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“Vučko” Made Off With Millions From State Land

Falsified documents, deceived partners, and millions in debt – these all were the controversies that for decades followed the construction and operations of the Vučko Hotel complex in Jahorina managed by father and son Prović. The municipal authorities made it possible for them to misappropriate state land, while the Entity authorities gave them millions in loans, which are now being repaid by Bosnia and Herzegovina. At the same time, the Prović family hid millions in profit.
Illustration: Željko Todorović (CIN)

The beloved mascot of the 14th Winter Olympic Games in Sarajevo welcomes the guests to the luxurious eponymous hotel in Jahorina. In the winter, thousands of guests wake up in Vučko Hotel, in the corridors of which the owner Aleksandar Bato Prović from Pale greets them with a smile. He patrols the hotel every day, not missing a single guest.

For some twenty years, Aleksandar and his father Milomir have been managing Vučko and the apartment complex, which they have been building over the past decade with investors from Serbia and Russia, not being able to finance the construction on their own.

Yet, their initial capital was not the private property of other businessmen but the property of Bosnia and Herzegovina. As CIN reporters revealed, the Municipality of Pale having disregarded the national legislation awarded them the old Olympic hotel Vučko and valuable state forest land on which they built the apartments. Once investors were in, the Provićs started spending the invested millions on their own needs, while assuring them that the money was being invested in the agreed construction.

“I’ve put in BAM 13 million and got back only BAM 235,000”, says the investor Dragan Đordan for CIN.

The Provićs kept from Đordan the multi-million borrowing from the Investment and Development Bank of Republika Srpska (hereinafter: IRB), which they have been repaying with his money while mortgaging the joint apartment facility. They took loans in 2009 and 2012, with the latter being approved based on falsified documentation. These loans were approved by their acquaintances and guests of the Vučko Hotel – the then Prime Minister of Republika Srpska (RS) Aleksandar Džombić and current President of RS Milorad Dodik.

Already heavily indebted to IRB and with a default history, the Prović family accrued debt of BAM 12 million by May 2022. Part of the money granted to them was from the European Investment Bank (EIB) funds, the repayment of which is guaranteed by the state. While the Provićs profited, Bosnia and Herzegovina is still repaying their loan.

“What problem do you or anyone has with that? The state is repaying it and the state will collect it”, Aleksandar Prović casually commented on his debts.

Following Đordan’s report, the District Prosecutor’s Office in Istočno Sarajevo opened an investigation into the economic crime and document forging related to the IRB loan, but the investigation was suspended due to a lack of evidence.

Business on misappropriated state property

Hundreds of thousands of tourists from all over the world visit Jahorina every year. Tens of thousands of them stay during the winter season in the complex managed by the Prović family. One of the facilities comprises the old hotel Vučko with suites, a restaurant, a wellness and spa center, three conference rooms, and sports courts, and the other comprises luxurious apartment blocks.

According to Aleksandar Prović, his love for skiing brought him into the world of tourism and hotel management in Jahorina (Photo: CIN)

Two decades ago, the Prović family took over the old hotel that was built for the 1984 Winter Olympics. They wanted to expand the complex with new apartments but were short of money since the reconstruction of the hotel rendered them deep in debt.

In search of business partners, they came across Dragan Đordan, a Tuzla-born investor who has been running a successful construction business in Russia for three decades. In 2007, Đordan bought an apartment in Vučko but came to visit his property only nearly two years later. On this occasion, he met Milomir Prović with whom he shared his success story.

According to Đordan, shortly after they met Prović offered him to invest in the construction of apartments in the Vučko complex. Prović’s cousin Mirko Tica from Serbia, whom Đordan trusted based on the collaboration they had before, was also familiar with the construction plan.

“The idea was that they (author’s note: the Prović family) wanted to build, and they had the land and the project, while others should be financing it”, Đordan said, reminiscing how he embraced the offer without a shred of doubt in its success. Tica too described the agreement as a promising project, conceived as a business venture of three families.

Hence in 2010, Đordan and Tica signed a partnership agreement with Aleksandar and Milomir Prović’s company “B&B Vučko”. They thus committed to investing BAM 3.1 million each in the first phase of the construction of the apartments, and after that, they would continue to invest proportionally until the construction is completed.

