European Prosecutor Indicts Žalac and Three Others

The Office of the European Public Prosecutor (EPPO) has indicted former Minister Gabrijela Žalac, former director of SAFU Tomislav Petric, and entrepreneurs Marko Jukić and Mladen Šimunac, suspected of causing damage to the EU and the Republic of Croatia exceeding 1.3 million euros.

EPPO, without disclosing the identities of the defendants, reported on Thursday that former Minister of Regional Development and European Union Funds Gabrijela Žalac has been charged with abuse of position and authority and influence peddling.

Jukić, Šimunac, and former director of the Central Agency for Financing and Contracting (SAFU) Petric are accused of abuse of position and authority, while Jukić’s and Šimunac’s companies Ampelos and Micro project are charged with inciting this criminal offense.

The Office of the European Public Prosecutor in Zagreb specified that during 2017 and 2018, then-Minister Žalac initiated a public procurement procedure for the procurement of an information system for strategic planning and development management and, in agreement with the second defendant, took several actions to secure a privileged position for him and his companies.

Žalac is, among other things, accused of unjustifiably increasing the estimated value of the procurement of this information system and deciding to conduct a negotiated procurement procedure without publishing a public call, during which companies associated with the second defendant were invited to submit their bids.

The European Prosecutor notes that at that time, Žalac was also the president of the Supervisory Board of SAFU, responsible for proposing the appointment and dismissal of the director of SAFU, and by virtue of her position, instructed Petric to ensure that the documentation of the previous control of that procurement would not call into question the selected negotiated procurement procedure.

Žalac and Entrepreneurs Persisted in Contracts Despite Cancelled Tender

– Although the application of this procedure evidently represented a violation of public procurement law, the director of SAFU agreed to follow the former minister’s request – stated the EPPO in a press release.

They added that Žalac and the two entrepreneurs continued to take actions in 2018 regarding the awarding of contracts to their companies, even though the State Commission for Control of Public Procurement Procedures canceled the tender in October 2017 due to violations of public procurement law.

Finally, after conducting an open public procurement procedure, the Ministry of Regional Development concluded a purchase agreement for the procurement of the information system with Jukić’s and Šimunac’s company. The EPPO emphasizes that by the decision of the former minister, the procurement price was unrealistically set at 1.73 million euros, although the real price of that system would be approximately 360,000 euros.

According to the claims of the EPPO, 1.73 million euros including VAT were paid into the account of the third defendant’s company, after which part of the money was transferred to the accounts of the second and third defendants, as well as to the accounts of their companies, and then part of the paid money was withdrawn in cash.

The EPPO emphasizes that the EU budget was damaged by at least one million euros, while the Croatian state budget suffered damage of nearly 300,000 euros. The prosecution specified that the second defendant obtained unlawful property benefits of 278,717 euros, the third defendant 272,081 euros, the fifth defendant company 465,674 euros, and the sixth defendant a total of 351,715 euros.