The Slovenia Times

NLB CEO Medja Detained over Mercator Insider Trading



First reports also suggested that NLB chief supervisor France Arhar, who was Unicredit banka Slovenija CEO from 2003 to 2012, had been detained, but he said the police only searched his office and asked him how the Slovenian subsidiary of the Italian banking group Unicredit got hold of the Mercator shares.

Arhar, who told Radio Slovenija he had the status of a witness in the investigation, explained the shares were part of a debt insurance deal with the troubled Istrabenz holding and were transferred to Unicredit banka Slovenija in March 2009.

The NBI conducted searches at seven locations in the areas of Ljubljana and Kranj, looking for evidence of insider trading, which carries a prison sentence of up to five years.

Police suspect that certain bank officials with access to inside information that significantly affected the value of the shares of a company, abused this access to buy the shares.

The NBI said one person (presumably Medja) had been detained, but merely for the purposes of making sure he is present for the house searches. Medja has already been released from custody.

As questions arose today whether Medja was still in a position to head NLB, Banka Slovenije Governor Boštjan Jazbec said the central bank would wait for information about the charges and the course of proceedings against Medja before it could comment on the case.

Finance Minister Uroš Čufer said it was up to the NLB supervisory board to decide whether or not to dismiss Medja. "I think [the supervisory board] understands the situation. They'll probably discuss this, we'll see what happens."

Medja took over at NLB in October 2012 after 11 years with Unicredit banka Slovenija, in the final four years as a management board member. Arhar, who served as the Slovenian central bank governor between 1991 and 2001 and is also the head of the Slovenian Bank Association, became NLB's chief supervisor last June.

Both were at Unicredit during the 2011 and 2012 attempts to sell Mercator, 8% of which is still held by Unicredit banka Slovenija.

The bank was one of the most vocal proponents of the sale, which had been postponed several times, but it never joined the consortium of owners who are selling more than 52% in Mercator to Croatia's Agrokor.

Some say Medja, along with a few other lobbying groups, was among the loudest promoters of the sale, especially because of his allegedly very good relations with some executives at Agrokor.

Mercator's Croatian rival, which agreed the deal this year - pending approval by competition watchdogs - was the only serious bidder and was said to be offering EUR 221 per share during that period.

A bid with such an offer was however never signed by Agrokor and some analysts argued the Croatian company was only testing the ground to gain better access to Mercator's plans.

Moreover, Unicredit demanded an audit of Mercator's deals for the previous five years in January 2012, which is believed to have undermined Mercator's position with respect to Agrokor. Medja's name is also being mentioned in connection to this step.

Meanwhile, the business daily Finance reports that the NBI is investigating whether Croatian bank Splitska banka and funds associated with the Croatian insurer Allianz, important Mercator owners today, were buying Mercator shares on Medja's behalf.

Splitska banka or its undisclosed clients presently control 10.5% of Mercator via a fiduciary account, which makes it the third biggest shareholder, following brewery Pivovarna Union (12.3%) and NLB (10.8%). Considering the current market value of Mercator shares (EUR 90.6) the stake is worth EUR 36.06m.

Both Unicredit banka Slovenija and NLB have confirmed for the STA the investigation is taking place at both banks and that they are fully cooperating with the police. However, while Unicredit said the investigation is not directed against any of its employees, NLB said the investigation is not directed against the bank.

Today's investigation coincided with the parliamentary session dedicated to the central bank's decision to orderly liquidate two private banks, held at the request of the opposition Democratic Party (SDS).

Deputy Matej Tonin of the opposition new Slovenia (NSi) said he did not believe in the coincidence, which is why he surmised the investigation against Medja was distracting attention from the debate in parliament, which he said was "unpleasant for many people".


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