They founded the company “Club Aparthotel Vučko” to which they agreed to invest and pay money. The sales of the apartments was supposed to ensure the return on investment, while the profit of the company would be shared by their children, as co-owners in this company: Tica’s daughters Gordana Stanković and Maja Uskoković, Milomir Prović’s children Ana Kovačević and Aleksandar Prović and Dragan’s son Bojan Đordan.

“We agreed to lay out foundations in a clear, responsible, and professional manner for our descendants to have a firm project and collect dividends from business operations”, said Đordan.

Milomir and Aleksandar Prović, Mirko Tica, and Dragan Đordan at the beginning of the collaboration in the Vučko Hotel in 2008 (Photo: Facebook “Club Aparthotel Vučko”)

Not having the money for the first phase of construction, the Prović family offered their land and infrastructure worth BAM 3.1 million, which Đordan and Tica accepted.

However, as revealed by CIN reporters, the Provićs became the owners of the land and Vučko Hotel even though these were state property which under the Law on Temporary Prohibition on the Disposal of State Property of BiH could not be transferred to private ownership.

In 2006, the Municipality of Pale granted the forest land use rights for 15,218 square meters of land to B&B Vučko for more than half a million BAM.

“It is to the detriment of the state”, says Ismet Velić, state Attorney General. According to him, municipalities can only dispose of construction land in their ownership, not forest and agricultural land owned by Bosnia and Herzegovina. Despite this, the RS Attorney’s Office gave a positive opinion on the land allocation.

In the last 17 years, this land has been fragmented into smaller pieces.  Part of nearly four acres, which the Provićs pledged to bring in the joint venture with Đordan and Tica, was estimated at four times the price they paid the Municipality for the whole land.

“Even if I paid a single BAM for the land, it’s my business”, said Aleksandar Prović.

The Municipality of Pale ignored the multiple CIN’s inquiries about the allocation of the land to B&B Vučko.

Similarly, the Provićs also got the old Vučko Hotel, which the Pale Municipal Assembly took away from the public enterprise ZOI 84 by its decision of 1991. In the 2000s, through the Pale Municipality, the Provićs took over the hotel together with their Slovenian partner at the time, Bojan Križaj, a former Yugoslav skier, with whom they terminated cooperation in the meantime.

Križaj briefly commented: “Don’t make trouble for me and yourself with that story.”

The public enterprise ZOI 84 sued the Pale Municipality, but after a 20-year-long process, they failed to return the hotel. In 2012, the District Commercial Court in Istočno Sarajevo rendered a final decision under which the hotel remained in the ownership of the company B&B Vučko.

“It was a political decision”, said Vesna Tošić, retired secretary of ZOI 84 commenting on the 1991 actions of the Pale Municipal Assembly.

Aleksandar Prović does not deny having good connections with politicians in Pale and Banja Luka but he said that no one gave him anything and there was no corruption: “Whoever wanted, could get it.  It didn’t require any political affiliation”.

The Vučko complex in Jahorina has about 300 hotel rooms and apartments (Photo: CIN)

Vesna Softić, a notary from Sarajevo, was au fait with the details of the partnership agreement from the very beginning. She told CIN reporters that Đordan and Tica trusted their partners in Bosnia and Herzegovina.

“They obviously had money they could and wanted to invest (…) These guys here were disposing of funds, and at times I was surprised by the level of trust they enjoyed. It was millions”, said Softić.

The construction of the apartments began in 2009, shortly before the signing of the partnership contract, and everything seemed to be going in the direction the partners had agreed. From time to time, they needed money to continue the construction, so they supplemented and certified annexes to the contract on additional financial investments at the notary’s office.

Đordan never doubted his partners: “It seemed unbelievable that so many people could be involved in deliberate misrepresentation and fraud from the outset.”

As it will later turn out, he was the only one who paid the entire amount of the investment.  Tica paid only half of the agreed amount, while Prović’s investment remained only a dead letter.

This was not the only business deal that the Provićs kept from them. The land they were supposed to invest in the project was owned by their company B&B Vučko.  Under the contract, they were supposed to give it to Club Aparthotel Vučko, but instead, they sold it to this company in 2011 for almost half a million BAM.  The land was paid for with Đordan’s and Tica’s money, which ended up in the pockets of the Prović family.

