The rise and fall of Agrokor – the adventure of a crony capitalism business

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This is a story about corruption, greed, deprivation, blackmail, mismanagement and influence of a large company, that still happens into the Western Balkans

This is the story of Agrokor and later Fortenova

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What is was Agrokor

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Agrokor d.d.  the Beginnings 

It all started way back in 1976 when Croatia’s most famous businessman founded the so-called agricultural business under the name “Ivica Todorić” and started producing flowers. Alongside his father Ante, the former general director of Agrokombinat, a giant socialist food producer, who had previously spent four years in prison for unknown reasons (embezzlement of funds), Ivica Todorić started setting up greenhouses and hothouses for growing cloves, tulips, roses and other types of flowers that were very much in demand at the time. He started up the family business in his hometown of Kloštar Ivanić in the vicinity of Zagreb and started selling flowers all across the former Yugoslavia, Later, they expanded their business to commodities, wheat and oils, generating higher turnover and ensuring easier access to finance. At that point, for the first time, Todorić managed to put into practice his idea that any good business relies on consolidation of production and trade. This idea has remained the backbone of his subse-quent business operations. 

By 1989, Ivica Todorić registered his business under the name Agrokor for the production, distribution and trade of flowers and trade in oilseed and cereals. At the time of Yugoslavia’s collapse and in the early years of Croatia’s war for independence, Agrokor had some 1,000 employees. Ivica Todorić was well-prepared for the transformation and privatisation of socially owned enterprises.Although he never really expressed his political allegiance and despite the fact that he was never a member of a political party, he had good cooperation with political elites, especially in the 1990s during the presidency of Franjo Tuđman, with whose family the Todorićs had had connections during socialism, with this connections, Agrokor managed to acquire in 1992-1994 a dozen companies (especially food and beverages companies), including Jamnica, a mineral water producer, Zvijezda, a cooking oil producer and Ledo, an ice cream and frozen foods producer and also Lovno gospo-Darstvo Moslavina, Agroprerada, Silos Moslavina, Bobis and Solana Pag . The acquisition of retail chain Unikonzum in 1994 was a true landmark for Ivica Todorić that led to a real business boom. The transaction gained him access to commercial property and a large share of the market. It was also an important cash source for him. Unikonzum changed its name to Konzum. As early as 1995 the first large retail centre, called Super Konzum, was opened. This was the beginning of his expansion into the retail market. In the 2000s, he then started acquiring and investing into ailing state-owned agricultural companies, such as PIK Vrbovec, Belje, Vupik and PIK Vinkovci. This allowed the company to acquire some 30,000 hectares of land. This is equal to 2.5% of the overall arable land in Croatia, but it accounts for one third of all the food produced in the country.

But those first purchases until 1995 were the stepping stone for Agrokor, with the “200 families policy” due to such circumstances, locals were favoured over foreigners (the idea cannot be attributed, but it became a part of national folklore as Tuđman’s privatisation path) which started the crony capitalism, but is not specific to Croatia but is the term used for the political economy of capitalism in Latin America,.Asia, the former socialist countries, and some African countries as well. In the rest of the decade, expansion by acquisition, i.e. through privatisation, is much rarer, in 1998 Jastrebarsko Mladina was bought. After the first wave of expansion (purchases) in the early 1990s, Ivica Todorić put the second wave of acquisitions on hold, until HDZ came to power again and Ivo Sanader became prime minister (dur-ing the period of Račan’s government, there was not a single important domestic, and only one foreign, acquisition)

