The developing legal offensive against Croatia’s dominant bank, Zagrebacka banka, or ZABA – first reported by WorldNetDaily as a danger to two of the world’s largest financial services institutions, which together own 95 percent of ZABA, and, by extension, to global market stability – continues to intensify.

As reported last week by Zagreb-based Vecernji List daily and Globus Magazine, the owner of Croatia’s largest meat-processing firm, Djuro Gavrilovic, whose ancestors started the “Gavrilovic” company in the 19th century only to have it confiscated by Croatia’s communist leadership after World War II, has launched a lawsuit against ZABA, which could amount to up to $57 million in claims, back interest and damages.

Similarly to Pask Kacinari, the Zagreb jeweler who is seeking damages from ZABA to the tune of up to $100 million and whose case the WND article covered in depth, Gavrilovic is claiming that ZABA “confiscated” his – i.e., his company’s – shares, which his counsel claims were “sold” to mysterious off-shore owners during the war-torn 1990s in Croatia in a semi-covert, irregular process.

Unlike Kacinari, however, Gavrilovic has strong international credentials, being Austria’s honorary consul to Croatia and an Austrian citizen and businessman of repute, which makes ZABA’s position all the more untenable.

Interestingly, Gavrilovic has retained the same counsel as Kacinari, attorneys Tatarac and Parazajder, who are making the same basic claim in both cases: that ZABA management has used the war years in Croatia to illicitly change the ownership structure of the bank, even as the Croatian state has no record of the institution ever having been privatized; that, by extension, the ZABA stockholder registry is “irregular”; that ZABA’s new “owners” – actually the old Communist elite that had gone “underground” after losing political power, as a means to consolidate economic power in Croatia – then proceeded to “sell” what amounted to stolen goods to reputable Western banks; and that these Western banks (i.e., Unicredito Italiano S.p.a. of Italy and Allianz A.G. of Germany), having swallowed “tainted” stock, have seriously compromised the market value of their shares, which trade in major global financial markets, including the New York Stock Exchange, presenting a considerable potential danger to their stockholders as well as to the credibility of the markets in which they legitimately trade.

In Gavrilovic’s case, victimization at the hands of Communists would amount to a repeat. As a child, Gavrilovic was forced to flee post-war, Communist Croatia to Austria, as his family’s industrial plants were nationalized. In 1991, having come back to Croatia as a well-to-do Austrian businessman, Gavrilovic bought back the very same company nationalized more than 40 years before by the Communist regime.

At the time of the acquisition, Gavrilovic was told by the authorities that much of his old family firm’s papers had been “destroyed” during the war, so it was not until a decade later that he ran across court records revealing that, while still in the hands of the state, his firm had acquired ZABA stock and had become one of the founders of the firm, which in the late 1980s began transforming from a state-owned to a stockholder-owned enterprise.

Yet, when he turned to ZABA’s current management, headed by Franjo Lukovic, Gavrilovic was told that he was “mistaken,” although no arguments were offered to back up the claim. Instead, Gavrilovic was invited to a personal, behind-closed-doors meeting, which he politely refused.

Instead, Gavrilovic has turned to the Zagreb Commercial Court, launching a lawsuit in which he asks the court to determine the exact number of ZABA shares he currently owns. And, as the mass-circulation Zagreb papers claim, the ZABA shares currently on Gavrilovic’s books could add up to $57 million, damages and back interest included.

As attorney Tatarac earlier stated to WND, the ZABA (and, by extension, Unicredito and Allianz) tactic in the Kacinari case seems clear: Take advantage of Croatia’s weak courts and media and hope the case will eventually die out and disappear. Indeed, Unicredito and Allianz have never publicly commented on Kacinari’s case and have refused all attempts to establish communications. In the case of Gavrilovic, attorney Tatarac’s fears concerning Croatia’s courts may gain new confirmation, as the sitting judge of the Commercial Court almost immediately threatened to “throw out” the case on a technicality.

Still, that may not be so easy with Gavrilovic’s case, given his credentials, diplomatic and business status, and Austrian citizenship – especially because the chances of German-language media picking up on the story are, in the Gavrilovic case, much greater. That would spell trouble for Allianz, Germany’s No. 1 financial services company, whose stock is owned by many of Germany’s corporate giants and traded on most of the world’s stock exchanges, including the NYSE.

Unicredito, closely allied with Allianz in a joint expansion into Eastern Europe, cannot afford to have its financial credibility brought into question, either. Italy’s No. 1 bank in terms of market capitalization, Unicredito is currently negotiating to buy HVB, Germany’s second-largest bank, even as it has gained a major financial presence in Eastern Europe, especially in Poland and Croatia. By extension, HVB has a 52 percent controlling interest in the International Moscow Bank, Russia’s eighth largest.

Many in Croatia are beginning to wonder what would happen if ZABA began to unravel under pressure from Kacinari, Gavrilovic and, according to Tatarac, scores of other large and small companies and individuals who have similar cases against the bank, similar claims of share “confiscation.” In the wake of Gavrilovic’s lawsuit and previous Croatian media and WND stories (picked up by the Croatian press), several parties began contacting the Parazajder/Tatarac offices with similar claims. The earthquake, most agree, would shake not only Croatia, but Italy, Germany and many global financial markets – an Enron-type event that would further erode the already shaky public trust in global corporate financial giants.

It should, in any case, soon become apparent whether Croatia presents a new paradigm in the expansion of global banking concerns in which legitimate shareholder rights take a back seat to gaining “market share” and regional and local market domination at any cost – with the help of powerful local “partners” with questionable credentials and background – or whether corporations will be forced to obey sound and responsible business practices in the world’s backwaters, where individual stubbornness combined with independent media reporting might successfully wage battles previously reserved for domestic and international courts. Both Kacinari and Gavrilovic are betting on the latter, and their battle has gained new momentum. The Balkans, traditionally known as the “graveyard of empires,” stand to solidify their reputations, rocking the very foundations of Unicredito and Allianz banking empires, the financial pillars of two of Europe’s largest economies.

Related stories:

Balkan privatization scam to affect Western banks?

German banks cozy with ex-commies



Aleksandar Pavic covers the Balkans for WorldNetDaily.com.

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