Subject: - False financial data of "Zagrebačka banka" d.d. bank, Zagreb,
- Potential influence of this banking fraud in the Republic of Croatia
on Western financial institutions
Dear Mrs. Schwerin
I./ I am writing to you on the behalf of my client, Mr. Pask Kacinari, a gold and diamond wholesaler from Zagreb, Croatia, who has authorized me to disclose the information in his possession regarding the falsification of the financial statements and balance books of "Zagrebačka banka" d.d., Zagreb («ZABA» in further text) to the appropriate international bodies. The information in my client's possession inidicates that ZABA has engaged in a fundamental falsification of its business documentation, including:
- falsification of share capital data
- falsification on data regarding real estate holdings registered in the bank's books.
Since this matter concerns the largest bank in the Western Balkans region, which has been integrated into the UNICREDITOITALIANO-HVB-BANKAUSTRIA banking group, there is an obvious danger of international financial ramifications and damages to good-faith investors. Thus we consider it your obligation to check the above claims and to inform your clients about the results you have obtained.
Failing to do so, you may be held liable for any eventual damage suffered by your clients, stemming from any failure on your part to inform them of these claims, effective from the date that you received information about them.
Before describing this bank fraud in greater detail, we would like to preface by underlining that extensive documentation on this fraud exists in the Croatian language. By extension, we feel that you will not be able to check our claims without engaging a Croatian language translator to translate the original documentation, part of which we are now submitting in the original Croatian language.
I.1. Data about real estate holdings in ZABA's books is falsified
ZABA's Annual Report for 2006, p. 52, states «the Bank's balance on Dec. 31, 2006,» and, under the category of «Holdings – real estate and equipment,» provides the total value of this property as being 1,118 million kunas (on 31.12.2006, the mid-rate of the Croatian kuna against the euro equalled 7.345081 kn for 1 euro).
The said data is false, and the Bank's Management was aware of this fact, but nevertheless deliberately presented it. The Bank was aware that a large portion of these real properties, according to the land books, was not the Bank's property, but was, instead, registered to the name of the Republic of Croatia.
Thus, the ZABA headquarters itself in Zagreb, Paromlinska 2, are still registered as «social property,» i.e. unprivateized property belonging to the Republic of Croatia. The excerpt shows that the Bank attempted registration in the land books but that it was refused, for which refusal there is also a record. The excerpt additionally contains records of numerous legal proceedings, including those initiated by the Bank's former employees on the basis of their rights to the Bank's shares and property, which had been withheld from them during the privatization process. The excerpt shows that what is recorded in the land books is «ZABA's right of use,» i.e. the right alotted under the communist regime to socially owned firms for the use of state property. As ZABA is the direct legal successor of the former "Zagrebačka banka" state bank from the communist era, it has continued using the real property at its disposal during communist times, but has not been able to register itself as its owner, due to the fact that it has no proof of ownership over it.
Nevertheless, ZABA has registered these properties as its own in its books, thus falsifying its financial and balance statements.
During its registration in the court register as a shareholding company, on 29.13.1989, ZABA had a total of 113 buildings and office spaces to which it had right of use according to communist era laws. Still, ZABA did not enter a single one of these properties as its own during registration, which means that they had remained the property of the Republic of Croatia. However, ZABA continued using these properties, for which no shares were issued, nor are they represented with corresponding shares in ZABA's share capital. Thus, although ZABA has no proof of ownership when it comes to these properties, they are still represented as the Bank's property in its financial statements.
My client has no knowledge as to how many of the 113 properties are still being booked by ZABA as its own property, which is something that should be determined through an audit of ZABA's books. Since ZABA is still using the affiliate office network it inherited from communist days, it may be assumed that the entire «packet» of 113 properties is recorded as ZABA's property in its books, even though all are still shown as Croatian State property in the land books. And, in the case that ZABA has in fact recorded ownership over any of the said properties in the land books – about which my client has no information - such a record would be subject to challenges on the part of either the Republic of Croatia or other interested parties.
I.2. ZABA share capital data is falsified
The fact that ZABA has not succeeded in registering ownership over real properties in its posession and which it is reporting as its own in its financial statements is closely related to the fact that its complete share capital data is false, i.e. that its entire share register is falsified. Below, we shall briefly describe how this has come about and the proof thereof.