Mercator d.d. the Regional Expansion

In the last 3 decades, the wave of expansion spread to the region. Slowly but surely and with a face pace, through acquisitions or organic expansion by investment and in-troduction of new technology, Ivica Todorić was taking control over production and retail markets in Serbia with Idea, Bosnia and Herzegovina, Hungary and, finally, Slovenia. Purchase of three large Serbian enterprises was an important step in that respect: the purchase of Frikom, an ice cream and frozen foods producer and the purchase of Dijamant, a producer of cooking oil, margarine and mayonnaise and later Idea the supermarkets chain or Kikindski mlin or Fonyodi two beverage producers in Bosnia-Hergegovina and Hungary. The system put in place was called “from farm to shelf”. It can be assumed that this was the way of doing business that Ivica Todorić inherited from his father who had applied the same model to Agrokombinat in the 1960s. Moreover, apart from focusing on the Group’s main activities: retail, agriculture and food production, in his attempt to increase revenues and compensate for the pressing need to pay off the loans, Ivica Todorić expanded to other branches of business that he deemed lucrative, such as the energy sector with ANP Energia, tourism with and healthcare with Aviva Polyclinic. The Group portfolio eventually included over 177 companies. The long business expansion was mostly based on expensive debt accumulation and commercial credits loans with more than 5 bilions euro. Its expansion was partially financed by the European Reconstruction and Development Bank (ERDB) that granted it a loan of 110 million EUR and thus acquired 8.33% of shares and earned a status of the Group’s strategic partner in 2006. However, the majority of the funding was secured by selling bonds on the international markets and obtaining loans from commercial banks with aver-age interest rates reaching as high as 9.5%, listed at Ireland Stock Exchange, in 2009 Agrokor issued 400 million EUR in bonds on the European capital market through a BNP Paribas and UniCredit arrangement for a period of seven years with a coupon of 10%.

The purchase of the Slovenian company Mercator was the biggest financial challenge for the Group and, potentially, the straw that broke the camel’s back. Ivica Todorić managed to acquire this retail chain with stores all across former Yugoslavia only on his fourth attempt because the Slovenians put up strong resistance. They thought that Agrokor was too debt-ridden and that Mercator represented an important enterprise on the national level. On the other hand, Mercator itself was over indebted and banks (i.e. creditors) were eager to find an interested buyer. In order to secure the 550 million EUR he needed to finalize the transaction, Ivica Todorić decided, interalia, to issue a special type of five-year bond, the so-called payment in kind (PIK) bonds to the amount of 485 million EUR. The bonds were issued not by Agrokor, but by a special Dutch-based holding called Adria Group Holdings B.V. that was owned also by Agrokor. This time, unlike before, the bonds were not backed by other Group companies as collateral, but by Ivica Todorić himself and his shares. In case of default, the bondholders were entitled to acquire 90% of Agrokor’s shares.

The real company crisses from 2017 to 2020

Because of the clientelism  part of Agrokor’s business activities which continued. Due to some suppliers’ dependency on doing business with Agrokor, as clients they had to agree to some other activities. With this form of clientelism, bills of exchange and siphoning emerge. Besides that, many of Agrokor’s employees were appointed or reinstat-ed as high-level state officials (Central Bank governor, Minister of Finance), and it is completely reasonable to recognise a conflict of interest in such situations.

Even the state institutions had undoubtedly been aware of the difficulties at Agrokor long before the beginning of 2017. The regulatory agency (HANFA) and the National Bank drew actors` attention to the unacceptable situation concerning the use of bills of exchange. The governor, trying to exculpate the Croatian National Bank from its obvious liability, declared later on that ”everybody has known every-thing” already since 2014 (when Agrokor acquired Mercator).

Finally, late in 2016, the Croatian Bank for Reconstruction and Development (HBOR) granted loans to Agrokor in amounts that were awarded by the Council consisting of minis-ters. These subsequent pieces of information show that they had been aware of the financial difficulties at Agrokor and despite that granted new financing. In the end, immediately before the collapse, according to the information given by the Government, Agrokor’s owner, Ivica Todorić, had asked for help from the Government and for loans to an overall sum of about 300 millions euro to solve the liquidity problem. There were several such meetings between the members of the Government and Ivica Todorić, at least early in 2017

