Open Letter to Croatia’s PM and Finance Minister on $15.2 Billion in Illicit Financial Outflows (2001-2010)

Natasha Srdoc, Chairman of the Adriatic Institute for Public Policy, in an interview for Croatia's national television HRT 3, talks about a recent Open letter co-signed by Monica Macovei, Roger Helmer, Natasha Srdoc and Joel Anand Samy to Croatia's top public officials regarding Global Financial Integrity's report on Croatia’s $15.2 billion of illicit outflows between 2001 and 2010. Dnevnik 3 - Croatian Radio Television, February 24^th, 2013.

Source: Dnevnik 3 – Hrvatska Radio Televizija

(see video at the bottom of transcript)

Transcript:

Some of the EU representatives are maybe over enthusiastically doing their jobs as proved by Romanian Monica Macovei. After a failure to pass into law her proposal on special monitoring of Croatia, together with a British colleague and two co-founders of the Adriatic Institute, she wrote an open letter to Prime Minister Milanovic and Minister Linic. She calls upon them to investigate where the millions of euros have disappeared in corruption scandals between 2001 and 2010.

Romanian EU MEP Monica Macovei, who asked for monitoring of Croatia even after joining the European Union, is not giving up.

Monica Macovei:

“One reason would be to ensure that the Croatian authorities will continue the reforms related to the judiciary: the fight against corruption, the fight against fraud, the conflict of interest, implementation policy, and so on.”

She is now a cosignatory of the letter sent to Prime Minister Milanovic and to Finance Minister Slavko Linic. The letter is asking that they answer about $15.2 billion illicit financial outflows from Croatia between 2001 and 2010. In that period the government was led by three prime ministers: Ivica Racan, Ivo Sanader, and Jadranka Kosor.

Monica Macovei:

“...that from the lessons learned from 2004 and 2007 accessions, after the accession a large part of the political will is decreasing. In particular when it is about the fight against high level political corruption.”

In the letter to the Prime Minister and the chief of finances there are questions:

1. Have Croatian authorities requested information from authorities in Liechtenstein, Austria, Switzerland, the UK and other countries including the names of individuals and amounts of funds transferred, pertaining to the reported illicit financial outflows?

2. How many cases of illicit enrichment has the government of Croatia prosecuted since 1991? What funds have been recovered for Croatia’s treasury thus far?

In the letter it was reminded that Croatia will between 2014 and 2020 from European Union receive about €11 billion, and stressed the importance of those funds not ending up in private accounts of corrupt politicians and government officials.

In Washington, DC, we talk with Natasha Srdoc, the President of Adriatic Institute for Public Policy, and one of the cosignatories of the letter we're talking about. Ms. Srdoc, you too are a cosignatory of the letter, how did you come up with the number of $15.2 billion dollars which you are bringing into question? Many are questioning the source and the methodology of the calculation.

Natasha Srdoc:

“A good evening to you Toncica and to your viewers. The report was done by one institution, an organization from Washington DC - Global Financial Integrity, based on the data from the balance of payments that Croatia and other 144 developing countries submitted to the IMF. What is being monitored are changes in levels of reserves, external debt, capital inflows and outflows which produced mentioned results.

Namely, the illicit financial outflows will be used by G8 under the initiative by the British Prime Minister Cameron and also at OECD. There is no doubt that the methodology is correct. The report shows the extent of illicit financial outflows via crime, corruption and tax evasion from developing countries.

Just for the Croatia’s citizens and taxpayers to compare this figure: - with this funding we could completely eliminate our foreign government debt or halve the total government debt or our taxes could have been much lower - Croatia’s VAT could have been 15% or even less instead of the 22% and the current 25%.

Toncica Celjuska:

What do you concretely expect from those most responsible. What investigative work should they undertake and toward whom? And do you have any concrete information that you would be willing to share with Croatia’s judicial authorities?

Natasha Srdoc:

Right. Judicial authorities have to do their job. And not only judicial authorities but also the Finance Ministry which is responsible for collecting funds into treasury and the budget, and when it comes to tax evasion, this is of vital importance.

In our Open Letter, we mentioned the countries: first Liechtenstein and then Switzerland, Austria, Great Britain and other countries in this particular order with an obvious intention.

It is known that the US Senate Permanent Subcommittee on Investigation initiated an investigation into LGT bank from Liechtenstein, which financially benefits the Liechtenstein’s royal family where they found out that this bank is helping American citizens to evade U.S. taxes, dodge creditors and ignore court orders. And in this case it became apparent that a great number of American citizens were laundering money through this bank in Liechtenstein.

Liechtenstein is important for Croatia because it is known that prior to Hypo Alpe Adria Bank sale to Bayerische Landesbank, its branch office in Liechtenstein was taken over by the royal family, that is Prince Michael von Liechtenstein, and so through this way the accounts of Croatia’s corrupt politicians and their private partners remained protected by the bank’s secrecy in 2007.

The bank secrecy disappeared after the investigation and great pressure that came from the US side. So today, Germany has managed to collect €2 billions of unpaid taxes from German citizens. One of the most prominent cases was the case of the CEO of German Postal Services (Deutsche Post). Other countries are also working on it. Great Britain has the same initiative towards Liechtenstein and Switzerland, and I think it is time for Croatia to do the same.

In case Croatia’s authorities are not willing or wish to, can not or do not know how to do this, we will request the support of foreign judges and prosecutors.

Toncica Celjuska:

Mrs. Srdoc, thank you for this detailed conversation. I am convinced that our institutions will do their job. Thanks again.

Natasha Srdoc:

I hope so. Thank you, Toncica.