How Croatian agriculture bought the farm

Between 1994 and 1996, Mr. Markovic expanded his share to nearly a third, buying stock from some of the workers. But while his holdings grew, the farm itself seemed to be sinking. The wars had battered the Croatian economy, and the agricultural sector was struggling.

Moreover, the state had only returned half the land originally attached to PP Retkovci. The remainder was given to the local government, which divided it among individuals in the area. The workers now faced the prospect of having to lease half of the land they had once owned.

In 1995, the workers say the farm stopped paying their wages. They carried on working without pay, hoping that the business would recover.

It was not to be. In 1996, the stockholders met and agreed that PP Retkovci should file for bankruptcy. Today, many of the workers say they opposed the move. At the time, however, they did not block it.

Markovic also asked a state privatization fund to annul the original contract for the share he had purchased in the farm. The fund had been created to manage all the privatization deals taking place around the country. Private investors who suspected they had bought shares under a flawed contract could complain to the fund. Where they could prove that the stake had been mis-sold, the fund would offer compensation.

In December 1996, the fund’s records reveal that it “broke up” Markovic’s contract. It also gave him €147,000 ($188,000) in compensation for his stake.

Years later, a state audit would cast suspicion on the timing of this move. Most investors who asked for compensation had reported flaws in their contracts shortly after signing them. However, Markovic asked for compensation and for the annulment of his contract after PP Retkovci had gone bankrupt, under his management.

In the space of six years, a successful business had been privatized and ruined. Markovic blamed the farm’s troubles on the state’s failure to redistribute its land fairly. But subsequent proceedings in an insolvency court suggested there were also other culprits.

Markovic appointed Marko Babic, a lawyer from the nearby town of Vinkovci, to manage the insolvency process. If the bankruptcy order had been the farm’s death sentence, Mr. Babic would be the executor of the will.

He was expected to oversee the auction of the assets, finding the best price for the equipment and buildings. The proceeds would be divided among the remaining companies and individuals who were owed money by the farm – including the workers. While the bankruptcy meant all stocks in the farm were technically worthless, the workers believed they were still owed a share of the farm’s assets. They wanted severance payments, as well as more than a year’s worth of unpaid wages, accrued in the period leading up to the bankruptcy. The payroll records from the period are unclear.

During the insolvency hearings, the workers claimed Markovic and several of his fellow managers had stolen produce worth half-a-million euros.

Antun Kasteljan, a farm employee, told BIRN truckloads of grain had disappeared during the Markovic era. When he asked where the trucks were going, he says he was told to mind his own business.

The workers also questioned how the managers had taken over an orchard that they believed belonged to the farm.

“How could this have happened? How could it be possible for them to have acquired that?” Zivkovic, the farm worker, asked the court.

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