 As a company deep in debt, Agrokor found it increasingly difficult to identify investors ready to lend on reasonable terms. Unable to strike a deal with Western creditors to refinance old debt, Ivica Todorić eventually turned to Russian banks. First, in 2014, the state-owned Russian Sberbank that had started to expand its business in South East Europe, granted him a loan of 600 million EUR with somewhat lower interest rates. Agrokor’s to-tal debt to the bank eventually reached 1.1 billion EUR. The company took out an additional loan of 300 million EUR from VTB, another Russian bank, so that debt to Russian banks accounted for 53% of the overall debt to banks. At the same time, the Croatian economy fell into a deep, six-year (2008-2014) recession that took a toll on the company’s revenues. In addition, following the country’s entry into the European Union in 2013, competition in the retail sector intensified, in particular after German chains Lidl and Kaufland got into the market and expanded their business operations under more favourable financial terms. Hardpressed by the difficult terms of doing business, Agrokor’s management frequently voiced the need for restructuring, considering the sale of some of their business operations and a potential initial public offering (IPO) of its shares to obtain fresh capital and reduce debt. None of these options have ever been exercised, though.  As it turned out, a small family-owned business did not apply a management structure suited to a large regional company and the management proved to be one of its weak links. Ivica Todorić was the owner and manager that had a final say on everything and was often driven by his own vested interests. His own children and their partners (his sons Ante and Ivan, daughter Iva, and son-in-law Hrvoje Balent) and the staff he deemed loyal were appointed to key management positions within the company. One event in particular was indicative of the chain of events that would follow: in January 2017, rating agency Moody downgraded the company’s rating by one level, to B3 from B2. In its explanation, Moody stated that the company’s revenues were down by 2.2 per cent in the first nine months of 2016 whereas financial expenses increased by 3.9 per cent. More importantly, Moody included the PIK bonds issued by Adria Group Holdings the overall debt due to the fact that the company agreed on debt refinancing with Russian banks in September and November 2016 to the amount of 840 million EUR. These loans would have to be repaid before the maturity date provided that the company was unable to refinance the PIKs 90 days prior to their maturity  in May 2018 . 

Despite partial debt restructuring and a favourable environment on the financial markets, the Group’s financial expenses continued to grow. At the end of September 2016, the overall debt at the Group level (loans, bonds and finance leases) reached more than 3,37 billion euro , of which 660 million were due within 2016. In addition, debt to suppliers totalled 2.14 billion euro. According to the rating agency, the company applied 150 payment days, significantly more than its competitors in the retail market that paid their suppliers in 60-90 days. Yet, earlier of 2017, the rating agencies estimated that, despite all the problems, the company had enough liquidity to repay its 2017 debt maturities. All of a sudden, the Group did not have access to finance. The company was undergoing a crisis in maintaining its liquidity levels and meeting its obligations. It was assumed that Ivica Todorić, the company’s owner, would come up with a solution. Instead, he spent the next three months negotiating, but with no success whatsoever. The already tense situation was further aggravated by statements made by the Russian ambassador to Croatia, Anvar Azimov, who, quite unexpectedly, said that Agrokor was supposed to fulfil all of its obligations to Sberbank, his statement indicated that the Agrokor case also had a political dimension to it. 

