How Slavonian companies cheated farmers and the state
Anja Vladisavljević, Mašenjka Bačić, Matej Zwitter
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Several Croatian farmers were never paid the silage they produced for biogas plants in the Slavonia region in 2019 due to two intermediary companies. One is now on the verge of bankruptcy and has apparently cheated the state out of many millions of kunas by using fictitious invoices, according to an investigation by the Tax Administration.
Foto: Jozo Šantak, private archive
Vlado Špoljarić doesn’t have good memories of 2019. As a reminder of it all, he is still repaying a bank loan from the bank that he had to take because he was never paid for the silage he delivered to Slavonian biogas plants.
Špoljarić is a producer of corn silage from Crnac in Virovitica-Podravina County, where corn is one of the main agricultural crops. "If the banks hadn't helped me, I would have gone out of business," he told Oštro.
He signed a contract with intermediary companies at the beginning of 2019, through which he sold his goods to biogas companies belonging to Bioen group. But the payment for the delivered goods, the service of their ensiling and transport, which together amount to around HRK 470,000 (about 63 thousand euros) never arrived.
Špoljarić is not the only farmer left without money. Last year, pre-bankruptcy proceedings began over the intermediary company which contracted Špoljarić. Its creditors, of which 166 are individuals, are seeking a total of HRK 56.4 million.
Špoljarić protested in Sopje in July 2020, along with about ten other fellow farmers. As they told the media at the time, they were outraged because they had not seen the money yet, while representatives of the companies with which they signed contracts for the production and purchase of silage stopped communicating with them.
They also filed a criminal complaint against the people behind the intermediary companies, addressed the competent ministry, but they are dissatisfied because there are no major results yet.
Špoljarić is afraid that they have exhausted all options for the corn silage compensation to be paid to them and to point out these problems to the public: "The only option is for us to go to protest on St. Mark's Square."
After that experience, Špoljarić continued to produce silage, but since 2020 he has been doing business directly with biogas plants, with which he has no problem of non-payment for now. He says that such a possibility did not exist before because biogas companies did not want to do business with "small farmers", so they hired intermediaries.
Fictitious accounts
At the beginning of 2019, farmers signed contracts with companies Agrokom Natura and Sedlić. Today, Agrokom Natura is facing bankruptcy, and the court in Bjelovar prevented an attempt to merge it with the company Invest Agro, which was once owned by one of the members of the Sedlić family.
According to the tripartite agreement we have in our possession, farmers were to sow agricultural crops in accordance with the needs of biogas plants, specifying the minimum expected yields of ensiled biomass to be delivered. They specifically sowed corn for biogas plants. Agrokom Natura was in charge of contracting and purchasing the produced oilseeds and cereals, and Sedlić was in charge of payment.
The contract also states that Agrokom Natura will provide farmers with an adequate amount of raw materials before sowing, which they will pay to Sedlić, i.e. they will be compensated at the delivery of silage.
“The only other option we have is to go and protest on St. Mark’s Square.”
The Sedlić company also had a separate contract with Agrokom Natura, but also with biogas plants owned by three companies from the Bioen group, to which it supplied corn silage
Despite the contract stating that Sedlić was in charge of paying for the delivered silage, the farmers, at the alleged suggestion of Marko Šutal from Agrokom Natura, issued invoices for the delivered goods to that company, and not to Sedlić. Šutalo, who took over Agrokom Natura from Admir Baždar last year, communicated with farmers and organized the signing of the contract.
As he explained in May this year in response to a lawsuit by one of the farmers, Sedlić bought the crop he sold to the biogas plant in Slatina from Agrokom Natura, and that company had to pay the farmers for it.
Farmers had no reason to doubt that they would be left without payment because they did the same in 2018, when they were normally paid. However, it is not clear where the sales revenues from 2019 ended up. In December 2019, the Tax Administration, in supervision of Agrokom Natura, determined that the company in that year fictitiously presented that it was buying goods from companies that were not actually selling it.
One of them was Eko-El from Virovitica. In January 2019, they charged Agrokom Natura for wheat worth one million kuna, which was to be delivered by the end of July. According to findings of the Tax Administration, the invoice was fictitious because Eko-El could not explain where the wheat was to be stored and from whom it was purchased.
In the second tax inspection in 2020, Eko-El tried to convince the Tax Administration that in the period from June 2018 to February 2019, it purchased wheat and other crops from four companies. Inspectors, however, found that the invoices were forged and never paid, and the company was ordered to pay an additional 3.2m kuna in value-added tax with interest.
Director and co-owner of Eko-El Zoran Alavanja, who is also vice president of the Energy Association at the Croatian Chamber of Commerce, said in a telephone conversation with Oštro that the Tax Administration made a mistake and that the invoices that came to Agrokom Natura were not fictitious. The Tax Administration did not answer Oštro's question, explaining that it "does not give answers to individual inquiries because it is obliged to keep them as a tax secret".