ZABA was originally a state-owned bank, which transfomred into a shareholding company on 29.12.1989, with 1,287 state firms as its founders. At the time, the Bank showed as its share capital only the funds invested by the said founders into the founding fund. The said founders invested a total of 8,630 billion inflationary dinars in 1989, which equalled, as of 01.01.1990, 863,000 «new» dinars, for which the Bank issued 863,000 shares with a nominal value of 1,000 dinars per share. However, according to the Decision on determining the account and profit balances of Zagrebačka banka d.d. for the year 1990, it came out that the founding fund equalled, 2,458,433,000 dinars, for which the Bank should have issued 2,458,433 shares. However,, the number of shares remained at 863,000, this despite the fact that the balance sheet for 1990 recorded that an additional 546,318,000 dianrs were paid into the founding fund, for which the Bank should have been required to issue 546,318 new shares. According to ZABA's Decision on issuing Emission I shares, of 27.12.1989, ZABA issued 863,000 shares, whose nominal value equalled 1,000 dinars each as of 01.01.1990. According to ZABA's Decision on determining the Account and Profit balances of Zagrebačka banka d.d. for the year 1991, the founding fund equalled 8,615,877,984.80 dinars, for which the Bank would have been required to issue 8,615,878 shares. In any case, it is important to note that, by decision of its Yearly Shareholder Meeting of 31.04.1994, ZABA issued an additional 42.86% Emission I shares to each of its shareholders. This means that ZABA must have had the total of 12,308,643 Emission I shares at that time. However, ZABA recognized the existence of only 863,000 originally, while the existence of the remaining shares, i.e. the remaining share capital, was concealed. On the other hand, on 31.12.1993, another 1 million shares somehow appeared in ZABA's share register, whose appearance was not connected to any new payments on the part of the original founders, which is evident from the excerpt from its books, of 31.12.1993. This playing with data about share capital and ownership over the Bank coincided with the most intense war operations of the 1991-1995 war, when domestic and foreing attention was focused on the war, and, thus, these bank manipulations remained unnoticed. It was then that the Bank's Management took over control and transferred to selected off-shore companies the shares belonging to the 1,287 state companies, i.e. the original founders of the Bank in 1989, about which there is ample, scanned evidence on Mr. Kacinari's website.
Further proof that ZABA's current share capital data is a consequence of wartime manipulation may be found in ZABA's Annual Report for 1995, which shows that, all the way up to 31.12.1993, ZABA had on its books Emission I shares with a nominal value of 1,000 dinars (subsequently 1,000 HRD – Croatian dinars). Namely, on page 135, under the section «Share Capital,» it is stated that on 01.01.1994, the Bank transformed its kuna-denominated share capital into DEM-denomitated share capital, that the Emission I shares had a nominal value of 1.00 kn, while the shares denominated in kuna were voided.
For proof of these claimes we direct you to Mr. Kacinari's website, www.zabaraba.com, while, due to the great amount of scanned documentation on it, we shall here refere you to the most relevant documents.
Zaba's proof of deposit into the Founding fund 200.020.050
Act on Determining ZABA's Account Balance and Yearly Financial Report for 1990
Excerpt from ZABA books, of 31.12.1993, showing total number of shares
Confidential internal ZABA diagram of secret auctions produced by ZABA management, at which auctions ZABA covered all bases - being auction organizer, sellers' agent and secret buyer, all conducted under secret rules
II.1. Due to the above, a number of legal proceedings have been initiated against ZABA, among which Pask Kacinari's lawsuit, in which he is seeking to recover, based on court expertise – a total of 358,307,590.00 kn, plus interest. The court expertise was completed on 13.09.2005, when the rate equalled 7.433401 kn for 1 euro. This amount represents the worth of 142,576 shares belonging to Pask Kacinari that ZABA transferred to the names of third, unidentified parties. Namely, Pask Kacinari was one of the Bank's founders and made a deposit into the founding fund but, as he was an ethnic Albanian in Croatia at the time of Yugoslavia's disintegration, ZABA's Management probably did not expect him to take Croatian citizenship or, perhaps, to survive the coming events, and expected to be able to «solve» the problem of his shares by transferring them to another party's name.