Lex Agrokor politics

As the pressure grew and the company faced a liquidity crisis, eventually, Ivica Todorić turned to the government. He held secret talks with Prime Minister (PM) Andrej Plenković and his team on a potential government bailout, including a favourable loan from the state development bank (The Croatian Bank for Reconstruction and Development, CBRD). The government decided not to provide financial assistance to Agrokor and to join the whole process in the role of an arbiter only if Ivica Todorić passed on his management positions to someone else. Nonetheless, the government took measures to prepare a legal framework, modelled on the Italian Parmalat case (Parmalat was an enterprise of systemic importance for Italy) to prevent spill over to other parts of the economy. Disappointed with the government’s stance, Ivica Todorić turned to his creditors instead. Finally, the company said that “together with their partners”, they were “analysing all the possible options to stabilise their business operations”. The company and its biggest creditor, the Russian Sberbank, agreed on an urgent loan of 100 million EUR to secure liquidity necessary to meet running expenses, such as taxes, wages and urgent payments to suppliers. This did nothing to ease tensions among suppliers who thought that they should also have a say in coming up with a solution. Of 168 Croatian companies that did business with Agrokor, 24 of them had claims on the basis of promissory notes, so they were most severely hit by the crisis.Since Agrokor could not take loans with banks in Croatia anymore because they had reached the maximum credit exposure, it recently started applying the so-called shadow banking practice. Many Croatian companies covered by Konzum’s distribution chain accepted to take part in shadow banking by taking loans in banks or lending their own money. In return, Agrokor issued promissory notes. Once these companies needed cash, they factored them to factoring companies at a discount.  Many suppliers were thus in danger of not being able to settle their claims with Agrokor. Moreover, they also ran the risk of having to pay their promissory notes to the amount of some 460 millions euro. The situation went from bad to worse following the accusations of Yuri Soloviev, the deputy president of Russia’s VTB Bank, that Agrokor “falsified financial statements” ,“irregularities in bookkeeping”. These statements did little do remove doubts that the business indicators were far worse than presented in financial statements. Finance minister Zdravko Marić was in the spotlight since he had been appointed to the ministerial function one year before, after working in Agrokor as the executive director for strategy and capital markets. In addition, he did not give a complete answer to the question whether the Group had paid taxes in full also he mention that he had not taken part in the preparation of financial statements in Agrokor because he had been in charge of relations with investors, rating agencies and mergers and acquisitions (M&A). The Group’s bonds and shares of companies listed on the stock exchange kept plunging week after week. On average, they were down by two thirds in several months. Rating agencies downgraded the Group’s creditworthiness to a rating one level above default. The Croatian National Bank said that the banking system could cope with the Group’s insolvency, but some smaller banks might be affected. Suppliers threatened to stop their deliveries. Banks and creditors desperately tried to negotiate a so-called standstill agreement to freeze debt repayments and approve a new loan to pay suppliers and keep the company in business and prevent a disaster. Eventually, Konzum and then some other Group companies’ bank accounts were blocked. Afraid that they might not be able to settle their claims, suppliers started factoring Agrokor’s promissory notes. 

