipal Court in Široki Brijeg ordered the two companies to repay 280,000 KM with interest. However, the debt has not been settled. According to data obtained by CIN, Elektroprivreda then sued "ZD. I. Produkt" for 78,110 KM out of a total debt of 610,000 KM. A court decision has not yet been made. The chances of recovering the debt are slim.

According to data from the Central Bank of BiH, the accounts of the two companies from Široki Brijeg had been blocked previously. "ZD. I. Produkt" has no assets that could be sold to recover the debt, and Lijanović's assets were previously blocked by other creditors.

Soko's Debt

CIN discovered that companies connected to ruling parties had previously enjoyed the privilege of not paying for electricity from Elektroprivreda HZHB. According to a special audit report, this Mostar-based power company collected only 55 percent of the electricity supplied 14 years ago. At that time, the company was controlled by cadres of the Croatian Democratic Union (HDZ).

Elektroprivreda tolerated debts from companies connected to politicians, as well as debts of the HDZ BiH itself.

In 2001, the company "Soko" owed 400,000 KM for electricity. Auditors concluded that the company was in a privileged position compared to other consumers. Part of the debt was incurred during the time when Dragan Čović, then deputy president of the HDZ, was the general director.

The same audit, during the verification of political party financing in 2001, found that the HDZ headquarters in Mostar had not paid for electricity for three years and owed Elektroprivreda 27,000 KM. After the auditors' warning, most of the debt was paid. In their report, the auditors found that the Party had not been disconnected from the grid for non-payment, nor had it received a warning before disconnection.

Every year, Elektroprivreda in Mostar writes off a portion of uncollected receivables, but the financial reports do not specify whose debts were written off. Over the past four years, this public company has written off up to 680,000 KM in electricity debt annually. Elektroprivreda states that the write-off of receivables relates to failed attempts at forced collection from consumers, writes CIN.