Regarding Mr. Kacinari's lawsuits against ZABA, we refer you to his website:
LAWSUIT BEFORE THE ZAGREB DISTRICT COURT
LAWSUIT BEFORE THE ZAGREB COMMERCIAL COURT
In addition to Mr. Kacinari, other parties have also initiated lawsuits against ZABA, i.e. the "GAVRILOVIĆ" meat industry is suing ZABA for shares that were transferred to another party during the war, for which Mr. Kacinari's website also provides information:
The Stolen Shares of GAVRILOVIĆ Petrinja
We would also like to draw your attention to the lawsuit by the transportation firm "SAMOBORČEK" d.o.o. against ZABA, in which the plaintiff is claiming that ZABA is trying to collect a mortgage for which it has «forgotten» to pay the principal. Should the plaintiff prove his claims, i.e. should ZABA not be able to furnish proof of having paid the principal, this would also throw new doubt on its balance books. Facts on this case are also available on Mr. Kacinari's website:
II.2. Since, in the course of proving the basis of his claims, Mr. Kacinari was also proving the fact that ZABA continues to be an unprivatized bank in the greater part of its share capital, for which privatization is yet to take place, Mr. Kacinari has informed the Republic of Croatia, the City of Zagreb and the Republic of Serbia as to their rights.
Namely, ZABA was formed through a merging of the former Kreditna banka Zagreb, as the City of Zagreb's communal bank, whose owner and founder was the City of Zagreb, and the former JUGOBANKA bank, based in Belgrade, whose legal successor was the Republic of Serbia. The Republic of Croatia is the legal successor of all the remaining unprivatized share capital of ZABA. According to Mr. Kacinari's figures, ZABA's present-day shareholders represent a mere 21.26% of ZABA's total share capital, whose remainder is owned by the Republic of Croatia, the City of Zagreb and the Republic of Serbia, as well as by private owners whose shares have been illicitly re-registered in other parties' names, such as those belonging to Mr. Kacinari and the "GAVRILOVIĆ" d.o.o. meat industry.
Here we should like to emphasize that, as an honest finder, i.e. the party who was the first to discover the existence of their rights, Mr. Kacinari has claimed the compensation to which he is entitled by law from the Republic of Croatia, the City of Zagreb and the Republic of Serbia.
Legal Procedure for the Restoration of ZABA's Capital to its Lawful Owners: Republic of Croatia, Pašk Kačinari and "Gavrilović" Meat Processing Company
Pašk Kačinari reports the rights of the City of Zagreb to shares of ZABA
Pask Kacinari's Lawsuit Concering the Existence of the Rights of the Republic of Serbia to Shares of ZABA
III./ The above case has also been the subject of articles by a leading American news portal, WorldNetDaily (www.wnd.com), while the France Presse news agency has reported on ZABA's history of money-laundering. We thus refer you to the following:
Balkan privatization scam to affect Western banks?
Shadowy transfers of institution's shares allegedly involved communist 'warlords'
New suit puts heat on European banks
Austrian businessman claims Croatian institution 'stole' shares of stock
AFP: Saudi aid organisation laundered money through Croatia: report
IV. From the above it is plain that the case of "Zagrebačka banka" holds potential danger for the Title's investors/clients, for which, from the moment of these facts having come to its attention, the Title has assumed responsibility.
At the same time, it is obvious that legal action with an international element has either been initiated or is pending, which would mean an internationalization of this unprecedented case.
We would, therefore, request that you check the facts provided in this report in the shortest possible time and immediately inform your clients as to your findings, i.e. as to the data which we have provided to you.
We stand at your disposal for any questions that you may have, as well as for any additional proof that needs to be furnished.
We would also refer you to our following telephones/faxes:
Or our e-mail.
In case of need for more detailed research, we invite you to visit our law offices in Zagreb, Bogišićeva 2, or our client, at Frankopanska 9, Zagreb.
In any case, we kindly request your feedback regarding any and all action you have taken in this case.
In Zagreb, 30.04.2007.
PAŠK KAČINARI, THROUGH LEGAL REPRESENTATIVE
OZREN TATARAC, ATTORNEY-AT-LAW
1475.39Z009-letter to World-Check02.doc