The international consultancy Alvarez & Marsal was appointed to manage the restructuring process. The consultancy was familiar with Agrokor’s problems because it had already been hired by the company for several months. For the plan to work, Ivica Todorić had to hand over key management functions to Antonio Alvarez. In principle, he agreed to this. But the Parliament adopted the Act on the Procedure of Extraordinary Administration in Companies of Systemic Importance, dubbed Lex Agrokor. According to the Act, with the owner’s consent, the company would be taken over by a special emergency administrator appointed by the government who was expected to resolve the problems by striking a deal with creditors within 15 months. One of the most important elements of the Act was a rule that tried to encourage creditors to grant loans to the distressed company so that any new debt would be ranked “super senior”; i.e. it should have priority over all other debts The Act was criticized by numerous legal experts, soon after its adoption, Agrokor’s owner Ivica Todorić, already burnt out by the events, asked for its implementation. He was left with no choice since pressure was building up from all sides. Among other things, suppliers threatened to stop delivering all their goods to Agrokor apart from fresh bread. Three months since the beginning of the crisis, Ivica Todorić gave his first public statement to the media. The government appointed Ante Ramljak, a partner in the finance and investment consultancy Texo Management, as the emergency administrator. In addition to a rich experience in finance and investment consulting, Ramljak had an additional advantage: he had already taken part in the preparation of the so-called Lex Agrokor and he had held advisory and executive functions in politics. All creditors including also “bondholders” Knighthead Capital Management and “lenders”Sberbank or Zagrebačka Banka, were invited to file their claims to the emergency administrator within 60 days. Suppliers stated that they would continue delivering their goods to Konzum stores because the Croatian government gave them the necessary guarantees. Other countries of the former Yugoslavia followed suit in their attempt to secure jobs and protect their suppliers. Slovenia, Serbia and Bosnia-Herzegovina took steps to prevent the assets in Agrokor’s local units from moving to the parent company. Slovenia, for instance, adopted an act similar to the Croatian one. The Act, nicknamed Lex Mercator, stipulated the appointment of a special government administrator if needed, to manage Mercator, an important retailer at a national level and employer to 10,500 workers with a network of local suppliers (who accounted for 50% of all suppliers). Mercator was financially independent of Agrokor in the first place, both in Slovenia and other countries in which it had business operations. At the moment when Agrokor acquired it, Mercator agreed a refinancing scheme with the banks, in force by 2020, that limits the owner to “financially exhaust” the company in the form of guarantees, loans or dividend payments. The new loan was granted by four banks – Erste, Raiffeisen, Zagrebačka Banka and Privredna Banka Zagreb with  100 million EUR worth loan.  Another consultancy, the New York-based AlixPartners was selected as an adviser in the restructuring process, after winning the tender. AlixPartners is one of the five world leaders in the restructuring industry. The Zagreb Stock Exchange suspended trading in shares of Group companies, – Ledo, Jamnica, PIK Vinkovci and Belje, until the audited 2016 financial statements were published. A special Memorandum on Agrokor’s Promissory Notes was adopted and submitted to 159 suppliers and 31 banks, factoring companies and other financial institutions with a request to sign the Memorandum and agree on terms of payment at a bilateral level within the set deadline As the tensions among companies eased a little, conflicts and accusations among politicians continued to escalate, but ultimately, the taxpayers would foot the bill. Many analysts agree that a large enterprise such as Agrokor could not collapse without dissolving the government. Although MPs from Most gave a no-confidence vote to the finance minister, he managed to keep his position after the motion to dismiss him did not pass . The crisis surrounding Agrokor might have triggered a third general election in two years at a time when the economy was picking up after sev-eral years of recession. Eventually, the ruling HDZ managed to find another coalition partner, the Croatian People’s Party (HNS).The crisis started taking its toll on the economy. Indicators for April 2017, industry output and retail turnover were all significantly below expectations. Everyone agreed that the crisis would have negative effects on the overall economy. It remains to be seen how strong they will be. Primarily, this will depend on the restructuring process in terms of whether it will be controlled and what the final outcome will be. As an important prerequisite to stabilise business operations, the emergency administrator ensured that the company got its second and last loan to ensure liquidity. A 480 million EUR loan was agreed with creditors’ representatives. The company had also agreed an additional loan in delivered goods from suppliers worth 50 million EUR. The list of creditors of the 480 million EUR loan include bondholders led by Knighthead Capital Management, a U.S. hedge fund that got hold of bonds after their prices plummeted, and Croatian banks led by Zagrebačka banka.Two other members of the creditors’ council (representatives of large and small suppliers) gave a green light to the agreement. Sberbank’s representatives refused to back the deal. Moreover, Sberbank tried to use legal resources to bar Agrokor from entering into new financing agreements, but it failed in its attempts. Agrokor’s largest creditor objected to the selected financing model (the roll-up arrangement) that would allow new creditors to claim superiority for new loans over previous debts to Agrokor and to the same amount. Even though previous creditors may take a proportionate share in new loans, Sberbank considered the model unjust because, for instance, it allowed the U.S. hedge fund to grant a 150 million EUR loan and claim superiority to the amount of 300 million EUR. Eventually, Sberbank took other measures: it blocked Agrokor’s assets in Serbia (Frikom, Dijamant) and collected on the collateral that Ivica Todorić issued to the bank for the last loan of 100 million EUR, namely 18.53% of shares of the Slovenian retail chain Mercator. Ivica Todorić had transferred the ownership of the minority stake in Mercator to his Dutch company whereas Agrokor had remained the majority share-holder. Apart from Sberbank, some other Croatian companies, such as Agram, owned by Dubravko Grgić, had already collected on the collateral in the form of shares. Thanks to the repurchase agreement, he had acquired 21.45% of shares of Konzum, 51% of shares of Agrolaguna and smaller amounts of shares in Belje, Vupik and PIK Vinkovci. Ante Ramljak, the emergency administrator, was not surprised by all this. In terms of potential court claims, he thought that they were imminent in such a complex case. . By early October 2017, claims against Agrokor and its six affiliates had been filed in six countries (Croatia, Serbia, Slovenia, Bosnia-Herzegovina, Montenegro and Great Britain), led by the Russian Sberbank. New loans allowed the company to stabilise its business operations and improve relations with suppliers and customers. In September 2017, the rating agency Standard & Poor’s kept the rating for Croatia at BB, but it upgraded the outlook from stable to positive. Also, the agency stated that the effects of the ongoing restructuring of Agrokor were limited in scope. 

