Polancec is defending himself today against charges, pressed by the anti-corrutpion agency USKOK which alleges that the former minister commissioned a study and paid HRK 500,000 for it although he was aware that the study was not necessary.

Polancec claims he is not guilty and that his actions were entirely in accordance with state interests and not with the interest of the Vukovar lawyer Petar Miletic from whom he had commissioned the study which was paid with the budgetary funds.

Polancec stressed that the study had been ordered to compensate Miletic for the fees he had lost while representing a group of Borovo workers (Serb nationals) who dropped the lawsuit.

Polancec told the panel of judges he was ordered by the then prime minister Ivo Sanader to solve this "big political problem", adding that HDZ's coalition partner - the Independent Democratic Serb Party - was interested in seeing this problem resolved.

"One could says I was solving burning issues in the government," Polancec said.

Before Polancec started presenting his defence, former Borovo director Mirko Cavara took the witness stand.

This is the first trial against Polancec against whom USKOK issued a total of three indictments.

Apart from this case, USKOK has also indicted Polancec for illegally spending HRK 230,000 to instal lighting on a football field in his hometown of Djelekovec near Koprivnica and for embazzling HRK 400 million in the Podravka case.

Also under way is an investigation against the former economy minister concerning the allegations that he, together with the director of the TLM company from Sibenik, Ivan Kostan, defrauded the power supplier HEP of HRK 600 million.