Wheat in the Federal Reserves!

Two private companies illegally spent wheat from commodity reserves, worth 1.8 million KM. The damage could have been less if the Federal Directorate of Commodity Reserves had stopped the theft of grain and been more active in lawsuits for debt collection, writes the Center for Investigative Journalism, reports the Patria News Agency.

Wheat that could have fed a city the size of Sarajevo for two months in case of a natural disaster or war has disappeared.

The Federal Directorate of Commodity Reserves (Directorate) entrusted the storage of 3,100 tons of grain worth 1.8 million marks to the milling companies „Žitopromet“ from Mostar and „Zlatna dolina“ from Stolac. In 2008 and 2012, these companies used the wheat without authorization and then ceased operations.

Director of the Directorate, Tončo Bavrka, ignored calls from his associates to change the storage facility and thus stop the wheat theft. He also did not inform the competent investigative institutions about the thefts, reveals the Center for Investigative Journalism from Sarajevo (CIN). Court proceedings for damage recovery followed, during which the Directorate made omissions that have caused the processes to continue to this day, with little chance of the damage being recovered.

The Federal Directorate of Commodity Reserves was established 18 years ago to provide the citizens of the Federation of Bosnia and Herzegovina (FBiH) with food, medicine, and fuel in case of war or natural disasters, and to intervene in cases of major price fluctuations of basic goods on the market. Funds for the purchase of goods and rental of storage space are allocated from the federal budget.

Since the Directorate does not have enough of its own space for storing goods, it issues tenders to select private companies with warehouses. For these services, the Directorate pays about 900,000 KM annually.

The Directorate keeps data on goods from reserves secret from the public, as the law prescribes the principle of confidentiality in its work. However, even the FBiH Government did not have accurate information about the reserves, although the Directorate was supposed to act as its service. This facilitated the theft of goods such as wheat from the silos of two Herzegovinian companies.

Empty Silos at „Zlatna dolina“

At „Zlatna dolina“, owned by Stolac businessman Ante Raguž, 1,607 tons of wheat were stored at the beginning of 2011. According to the contract with the Directorate, the company could use the four-year-old wheat and replace it with newer wheat by the end of that year.

Before the New Year holidays, Raguž informed the Directorate in writing that he had done so, but did not provide a certificate of quality and quantity of goods, nor a delivery note for the wheat entering the warehouse, which would have been proof that the wheat had been replenished.

At „Zlatna dolina“, they postponed the arrival of Directorate officials for control for the next two and a half months, citing Raguž's business commitments. The control was also postponed due to heavy snowfalls that hit Bosnia and Herzegovina (BiH) in February 2012.

The first inspection in mid-March revealed that 763 tons of wheat were missing from the silos. Raguž justified this in a letter to the Director of the Directorate, stating that the company, which was involved in flour production, had used the wheat from the reserves because they could not procure their own due to the blockade caused by snowdrifts. He then promised to compensate for the shortage by the end of April.

According to the Law on Commodity Reserves of FBiH, warehouse keepers are not allowed to use goods without the Directorate's approval. If this happens, the Director of the Directorate can order the immediate sealing of the warehouses and the urgent relocation of the remaining goods to another company's warehouse. After discovering the theft of goods, the Directorate should also inform the FBiH Financial Police and the Federal Inspectorate. It did neither, nor was the wheat compensated.

This was shown by a new inspection of wheat in the silos of „Zlatna dolina“ two months later, in May 2012. Some of it had been compensated in the meantime, but 435 tons of wheat were still missing.

Inspectors demanded that Director Bavrka urgently move the remaining wheat and initiate legal mechanisms to recover the used goods.

The Directorate had the option to activate the promissory notes that „Zlatna dolina“ had provided with the storage contract as a guarantee of performance. With the help of the promissory notes, the Directorate would block the Stolac company's accounts, so that the money coming in would flow into the Directorate's accounts until the debt was settled. At that time, „Zlatna dolina“ was active and there was a possibility of debt recovery, but Bavrka did not do it.

Instead of following his associates' suggestions and moving the wheat to another warehouse, Bavrka arranged a meeting with Raguž. The owner of „Zlatna dolina“ explained at the time that he did not have the money to compensate for the wheat and needed time to do so. At his suggestion, the Directorate extended the deadline for replenishing the wheat until the end of July 2012.

Bavrka told CIN that he did this because he did not want to confront the company that owed them 435 tons of wheat, fearing he would not be able to collect the debt. However, instead of compensating for the shortage, „Zlatna dolina“ used the remaining wheat during the summer.

Raguž told the CIN journalist that the commodity reserve wheat was old and he could not sell it at a price that would allow him to buy a new stock of wheat.