Ivica Todoric life after Agrokor, 

Prior to this events, in 2016, film director and producer Dario Juričan came out with his documentary ‘Gazda’ (The Boss), was on a fly high wave and with his own office building – the Cibona Tower, but whose whereabouts since September 2017 were unknown; finally, as it turned out in 2018, he is in London, almost half a year after passing on the company to the government, the still official owner of Agrokor Ivica Todorić decided to speak up in a rather unusual way, he created his own website and, with the help of a team of lawyers and PR experts, started bombarding the general public with his interpretations of events in Agrokor and blunt accusations against state officials like Martina Dalić and Ante Ramljak. Figures published in the financial statement indicated a decrease in the value of the company’s assets and business losses. In accordance with his interpretation of the events, in early 2017, while he and his management still had control over Agrokor, the company had a clear plan for development, strong growth and was paying its creditors, but all of his plans failed. Finally, he handed over the company to the government because, he claims “he was blackmailed, coerced, threatened and manipulated by legal provisions and unprecedented media hype” and attacked by Martina Dalić, saying that she had been sending him threatening messages saying that he and his family would end up in prison unless he signed Lex Agrokor but, the media and state officials did not find any threatening messages whatsoever. Moreover he claimed that the roll up arrangement by Ramljak was illegal and that it had been created by “vulture funds” for their own purposes. Ultimately, he perceived Agrokor’s demise as a result of a conspiracy organized by state officials and a group of people that used to work in CAIB, now Unicredit, an Austrian bank that made business in Croatia and into the region, in the 1990, and finally Ivan Crnjac, his financial director and, formerly, one of his most trusted managers, according to Ivica Todorić, was to gain profit, but now at 69 years old, he is a simple elderly man, but he used to control the shares in the Croatian company Agrokor Projekti, by which Todorić still controls the ownership of Agrokor, whose nominal value was 715 million euro, but Agrokor is now a simple company with debts and lost connections and he remain only with the nameplate that is saying Founder, Owner  and CEO of Agrokor, once a giant.

The central point of the investigation also relates to the falsification of Agrokor’s financial balance sheets from 2006 to 2015 and the unjustified payment of dividends to Ivica Todorić and also his Dutch company Adria Group Holding BV. And the expertise made in that part is quite clear – Agrokor, in fact, operated with losses throughout that period, so there was no place to pay dividends to the owner, and it is a total of 93,84 millions euro reported by Jutarnji list.