“I sold it because I could!”, said Prović to reporters.

“We didn’t even understand the situation. How was this possible?” said Đordan, who did not know about this sale for seven years.

The first apartments were built on this land, and the Provićs fragmented the land to use it as collateral for a mortgage loan from the RBI. And they did it without informing their partners.

“It is totally against the rules, especially, the fragmentation of the built facility. Someone should have been there to control their every action”, says the notary Softić, who notarized the investors’ contracts.

Dragan Đordan believes that his partners were not honest about the joint venture from the start (Photo: CIN)

False documents in the RS Investment and Development Bank

By 2010, B&B Vučko owed millions to Hypo Bank. The Provićs needed financial help to pay the debts, hence they turned to the Investment and Development bank where they had a long-time family friend Aleksandar Džombić, who was deciding on loans from the positions of an RS prime minister and RS finance minister, President and later a member of the Credit Committee.

According to Aleksandar Prović, Džombić was helpful because as an official he “recognized that Jahorina can be a destination from which a lot [of profit] can be made.”

During the development of the hotel business, help was coming from all levels of government in the RS: “We were receiving support not only from the Municipality but also from the Ministry and the then Government  (…) I think that Dodik was Prime Minister at the time (…) but also from all others who came after him”, says Prović.

According to the records of overnight stays in Vučko Hotel that were made available to CIN reporters, Milorad Dodik and reps of RS institutions often enjoyed the Jahorina fairy tale experience, while billing it to the budget of the Entity.

“I just want to say that my father and I, and especially my father, have built very good relations with all political structures, with all politicians. We have never been members of any political party but we fostered fair relations with all those who were in power”, Prović explained.

According to the document of the investigative authorities of the Republika Srpska, Džombić, as the then Entity Minister of Finance and a member of the IRB Credit Committee texted Bojan Golić, the then director of the IRB, urging him to approve a BAM 5-million loan.

“Speed up the Vučko case (…). It’s urgent!”, Džombić wrote to Golić on December 21, 2009.” “OK. I’ve got the call about it too (…). Vučko will be [considered] in the next committee [meeting]”, he replied.

Four days later, Dodik, as the then prime minister of the RS serving as the chair of the IRB Credit Committee with the mandate to decide on large loans, signed and approved a BAM 5-million loan to B&B Vučko for refinancing of old debts and construction of wellness and spa center.

Dodik and Golić did not answer the call from CIN reporters.

Džombić did not want to talk to reporters about his work at the IRB as he is subject to pending criminal proceedings. He was accused of granting a BAM 19.4 million loan to the Zvornik company Energolinija in 2012, knowing that the company will not be able to repay it due to insolvency.

Aleksandar Džombić met with CIN reporters, but due to the pending court process, he could not make any official statements (Photo: CIN)

In 2012, Džombić, as the Prime Minister of the RS and the President of the RBI Credit Committee approved another BAM 6 million loan to B&B Vučko for repayment of old debt. These were the funds of the European Investment Bank (EIB), which BiH borrowed to finance the investment projects of companies in RS.

“As far as I recall, these funds were not available for refinancing some obligations, i.e., loan commitments. Perhaps, the refinancing was partly related to the purchase of some machinery, liabilities to suppliers of previously purchased machinery but there was no possibility of using it for refinancing of existing loan commitments”, says Milenko Pavlović, the IRB director at the time, who received the loan application from B&B Vučko.

The forest land and Vučko Hotel, which the Provićs got from the Pale Municipality, were pledged as the guarantee for the first IRB loan, while the collateral for the second loan was the properties of Prović’s father Milomir and his companies C-PROVEX and Elit and the Club Aparthotel Vučko apartments under construction, which were at the time estimated as BAM 7.6 million.

CIN revealed that the second loan was approved based on falsified documentation on mortgaging the company’s property. Namely, in 2012, the Provićs submitted a falsified decision by the general meeting of the joint venture Club Aparthotel Vučko stating that the company mortgages apartments that they built with Đordan and Tica.

