The Slovenia Times

Former bank boss sentenced to prison

Crime
Matjaž Kovačič, the chairman of Slovenia's second-largest bank, NKBM, between 2005 and the end of 2011, has been sentenced to one and a half year in prison for abuse of office linked to a forward sale of shares of three power companies. The sentence is not final yet and the defence has announced an appeal.

The case also involves Matej Raščan, the former owner of the magazine publisher Delo Revije, who was sentenced to a year and four months in prison after being found guilty of assisting Kovačič in allowing Raščan's company to make over a million euro in financial gain.

The case in which the Maribor District Court declared the judgement on 29 August, pertains to suspicious stock transactions that NKBM performed in 2010 which were allegedly linked to Raščan's attempt to take over the newspaper publisher Večer.

NKBM purchased €1.7 million worth of shares of power distributors Elektro Ljubljana, Elektro Primorska and Elektro Celje in 2010 and then immediately made a forward sale to the companies Vinag and M&M Consulting, which allegedly did not have enough money to meet the conditions to commit to the purchase.

The prosecution alleged that the transactions served as a credit to Raščan's company to finance the takeover of Večer. Since Kandela, the company that NKBM bought the shares from, was said to no longer be creditworthy, Kovačič and Raščan avoided the deal being discussed by the credit committee by making a forward sale.

The prosecution alleged that Kovačič had abused his position at the bank to earn Kandela more a million euro in gain. It argued it was clear Raščan was behind that company because he had controlled its bank account and made agreements about the deal with Kovačič.

The head of the judging panel Karmen Krajnc said it had been proven that Kovačič had abused his position, and had had obvious interest in the deal. Raščan needed money to buy Večer, which would enable both to gain influence in the media.

Raščan had already owed NKBM more than €15 million through his companies Monera and Delo Revije at the time, so Kovačič enabled him to get money in the manner in which the management, meaning Kovačič himself, had the main say.

In order to at least ostensibly secure the purchase at a value higher than the book value, Kovačič concluded a contract with Vinag and M&M Consulting with which the companies committed to buy the shares, but this did not happen for quite some time.

It was only after the Commission for the Prevention of Corruption (KPK) drew attention to the deal that Kovačič himself arranged a €1 million loan for Vinag at the bank Factor Banka, which would later be wound up.

While the defence maintained that NKBM was fully repaid, which the court acknowledged to a large extent, the court noted that the disputed acts took place much earlier, and that the debt was settled only after the warnings from the KPK.

The visibly disappointed Kovačič said that, as an a holder of a degree in economics, it was not clear to him how he could be convicted of white-collar crime if the judge had clearly stated that the bank had not suffered damage.

"I allegedly gained something without causing damage to the bank, which is absolutely unacceptable to me," said Kovačič.

His counsel Črt Šatej announced an appeal, convinced that the arguments presented by the defence can only lead to acquittal. "After all, the court confirmed the defence's argument that the bank was not damaged, so it is difficult to understand what the criminal act is about."

Specialised State Prosecutor Mojca Petan Žura disagreed with the court's assessment that the bank did not suffer damage, noting that Vinag only partially reimbursed the damage after the warnings from the KPK, while M&M Consulting did so only after seven years as part of an enforcement procedure.

This is the first guilty sentence for Kovačič, who is on trial in two other cases. In one he is accused of abuse of office by extending a loan to Raščan to acquire Delo Revije, and in the other of involvement in a scheme to defraud the bank out of nearly €30 million through real estate deals in Croatia between 2006 and 2009.

Raščan, who used to be an important player in the Slovenian media space, built his business empire by taking over the knitware company Rašica and the magazine publisher Delo Revije, both of which later ended in receivership.

Raščan has already served out his four-year prison sentence for defrauding Delo Revije by abusing the publisher's good credit ratings and taking out massive loans and funnelling the money to his other companies and his own personal bank accounts.

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