Fortenova creation

Finally, in October 2017, the extraordinary administration presented the most important findings of the audited financial statements for nine leading Agrokor affiliates. The statement, compiled by PricewaterhouseCoopers (PwC) during a five-month period, has shown that key affiliates of Agrokor were worth 1.77 billion euro less than reported and that the overall loss totalled 420 millions euro. This was mostly due to the fact that mutual claims within the Group were written off up to 50% in value. Yet, the biggest decrease in value (by 1.32 billion euro) was recorded for Konzum. In addition, certain irregularities in the books (440 millions euro) regarding the value of the Serbian company IDEA and business operations were taken over by Mercator, but Konzum kept it on its balance sheet. But Konzum has generated operating income which gives us hope that all the Group companies will achieve positive results by the end of the year”, he said during the presentation of the statement. The first draft of the settlement with creditors was expected by the end of 2017. Way back in June 2017, Ante Ramljak said that he would propose creditors a settlement according to which the nineteen most valuable companies would be sold, whether the sale will be made by groups (for instance, of the entire retail group) or at the level of individual companies (Konzum, Mercator etc.). The emergency administrator has been appointed for a term of up to 15 months,  until July 2018, but the law provides for extension up to three months. The ruling party (HDZ) had initially opposed the initiative, by arguing that they did not want to interfere in the investigation launched by the Public Prosecutor’s Office. Todoric himself illegally gained more than 122 million euros while the alleged crimes cost the firm over 159 million euros, prosecutors said. However, they concluded that all the necessary preconditions had been met and political parties managed to strike a deal and Agrokor will not be a Group any more. The future of its companies will depend on a ‘restructuring plan’ and it will be backed by the settlement”.. Investments were well-made, but there were too many of them, he said.

With these changes, it was successful in preventing Agrokor’s collapse and it allowed the ownership structure to be changed to safeguard creditors and enable the creation of Fortenova in April 2019 with a new management team.

But Fortenova,  the successor company to Balkan food and retail giant Agrokor, issued €1.157bn in four-year bonds in September 2019.

Costella and Agrokor AG cases

Agrokor d.d. was fined with 1 million euro for failing to notify Slovenia’s competition regulator of concentration following the 2017 takeover of Slovenian-based water-bottling company Costalla and also due to not having reported the concentration of the companies Agrokor AG and Ardeya Global Ltd.The seizure is based on a non-final penalty in the amount of EUR 53.9 million, as well unprecedented in the practice of this regulator. This penalty, imposed, on Agrokor as legal person and EUR 5.000 for the accountable (natural) person, by the Competition office in Slovenia AVK in September 2019, Costella d.o.o., generates only slightly more than EUR 1 million in revenue yearly. This company was acquired by Ivica Todorić, ie. Agrokor AG from Switzerland, back in 2016.

The seizure included also Mercator shares is in itself also largely disproportionate, since the shares in question have an appraised value of in excess of EUR 140 million

Agrokor AG was a company for the centralized procurement of the entire Agrokor Group in order to achieve better contractual conditions when buying various goods, but also because of the possibility of using more favorable credit lines offered by Swiss banks,

Under the IPO item, the costs that were covered, like sponsorship of the Autograf portal by Drago Pilsel and the Zviždač Association, Megamobil’s account for the cost of repair vehicles, servicing the ship in the marina St. Andrea, and bills at Marina Frapa and berth at ACI Marina

The prosecution also believes that this company paid for the trip of the suspect Damir Kuštrak and his wife to New York in 2015 and the trip of Ante Todorić with his family to Doha for Easter 2015. Only for the trip of Ivica Todorić with his family to Bangkok for Christmas 2013. HRK 300,000 was paid.

In total, Agrokor Zug incurred more than 13,22 millions euro in such costs, but as they were partially covered, Todorić was charged with extracting at least 8.4 millions euro from Agrokor Zug for private purposes that have not been reimbursed.

Also it is suspected that Hrvoje Balent bought at the Eraldo Boutique in Venice on behalf of Agrokor, and under the guise of settling the same costs , and that numerous flights between Zagreb and St. Petersburg were paid for. Gallena, as well as a private plane for Martina Todorić for Milan, and Vesna Todorić, Ivica Todorić’s wife, for Barcelona, Ljerka Puljić also traveled to Agrokor’s account with her family, and under the same terms, the costs of business cards of members of the Management Board of Agrokor and some other employees were also covered.