At that time, the FBiH Government requested the federal inspectorate to inspect all commodity reserve warehouses. The then Prime Minister Nermin Nikšić told CIN that the inspection was ordered because they were receiving information that the Directorate's goods were not in the warehouses, even though they were recorded.

The government immediately requested an investigation into the theft of goods, but the State Investigation and Protection Agency (SIPA) only began it in mid-last year at the order of the BiH Prosecutor's Office. Bavrka was not dismissed. Nikšić explained that Bavrka is a civil servant whom he cannot dismiss by law, unless he goes to prison for more than six months.

Lawsuit After Discovery

In September 2012, a month after the inspection report on warehouse control, Bavrka filed a lawsuit with the Municipal Court in Sarajevo against „Zlatna dolina“ from Stolac, demanding the return of wheat worth almost a million marks.

At the preparatory hearing scheduled for October 23, 2013, the Directorate's legal representative Sonja Jelić did not appear, nor did she justify her absence. Therefore, the Court declared the lawsuit withdrawn. A few days later, Bavrka requested the renewal of the proceedings, justifying that Jelić, on her way to the Court, received information about her mother's pre-infarction condition and could not attend the trial. He also provided a medical certificate for Jelić's absence from work due to caring for her mother.

However, the review of employee attendance and absence from work at the Directorate indicated that Jelić had worked an eight-hour workday that day. Bavrka says that this employee came to work and was supposed to go to the hearing scheduled for the morning of that day. „You come to work and report, you don't know that one of your parents will be ill,“ says Bavrka, who did not explain why the Directorate's records did not show sick leave for this employee. Nevertheless, the Court accepted the medical certificate and returned the lawsuit to its initial state, but the proceedings were only initiated a year later, in October 2014.

In the meantime, „Zlatna dolina“ ceased operations, and other creditors also tried to collect debts from the company. The Directorate, for example, was late in collecting its debt by selling the company's vehicles, as the Tax Administration of the Herzegovina-Neretva Canton had done so before them.

CIN reveals that in 2013, the Directorate made another omission due to which it will be difficult to recover damages from another company that also illegally used approximately the same amount of wheat. This concerns the bankruptcy proceedings opened in February 2013 before the Municipal Court in Mostar against the company „Žitopromet“, which is owned by private investment funds.

During the bankruptcy, the Directorate failed to report that this company owed them about 834,000 KM, because it had illegally used 1,500 tons of wheat. This is a larger part of the wheat stock that the Directorate had stored in the Mostar company seven years ago.

Specifically, when the bankruptcy was opened, the Court, through the Official Gazette of BiH, invited all companies and individuals to whom „Žitopromet“ owed something to report their claims. Although there were two deadlines for reporting claims, totaling four months, the Directorate only responded in January 2014, when there was no chance to report claims.

Director of the Directorate, Tončo Bavrka, in a brief conversation with CIN, blamed the Department of Commodity Reserves for the loss of wheat at the Stolac-based „Zlatna dolina“.

Due to this case, at the beginning of 2014, Bavrka filed a disciplinary complaint against the employees of the Department for Legal and General Affairs, Mirela Trnka, Sonja Jelić, and Tea Mrnjavac, for not following the Official Gazette of BiH, which caused the Directorate to be late in reporting its claims. Mrnjavac was suspended for thirty days, Trnka received a verbal warning, and Jelić faced no consequences. However, the Civil Service Appeals Board annulled that procedure because it did not clearly establish the responsibility of the employees for the offense. They disputed Bavrka's claim that he had not known about the bankruptcy for a year, as he had maintained constant contact with „Žitopromet“ during that period. CIN obtained Bavrka's travel order, which shows that he visited this company during that period to discuss possibilities of debt collection.

Brutal Attacks

Wheat is not the only commodity stolen from the Directorate. Nine companies that had contracts with the Directorate for storing goods illegally used a large quantity of food and fuel. The damage is estimated at 12.1 million marks, excluding interest due to the passage of time. Auditors of federal institutions concluded in their latest report on the Directorate's operations that it is more than likely that a significant portion of the damages in court proceedings against the companies will not be recovered.

CIN is in possession of a report in which Bavrka writes to the then Prime Minister of FBiH, Nermin Nikšić, about the court proceedings for damage recovery at the Directorate. In the letter, he explains the reasons for the constant loss of goods. He wrote that it seemed to him that „the shortage occurs intentionally and that the companies are trained for such dishonest practices“. He also stated that the Directorate lacks the staff who can resist the „brutal attacks of economic entities that embezzle Directorate goods“.

The largest portion of goods disappeared from warehouses between 2008 and 2012, in the first four years after Bavrka was appointed Director of the Directorate. The thefts only stopped after the inspection in the summer of 2012.

(Center for Investigative Journalism)