Čović and Džaferović's Connection: How Soko Company's Loans Were Redeemed from the Development Bank

Although the Financial Police investigation at the Development Bank of the Federation has long been completed, and the case has been handed over to the Sarajevo Canton Prosecutor's Office, there have been no reactions. After promises by former prosecutor Nives Kanevčev to take this case out of the drawers, the bank was not touched during her term, writes the Patria News Agency.

Ramiz Džaferović, the long-time director of this state-owned bank, remained untouched. The rule of law remained powerless, as all networks were woven and all links connected, from Sarajevo to Mostar. If one looks at the composition of the Supervisory Board of this institution, it will be clear that the bank has been ruled for years by HDZ structures and people close to Dragan Čović.

After all, Džaferović himself was considered a close friend of Čović. This was publicly acknowledged by SDA structures.

Loan Redemptions Through Connections

When Džaferović was appointed to head this bank in mid-2006, the then Supervisory Board was formed in parallel. Ankica Kolobarić was elected President of the Supervisory Board, while Mila Gadžić was a member. Both Gadžić and Kolobarić have held financial positions for a long time, thanks to the trust placed in them by HDZ leader Dragan Čović.

It later turned out that the influence of this "Soko circle" was crucial in the operations of the Development Bank. When the Financial Police completed their investigation into the operations of the Development Bank during Džaferović's leadership, in a report of almost 300 pages, they primarily focused on conflicts of interest. Namely, those who received loans would immediately order an audit at Džaferović's auditing firm.

Immediately after arriving at the bank, Džaferović carried out an interesting financial maneuver. Namely, the internal auditor, in his report for the period June-September 2007, confirmed that the bank had taken over the loan of "Soko Air" which it had at Hercegovačka Banka. The collateral for the loan was a commercial property in Rodoč near Mostar.

It was reported in all media that Soko Air was privatized, along with 18 other Soko companies, and that the privatization was completed back in 2003. Therefore, the key question is why would a state bank redeem the debt of a privatized company?

The maneuvers continued, so the bank's credit committee, headed by Džaferović, by its Decision 8596-II/07 of July 27, 2007, transferred/sold the receivables from the company Soko Air doo Mostar to the company "Mostarski sajam" doo Mostar, in the amount of 511,174 Bosnian marks.

Some bankers will probably ponder another financial paradox: At that meeting of the Credit Committee, Džaferović approved a discount on this loan in the amount of 30 percent and then reduced the total sum of 730,248.67 KM by 219,074.67 KM. So, first, the loan of a private company was redeemed, and then it was favorably transferred to another private company - "Mostarski sajam".

Mostarski sajam took over Soko Air's debt, and the bank undertook to remain the enforcement creditor in the court proceedings until the requested amount was paid. However, as predicted, the payment of this sum did not happen. At the meeting of the Credit Committee held on October 3, i.e., two months later, a Decision was made to extend the validity of the Decision of the Credit Committee 8596-II/07, made at the 377th session, on the sale of receivables to the company Mostarski sajam in the amount of 511,174 KM with a payment deadline of September 30, 2007. The new deadline would be October 30, 2007.

Loan Acrobatics to Lose Track

Mostarski sajam allegedly paid 100,000 marks of this debt on September 28, 2007.

Another decision was made that the payment from Mostarski sajam in the amount of 100,000 marks should be "recognized as income", which was an unusual outcome at best, as the burden of possible court costs was transferred to "Mostarski sajam" by the decision.

It is impossible to find out how this loan was repaid afterwards, as neither the Credit Committee nor the Internal Audit dealt with it further, and during the search, documentation was hidden from the Financial Police. The loan remains an example of how finances were spun in circles with acrobatic maneuvers, until the trail was obscured.

Due to many facts, the Development Bank is called the bank for conflict of interest.

Ankica Kolobarić, Čović's godmother, was a coordinator for internal auditor positions at Hercegovačka Banka long before this case. In 2007, as president of the Supervisory Board of the Development Bank, she approved these almost donation-like moves by the bank's management towards Soko Air and Mostarski sajam.

Her husband Branko was the director of the company Soko Vita, and a little later, the deputy chief auditor of the Federation. Mila Gadžić was at the head of the Privatization Agency when Soko was privatized for symbolic money and when her late brother Dragan became one of the owners of the privatized Soko. During this acrobatic loan by Džaferović, Mila Gadžić was a member of the Supervisory Board of the Federal Bank. The interests act harmoniously, because the former head of Soko and the practical leader of all these cadres is Dragan Čović, the leader of HDZ.

It would be interesting to analyze other loans for the Soko group, which Džaferović similarly placed with acrobatic maneuvers. The bank today has very few placements. Although no one admits it, the situation is critical, and no one from the ruling SDA wants to react to warnings about such a state. The current director Salko Selaman is not introducing audits or financial police, nor is he talking about the bank's operations, although his dismissal has already been prepared. The Financial Police report is still in the drawers, almost seven years after the report was submitted to the Prosecutor's Office.