Investigators found a significant part of the business documentation of the Swiss company Agrokor AG missing.


Into the from 2017 from 2020 period, the Croatian Government took over, with a high risk for the taxpayer and with an insufficiently persuasive explanation, the crisis management of Agrokor, the largest Croatian company. In order to achieve its objective it correspondingly changed very quickly the institutional structure by adopting a special legal act, without sufficient respect of other opinions.

After the state administrator had worked for half a year as chief executive of Agrokor, the success is modest and the main problems remain unresolved: the resolving of the debt of medium-size and large suppliers, the maintenance of the business after the expiry of the special business conditions and the matter of possible legal actions and this was an archetype company with its business adapted under the conditions of the political economy of crony capitalism

The most important fact is that the work of the state administrator so far has in no way indicated that the way the government is dealing with the Agrokor collapse would change the current unfavourable politi-cal economy of Croatia. It is most probable that the current political economy of crony capitalism which was established after the first multi-party elections and which enabled the growth of Agrokor into one of the largest companies of Southeastern Europe will remain in operation. It will be adapted to the conditions of the EU but the government does not suggest in its plans that any essential change would come about. The collapse of Agrokor is not a collapse of crony capitalism in Croatia. The problem of Agrokor will not be solved by improved democratic standards. The work is done arbitrarily and non-transparently, the coalition partner (Most) who was inclined to have the procedures monitored, was thrown out of the government. The relations are still personalised, there are conflicts of interest, the sus-picion of corrupt relations and spread of insider in-formation. The government welcomed the possibility of an agreement with other private companies in a way that does not suggest a change of the behavioural matrix, as in the way it resolved the matters with Agrokor, defending particularistic interests.In the light of the political economy of crony capital-ism, the collapse of Agrokor may best be regarded as a collapse of a boss-company that grew too big to do business under conditions of crony capital-ism, but which did not develop enough to deal with EU business criteria. The collapse may lead to the restructuring of its components into minor boss-companies that may continue to successfully do business under crony capitalism and within the EU. It is true that there are opinions according to which the restructuring of Agrokor opens the possibility of introducing modern capitalism, but in order to realise this, the political economy of crony capitalism should without pressure extinguish itself. History teaches us that such changes of political economy are not probable.

Also the lack of unstable management that prevent them to move with a faster pace, i`m talking about the Mercator and Konzum duplicity into Agrokor, basically this 2 companies had and still have 2 the same services for the same products that they sold, that prevents them to cut costs, and also to grow into the food and beverages activity and products, maybe with others acquisitions into this field, with a brewery or a a spice and herb company, or bakery and another complementary services and products, but instead they prefered to invest directly into real estate, constructions, tourism, media, IT and more…

But we will see what happens

maybe a another episode

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  • Andrej Plenković, is still the Prime Minister of the Government of the Republic of Croatia
  • Martina Dalic, former government minister, is the new president at Podravka
  • Ante Ramljak, returned at his company and moved his headqurters to Czehia
  • Fabris Peruško, is the new boss at Agrokor and Fortenova
  • Irena Webber, is still in what is left of Agrokor
  • Ivan Todoric, is a quiet businessman in Switerland
  • Iva Todoric, started a new business… marketing
  • Ante Todoric jr., is doing…….businesses, like his father and his grandfather, in London this time
  • Fortenova takes back control of Mercator chain
  • Croatia’s Fortenova sells frozen food business to Nomad Foods, for 615 milions euro
  • Agrokor’s Companies to Get New Names 2019 and 2020
  • Croatia tycoon Ivica Todoric acquitted in one trial, more others are pending
  • 70 years, new patriarh of the Todoric family, remain with the 200 million of money (unnoficially), wanted to join the politics world, but backoff, has a lot of lawsuitsRussia’s is still doing games in the Balkans
  • …….