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Croatia tries eight over shipyard embezzlement

12 November 2012, 14:17 CET
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(ZAGREB) - The trial of eight people, charged with abuse of power causing $4.7 million (3.8 million euros) damages to one of Croatia's struggling state-run shipyards, opened before a local court on Monday.

A restructuring of the yards is vital to the entry of Croatia into the eurozone.

The eight, including the Brodosplit shipyard's two former top managers and current manager of the Brodotrogir wharf, have all pleaded not guilty to the charges that also include money laundring at the start of the trial in the coastal town Split, the national radio reported.

The men are indicted for their roles in signing contracts for Brodosplit to build four tankers for a German-owned group for $51.5 million per ship in 2005 and 2006.

One of the suspects later concluded side-agreements to return to the investor 1.9 percent of the contracted price as a commission, according to the indictment.

When the German group made the advance payment, Brodosplit transferred $4.7 million to the investor's and a broker's accounts in Cyprus.

The money was then transferred to an Austrian company account and later withdrawn for payments to those involved in the affair.

Brodosplit is Croatia's biggest state-run shipyard and employs some 3,500 people. Restructuring of its heavily subsidised wharfs tops the agenda of issues Croatia must resolve before entering the European Union in July 2013.

Earlier this year the government decided to sell Brodosplit to local company DIV, but the privatisation deal has not been signed yet.

Of the Adriatic country's five shipyards, one is in bankruptcy, while at Uljanik, the only wharf that actually turns a profit, the government set up a scheme for employees to buy its shares.

Viable solutions for the remaining two have yet to be found.

Croatian shipyards employ around 10,000 people but are estimated to have accumulated losses amounting to some 3.7 billion euros during the past 20 years.

Experts warn that they need a radical overhaul, as they are technologically not up to date and suffer from low productivity, overstaffing and outdated management.


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