The government of the Federation of Bosnia and Herzegovina (FBiH) has spent more than 1.27 million KM over the past five years reconstructing and maintaining the ‘Residence of Rest’ in Trpanj, Croatia, on the Adriatic Sea.
Taxpayers have footed the bills for this while some 90 politicians and civil servants have vacationed with their families nearly for free in what had been a prewar residence for communist functionaries. Its latest report showed that the FBiH auditors could not track down the bulk of the money paid to the account of a firm that runs the residence because of missing billing.
Profit from rent of 12 rooms—three are single bedrooms and nine double bedrooms with an extra bed and shared kitchen —falls far short of costs. The most proceeds, 6,255 KM, were made in 2008 when 17 persons with family members were reported as guests. That year, 107,352 KM was spent on maintenance costs, while another 177,437 KM went for a well-equipped 7-meter boat.
Miroslav Šunjić, director of the company managing the residence told journalists and the Trpanj tourism association no guests stayed in the house in 2010. Reporters for Center for Investigative Reporting in Sarajevo (CIN), however, interviewed at least four officeholders who said they vacationed in the residence last summer.
Šunjić credits the fact that BiH owns the residence today to Haris Ihtijarević, director of the Joint Affairs Department of the FBiH Bodies and Agencies which manages FBiH-owned real property. He initiated and managed investments that the FBiH government had signed off on. He said he did this because this building was in peril of being confiscated by Croatia; it was in such bad shape, rubbish strewn and rat infested.
‘There have been absolutely no claims, neither from Trpanj Municipality nor from any other government level’ said Mayor Jakša Franković. He added that it was the municipality that asked BiH authorities to pay for outstanding debts and take care of the dilapidated building.
A memo was sent to Ilija Šimić, then deputy chairman of the BiH House of Peoples, who said that he knew people within Trpanj municipality and he talked with them about the residence. Šimić did not send this memo to the BiH Council of Ministers, but to Alija Behmen, then the FBiH prime minister.
‘The Council of Ministers was at its inception and was preoccupied with itself. And to this day it has been preoccupied with itself, while the entities do get things done’ explained Šimić. That year, the FBiH government paid more than 14,000 KM to the municipality, took over the residence and charged the department with taking care of it.
Significant investment in the residence began in October 2006 when the government allocated 130,000 KM at Ihtijarević’s suggestion. However, almost five months before that decision, Ihtijarević had contracted Miroslav Šunjić’s company from Trpanj – Šunjić LLC.
Ministers against Šunjić
Ihtijarević signed a contract with Šunjić LLC on June 6, 2006. Records in the Court in Dubrovnik show that the company was incorporated three and a half months earlier. The contract reads that the department’s commission thought the company’s bid to be the best, but CIN reporters were not granted access to the commission’s minutes.
The contract reads that the department took over an obligation to pay 44,237 KM annually for the maintenance of the residence and the salaries of two employees. In the following year, additional annexes to the contract were signed and the costs rose to 73,769 KM.
Ihtijarević recommended the FBiH government set up a state-owned company to keep up the residence and at a government session dated May 7, 2008, was signed into existence Riva Trpanj LLC. The new state company was made of Miroslav Šunjić and three of his employees.
The number of employees who worked on the maintenance of the residence has not increased since 2008, but the maintenance costs have risen.
The transcript of this session reveals that Ihtijarević lobbied the government to appoint Šunjić as director against the opposition of three ministers. He also convinced the government that Riva Trpanj LLC should be taken over by Šunjić LLC with all its rights and obligations, because the latter is ‘a designated legal entity that does work for the FBiH government’.
Three people that voted against him were Vahid Hećo, minister of energy and mining, the culture minister Gavrilo Grahovac and the finance minister Vjekoslav Bevanda, who vacationed in the residence that same year. All refused to talk about Trpanj, referring reporters to Ihtijarević.
The government accepted Šunjić as an acting director at the time, in order to incorporate the company, deciding that a permanent director would be named later. But then Prime Minister Nedžad Branković erred in signing the power of attorney that was to make this happen and which would have authorized Ihtijarević to dispose of money from an account of the new company. Required date and protocol number was missing on the document.
