A former state secretary in the Croatian regional development ministry, Luka Zivanovic, testified on Wednesday in the trial against former prime minister Ivo Sanader for the shady sales deal of a building in Planinska street for which the former PM and Croatian Democratic Union (HDZ) leader was allegedly paid HRK 17 million in commission, saying that the ministry had purchased the building without any prior assessment of its value.
The trial continued today after a one month recess and Zivanovic testified that former regional development minister Petar Cobankovic, who has already admitted to his part in the murky deal, called Zivanovic and the owner of the disputable building, Stjepan Fiolic, to his cabinet to a meeting with representatives of Hypo-Leasing.
Cobankovic said then that the ministry was purchasing the building so that all its offices could be located in the one building rather than being scattered around town and Zivanovic was to prepare a letter of intent to this effect but that no price had been mentioned at the meeting.
Some time later a contract with an installment plan arrived for an amount of EUR 11 million, the witness said.
I am not aware that the ministry conducted any action to have the building's value assessed, Zivanovic said.
The contract had been forwarded to the Finance Ministry which later advised that the purchase was subject to the Law on Public Procurement to which Cobankovic directed Zivanovic to enquire with the economy ministry which in turn advised that same day that the purchase was not subject to that law, he said.
The contract was concluded in early April 2009 and signed by Cobankovic. Zivanovic added that the ministry continued to operate at six locations for which it paid rent and that only 2 or 3 installments had been made for the building in Planinska but then he transferred to the ministry of agriculture which continued to pay the lease for the building and that Cobankovic had advised that this was a decision from "above" which Zivanovic considered, referred to the government.
An audit was conducted later and some irregularities were identified in the leasing contract concluded by the regional development ministry and that the price of the building was too high.
The audit office requested an assessment of the value of the building which I obtained from the Hypo Bank and subsequently forwarded to the auditors, he said. Later the bank called him and said that the assessment was an 'internal document' and sent him another assessment. Zivanovic concluded his testimony by saying that he sent both assessments to the audit office without having read either of them.
The trial will continue tomorrow when a representative of the Hypo Bank is expected to testify.
