Prior to that, Polancec's attorney Anto Nobilo told Hina the public would be disappointed once it saw what this was really about. Asked if an investigation into his client led to former Prime Minister Ivo Sanader, as speculated by some media and politicians, he said that it did not. According to the print media, Polancec allegedly said that Sanader was the target, while he was a collateral victim.

"Judging by the charges against Polancec, I would say the investigation doesn't lead to Sanader, but I don't know if the police and USKOK are investigating something else as well," said Nobilo.

Polancec and Markovic were arrested yesterday morning. After being interviewed by the police, they were brought to the USKOK headquarters, where, according to Nobilo, Polancec presented his defence. Both spent the night in custody.

Polancec is suspected of abusing office and causing extensive financial damage to the Podravka food company. He is suspected together with former Podravka executives Zdravko Sestak and Josip Pavlovic, who are already suspected in a fraud case in Podravka codenamed Spice.

Since USKOK's investigation is secret, it has still not been officially stated what they are charged with and the amount of the financial damage allegedly caused to Podravka. The media speculate the amount is HRK 75 million.

Nobilo said on Croatian Television last night the damage in Podravka was only potential and that there would have been no damage had Polancec managed to sign the deals he was recently supposed to. He added there was a reason why his client was arrested now and that the timing was not accidental.

Sestak was arrested in an operation codenamed Manager last October alongside five others on suspicion of involvement in the Spice fraud case. He is the only one still in custody. He is also suspected of abuse involving legal advice to Podravka. The police claim he was incited to commit the abuse by Markovic, the director of Fima Ami, a company registered in Malta to which the Croatian company Fima transferred a 10.6 per cent stake in Podravka. One of its owners is Milan Horvat, another suspect in the Spice case.

According to the media, Markovic took part in negotiations on management rights in the oil company INA which Polancec was leading on behalf of the Croatian government with the Hungarian oil company MOL. It is speculated that in exchange for the management rights, the Hungarian OTP bank used EUR 34 million, deposited by MOL, to close a Merrill Lynch loan which Fima used to buy Podravka shares.