Agrokor’s Rise and the Cracks Beneath
Agrokor, once the largest private company in the Balkans, played a pivotal role in Croatia’s economy, wielding significant influence across Central and Southeastern Europe. Founded by Ivica Todorić in 1976, Agrokor expanded rapidly into various sectors, including retail, food production, and agriculture, acquiring companies like Poslovni Sistem Mercator in Slovenia. Despite its apparent success, cracks in Agrokor’s financial foundation began to show, revealing a story of debt, opaque practices, and strategic missteps.
Expansion Fueled by Debt
Agrokor’s growth strategy hinged on acquiring businesses throughout the Balkans, positioning itself as a dominant player in the region. These acquisitions, including the high-profile purchase of Slovenia’s Mercator, were primarily financed through debt. By 2014, Agrokor had secured substantial loans from Sberbank, Russia’s largest state-owned bank, with its debt eventually exceeding EUR 1 billion. The company’s overall liabilities soared, leaving Agrokor highly leveraged and vulnerable to economic fluctuations.
The aggressive expansion, combined with underperforming acquisitions, created significant cash flow challenges. For instance, the integration of Mercator, while intended to bolster Agrokor’s retail footprint, led to operational strains and increased debt without delivering the expected returns. This debt-driven growth model created a fragile financial structure that was bound to face challenges as economic conditions tightened.
Financial Mismanagement and Hidden Realities
Behind the scenes, Agrokor’s financial troubles were exacerbated by questionable accounting practices. According to our investigation, the company maintained two sets of financial records: one for creditors and the public, and another for internal use. This allowed Agrokor to mask its financial instability for years while continuing to secure loans from international creditors like Sberbank and VTB Bank, another major Russian financial institution.
As Agrokor’s crisis deepened, the Croatian government stepped in with the adoption of Lex Agrokor, a law designed to protect the company’s Croatian assets from creditor claims. This move underscored the precarious position of Agrokor’s finances and the broader implications for Croatia, where the company employed tens of thousands of workers.
Lex Agrokor and State Intervention
By early 2017, Agrokor’s financial struggles could no longer be hidden as its accounts were frozen due to unpaid obligations, prompting suppliers to halt deliveries. In response, the Croatian government enacted Lex Agrokor in April 2017, appointing a crisis manager to oversee the company’s management and initiate debt restructuring.
This emergency measure sought to stabilize Agrokor’s operations and protect its assets from international creditors. However, it sparked criticism from foreign creditors like Sberbank, who felt sidelined by the Croatian government’s decision to prioritize local interests. The law’s implementation marked a significant shift in Agrokor’s management, as control moved from Todorić to a state-appointed overseer.
Influence from Austrian Financial Circles
As Agrokor’s crisis unfolded, a web of connections among Austrian financial players emerged. Figures like Alexander Dibelius, a former top executive at Goldman Sachs, became involved in strategic moves that influenced Agrokor’s trajectory. According to our sources, Dibelius played a role in Agrokor’s acquisition of Mercator, advocating for conditions that strained the company’s liquidity. His involvement, alongside other Austrian figures, reveals the broader influence of these circles on Agrokor’s fate.
These advisors helped shape the strategic decisions that led to Agrokor’s collapse, positioning themselves to benefit from the company’s restructuring. Their role in advising on financial moves, coupled with their ties to influential creditors, highlights the complexities of Agrokor’s financial turmoil.
Shifting Power Dynamics
Agrokor’s downfall was a result of a complex interplay between rapid, debt-driven growth, financial mismanagement, and the strategic actions of various stakeholders. The company’s reliance on debt, coupled with opaque practices, created a fragile foundation that ultimately collapsed. As the Croatian government stepped in to stabilize the company, the strategic influence of Austrian financial advisors and international creditors like Sberbank came into sharper focus, setting the stage for further investigations into their roles.
Read the follow-up stories 2 and 3
Our thanks go to the team at https://AssetTracing.com for their assistance in preparing this investigation.
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