Riva Trpanj LLC was established in May 2008, but it was taken over by Šunjić LLC only in July of the following year. Thus, in 2009 the department was financing both companies. Šunjić LLC received 56,771 KM for the maintenance, while Riva Trpanj LLC got 85,000 KM ‘for the support of the Riva Trpanj facility’. Since the department has not provided the billing, the auditors were unable to establish how 141,771 KM was actually spent.
Investigation of FBiH Financial Police
The FBiH Financial Police investigated Ihtijarević’s management in 2009 after Salko Obhođaš, the then FBiH minister of spatial planning reported him for abuse of office and conclusion of harmful contracts related to investments in the residence and two other government-owned facilities. The minister later retired, while the financial police had filed its report with the Prosecutor’s Office of Sarajevo Canton. The case is still in the ‘pre-investigative phase’ according to the prosecutors.
The report describes how the department invested in the residence even though it knew that it was in state not FBiH ownership. The Financial police were unable to analyze the financial statements of Šunjić’s company because it is registered in another country. According to the auditor’s report Ihtijarević bought a boat in February 2008 without the knowledge or authorization of the FBiH government. Asked why, Ihtijarević responded:
‘And what if someone got hurt? The closest outpatient clinic is in Neum. To get there by land takes two hours and with a boat half an hour. And this is not a yacht, just a plain boat.’
CIN located an outpatient clinic with a pharmacy in downtown Trpanj, less than a kilometer from the residence. Šunjić said there was no rulebook on the use of the boat, and that BiH Border Police sometimes used it. Officials with the Border Police denied that.
Renovation of the residence, purchase of the boat and nearly 327,000 KM in budget funds for the past two years have not been sufficient to make this operation sustainable. The financial statements of Šunjić LLC and and Riva Trpanj LLC show that the firm Šunjić managed is either in red or has a token profit.
Šunjić and an employee, Igor Burić, explain that a lot of the money is spent on taxes, utilities and salaries of four employees who take care of the building 24/7. Everything is expensive and water in Trpanj is expensive like gold, according to Burić.
‘Those figures are beyond us’ said the head of Franković, befuddled at the high costs of the residence’s maintenance.
According to a price list set up by the department and approved by the government, politicians and civil servants were to pay 45 KM for a double room, additional bed and the use of common kitchen until the summer of 2010. Šunjić said that was increased to 80 KM per person for a bed and breakfast during 2010 adding that ordinary citizens would be allowed to vacation in the residence, even though the politicians would have precedence.
Šunjić said that in 2010 no one vacationed in the residence and thus there was no revenue. However, the head of the FBiH Inspection Authority Ibrahim Tirak said that he was a guest last year.
‘It was sad, less than five people this summer…I was there and I don’t hide it’. The deputy in the FBiH Parliament Safet Softić and Sarajevo lawyer Sadik Hota also confirmed in an interview with CIN reporters that they visited the residence last year. Softić also said that a former member of the FBiH Parliament Abdulah Garača summered at the residence.
56,000 KM on Business Trips without Justification
Ihtijarević has been going to Trpanj on official visits and traveling to this seaside place in the company of waiters employed in Sarajevo. The department had spent more than 56,000 KM for business trips abroad during 2008 and 2009, according to auditors.
Of Ihtijarević’s 13 business trips abroad during 2008 and 2009, at least six were to Trpanj, most during weekends and taken with no explanation of trip purpose. One trip took place in the beginning of May 2008. Ihtijarević spent then in Dubrovnik 600 KM for shrimp and clams and 110 KM on Plavac wine. The director of the department did not want to talk about the reasons for his trips to Trpanj, nor about Riva LLC’s financial dealings.
In the previous conversation with CIN, Ihtijarević said that one should not expect the residence in Trpanj to be profitable because it is designed for luxury. In his report to the government dated July 2008, Ihtijarević wrote that after the incorporation of the firm Riva Trpanj LLC, the residence was going ‘to cover, mainly on its own, the costs of business.’