Alavanja was a long-term associate of a Slovenian group Keter in Croatia, which was engaged in construction of biogas plants. A decade after the rise of the Keter Group, its credit deals are being investigated by Slovenian authorities.
Foto: Jozo Šantak, private archive
Most of the plants that Keter built in Slovenia ended up in bankruptcy, and a research by the Slovenian Oštro based on Pandora's documents revealed that there was a network of companies that were gradually extracting its assets before the bankruptcy.
Keter Organica expanded to Croatia in 2010, where its representative was Alavanja in 2011 at the earliest. That year, the Slovenian management of the company and Alavanja were received in the presidential palace by then Croatian president Ivo Josipović.
Later, Alavanja became a member of the board of several Croatian Keter companies, among which was Eko-El. The owners of that company were Alavanja and the company Keter Grandis, which was controlled by Marjan Kolar, former director of key companies of Keter Group in Slovenia, until September 2018.
In a telephone conversation, Kolar explained to Oštro that Eko-El, as he recalls, was conceived as a project company for investing in a solar power plant that was never built. He claims he knows nothing about issuing fictitious invoices to a company that was in his indirect co-ownership. Even before the bankruptcy of Keter Grandis in September 2018, he was not actively involved in the business of Croatian companies, which were run by Alavanja: "Obviously he did it on his own initiative."
He explained that Keter started cooperating with Alavanja as early as 2010, but that they had a lot of problems with him later. Among other things, Kolar said, he withdrew initial capital from the companies. When they discovered this in 2012 or 2013, they hired a lawyer, but Keter went bankrupt before the end of the trial.
Despite this, Kolar and Alavanja were still co-owners of the Eko-El company in 2018. As he explained, he didn't even think about it: “Nothing else was happening in those companies. He neither answered the phone nor the lawyer. There were a lot of procedures with him.
Bankruptcy of intermediaries
Farmers, however, were looking for a way to get their money. After Agrokom Natura did not pay the invoices they issued in 2019, they turned to a lawyer Dubravko Marjanović, who represents them in court.
At the end of 2020, at the suggestion of a lawyer who claims that, based on a tripartite contract, Sedlić is responsible for the payment, the invoices for the goods delivered in 2019 were issued again, this time to Sedlić.
In January last year, several farmers filed criminal charges against Admir Baždar and Marko Šutalo, former and current owners of Agrokom Natura, with Virovitica Municipal State Attorney's Office. Three months later, the charges were extended to the owner of Sedlić company, Domagoj Sedlić. Litigation is also being conducted against the company, in which farmers are asking Sedlić to pay money that has not yet been paid to them.
The Municipal State Attorney's Office in Virovitica confirmed to Oštro that after the criminal report was filed by several injured parties, they are conducting investigations on suspicion of fraud, noting that the proceedings are secret.
The Ministry of Agriculture confirmed to us that in November 2020 it held a meeting with agricultural producers from the Virovitica-Podravina County about non-fulfillment of obligations under the contracts they concluded with Sedlić and Agrokom Natura.
They claim that they are not directly competent in this matter, but that "after a meeting with agricultural producers, a letter was sent to the State Attorney's Office of the Republic of Croatia drawing attention to the issue and the fact that such cases and occurrences further complicate already complex business conditions of agricultural producers"
The State Attorney's Office sent their letter to the Bjelovar State Attorney's Office, requesting from them to take action.
Sedlić does not deny that he received money for silage from biogas plants, but he defends himself by claiming that he only worked with Agrokom Natura and with biogas plants, and not with individual farmers.
Even though his company's stamp is on the contract, he claims that he did not know about existence of the contracts between the farmers, Agrokom Natura and his company Sedlić. In addition, he says that the signature is not his, meaning that the contract is forged.
In July this year, while testifying at one of the lawsuits against Sedlić, former board member and current owner of Agrokom Natura Marko Šutalo confirmed that his signature was next to both stamps and said it was not possible that Sedlić knew nothing about it.
Sedlić also thinks that it is more profitable for farmers to file a lawsuit against him than against Agrokom Natura, because they would have to pay around five thousand kuna in fees for a lawsuit against a company with a frozen account.
While farmers are slowly running out of additional options to get paid, the Commercial Court in Bjelovar has banned the merger of Agrokom Natura and Invest Agro because FINA proposed opening bankruptcy proceedings over the former, with which the temporary bankruptcy administrator recently agreed.
The former name of Invest Agro is Invest Sedlić. The company was owned by members of the Sedlić family until April 2019. It was then taken over by Agrokom Natura, which renamed it Invest Agro, and that year it was personally taken over by Marko Šutalo, the current owner of Agrokom Natura.
Marko Šutalo did not respond to our inquiries.
The production of this investigative story was supported by a grant from the Investigative Journalism for Europe (IJ4EU) fund.