According to the documentation submitted to the IRB, the facility under construction was mortgaged by Ana Kovačević, the sister of Aleksandar Prović, who at the time was the director of the company Club Aparthotel Vučko.

She signed documents stating that the co-owners of the company at the extraordinary general meeting held in March 2012 via teleconference, approved the pledging of the property. However, none of the co-owners attended this general meeting nor did they sign the company’s agreement to pledge the property. As it turned out, Kovačević made this document five months earlier and attached it to the loan application.

She did not want to comment.

Đordan and Tica found out about the mortgage only in 2015, when the IRB blocked the accounts of their partner B&B Vučko due to default.  They immediately convened a general meeting of the company Club Aparthotel Vučko, where they declared to have never approved the pledging of their property. Having inspected the financial ledgers on this occasion, they realized that B&B Vučko was repaying the IRB loan with investors’ money.

“The mortgaging process was unlawful and insinuates criminal conduct.  As a human being, I cannot understand this”, said Tica, according to the minutes from the general meeting.

Forged documents on the pledging of property of Club Aparthotel Vučko that were submitted to the IRB (Photo: CIN)

The mortgage papers were notarized by the notary Gordana Gerdijan from Banja Luka, which the notary Softić found strange since she was doing their contracts up to that point: “There was something that they did not want to be known.  It was a red flag for me that something was not right.”

Gerdijan claimed to have done nothing beyond the decisions of the IRB, which was the first to determine the legality of the documentation: “How could I know that these were fake documents, all of which were signed and with a seal, if the bank had their credit committee there, the references?”

Paying debt to partners

Milomir and Aleksandar Prović admitted part of their debts to investors in the presence of the notary Softić. To pay their debts, they promised to transfer the hotel Vučko and the land with accompanying facilities to the joint venture. This was not possible since Hypo Bank had registered a lien on these properties, and they also failed to do so later when the mortgage was lifted in 2022.

With the new IRB loan, they were supposed to close the old Hypo Alpe Adria bank loans, which they took before the deal with Đordan and Tica but this was not possible because their debt exceeded by several times the amount they secured with the IRB loan.

“Most of the loan is closed, but not in its entirety”, Aleksandar Prović admitted to reporters.

The IRB management failed to explain to CIN the basis against which they concluded the creditworthiness of B&B Vučko. They claim to have made no mistakes in their loan-granting process.

Former director Pavlović, as he says, tried to prevent the Bank from taking big risks, knowing that it could “cost it a lot”: “The [Bank’s] Risk Center at the time held that by building the hotel and placing it under a mortgage, the loan could be adequately repaid”, he said, adding that the RS Government reps had the final say in it.

As CIN revealed, IRB provided EIB with incorrect information on the purpose and use of the loan.

“Based on information provided to the EIB by the Financial Intermediary at the time, the purpose of the loan was the purchase tangible assets i.e., modernization of kitchen equipment, modernization of hotel interior, building of a conference room and pool, modernization of restaurant and sport facilities, building of a congress center, and investment in working capital, said EIB rep for CIN.

The contract between B&B Vučko and the IRB says that the company will use over three and a half million marks of credit to pay off earlier debts, and a smaller part for the construction of a sports hall and swimming pool.  However, the construction of the sports hall and swimming pool was paid for by investor Đordan.

In May 2022, the RBI confirmed for CIN that the debt of B&B Vučko was nearly BAM 12 million. The bank did not respond to the inquiry about the amount of debt in mid-2023.

The bank sued the company in 2015, but the proceedings are still ongoing. In the meantime, the state of Bosnia and Herzegovina is repaying the loan as part of its commitment to EIB.

Đordan reported Prović to the District Prosecutor’s Office in Istočno Sarajevo for falsifying documents, but the prosecutor Halida Vrabac suspended the investigation.

“I simply doubt that the RBI would have approved the loan if the documents were forged (…) It’s not a simple procedure and they don’t just give such sums of money like that,” said Vrabac.

She never heard the testimonies of Tica and Đordan but she concluded that they “tacitly agreed” to pledge the property, even though she had a certified decision of the General Meeting saying otherwise.

Prosecutor Halida Vrabac “it was not at all easy” for her to handle this case but she believes the investigation was carried out properly (Photo: CIN)

Siphoning off the money

When the Đordans found out about the debts and liabilities with the RBI, they started doubting their partners.  They asked the accounting department of Club Aparthotel Vučko for all cash flow reports. Although Bojan Đordan is the single largest individual owner of the company it took him three years to get the requested data because Tica and the Provićs constantly prevented and blocked the delivery of the data.

When he finally got them, the data showed that the Đordans alone invested more than BAM 12 million in the construction, plus some borrowing, while Tica invested only half of the agreed investment i.e., about five million BAM.  While investing neither land nor money, the Provićs used the investors’ money mainly to satisfy their own needs.

“We were in shock”, recalled Đordan, who believed his partners were honoring the investment agreement. He claims to have no idea as to what happened to over BAM 6 million revenues from the sales of apartments.

The Vučko complex consists of more than 200 apartments, less than half of which were never completed due to disagreements between the investors. The first apartments went on sale in 2013, and about fifty of them were sold at prices from 1,700 to 2,500 BAM per square meter. The company’s financial statements reveal that the Provićs have been selling the apartments without authorization, thus keeping more than a million BAM for themselves.

The accounting reports showed that the Provićs paid more than BAM 1.7 million from the account of Club Aparthotel Vučko to the company B&B Vučko on their own. While constructing the blocks of apartments A, B, and C, they also worked on the construction of an apartment wing adjacent to the old Vučko Hotel. The money for the construction of the apartment wing was taken from the joint venture by fictitiously increasing the quantities of construction material required for the construction of the apartment blocks.

“So we built even the things that we shouldn’t have”, commented Đordan.

Slobodan Perić, an employee of Club Aparthotel Vučko who supervised the construction of the apartment blocks indicated in his supervision report that the materials built in the apartment wing were signed off as works on blocks A, B, and C at the request of Aleksandar Prović.

The receipts and reports of the supervisory authorities showed, inter alia, that the Provićs financed the following works on the apartment wing from the money of Club Aparthotel Vučko: electrical installation works, heating installation, access card, and CCTV systems, installation of windows and furnishing of apartments.

Aleksandar Prović claims to have paid for the works on the apartment wing from the money of B&B Vučko but he offered no evidence in support of this claim.  “I don’t like to discuss whether I have proof”. Although he promised to share evidence in support of his claim with CIN, he never did so.

However, the former finance director of Vučko Zoran Miljuš recalls that a team was formed to make an analysis. The analysis showed that the quantity of material paid for exceeded the quantity of material installed in the building: “I think that’s when the major problems arose.”

Mirko Tica says that wrong ambitions led to partners going separate ways, which is why he decided to withdraw from the deal.

At the same time, financial statements incorrectly showed that Tica was investing as much as Đordan. He never paid somewhat less than half of the money he committed and agreed to invest.

“Everyone has their own point of view – who regularly honored the commitments, who couldn’t or didn’t want to honor them”, said Tica.

In 2021, he filed a civil action against Club Aparthotel Vučko, and the Sokolac Basic Court ordered the company to pay him a debt of BAM 4.4 million.  He was thus granted the right to register as the owner of the apartments in the amount of his investment claim. In 2022, Tica sold more than 80 completely or partially built apartments to the company “Real Estate Jahorina” without informing Đordan thereon.

Đordan also filed a civil action against the company before the same court, seeking to collect his debt. He says he submitted the same evidence from the accounting company as Tica, but his claim was declined. He appealed against this court decision, the appeal was accepted and now he awaits the start of the new proceedings before the Sokolac Basic Court.

“I gave more than BAM 13 million through 63 payments from my private account to which I had previously properly paid all the taxes. I’ve got back only BAM 235,000”, said Đordan.

“He may never collect anything (…)”, Aleksandar Prović said.

Đordan is still fighting to collect the debt with interest before BiH courts, but he claims judges and prosecutors do not accept his evidence, of which he warned the former president of the RS, Željka Cvijanović, and current president Milorad Dodik.

“It’s a disgrace and a huge signal to everyone who gets into such deals. They are not protected and can hardly get justice. Society is highly corrupt. Simply said, it is all crime and fraud.”

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