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INTERVIEW, IVANA VESELINOVIĆ

Belgrade 01. 05. 2010 Politika Politika

INTERVIEW, IVANA VESELINOVIĆ

Luka purchased by the loan money

Our attorneys in Serbia and in Brussels ensure us that we have the right of damage repair on the grounds of deprivation of the construction right. We want to put an end to the economic and political pressure to which our company has been exposed.


General manager sold his shares

Minor shareholders claim to be damaged and that estimation of the Institute of economics was hidden from them. Former minor shareholders are not suing Worldfin to whom they sold their shares nor the current management of the company. Their lawsuit is directed against former management of Luka when they still owned the shares. Although we believe that the lawsuit is essentially nonsense, we take it into consideration because they require Luka Beograd to pay their damages. Who else than the usual suspect? Luka wasn't in charge of advising the shareholders how to deal with them and at which price to sell them, but even the law strictly prohibits anyone to influence the final decision of shareholders during takeover bid. The company is only allowed to give a public statement regarding the received offer if it wants to. It can, but it doesn't have to do it. Luka and its Executive board did so. It was announced in the advertisement in "Politika" that we should wait for competitive offers. They were informed that the new estimate of the company's property would be higher than the one stated in the books. However, most shareholders sold their shares because our offer was three times higher than the registered value. Even the former CEO sold his shares and he also filed a lawsuit. He was also ignorant, can you believe it. Around 800 shareholders didn't sell their shares and now they should make up for the former ones who are suing, which is absurd.

The truth of Luka Beograd is simple. This company and its shareholders are clean and authorized institutions have the real insight into it - the Prosecution, the police, Tax administration and the Administration for the prevention of money laundry. They acted by conscience and they were the only ones who remained silent, states Ivana Veselinović, the president of Luka Beograd in the interview for "Politika". We want to put the final end to economic and political pressure to which our company has been exposed for more than two years, Whoever wanted to attract public attention and make cheap public-political profits in that period, started mentioning Luka. The public was filled with incredible sensations. The "research journalists" were speculating with the amount of 2.5 billion euros in their estimates of the port value. Unqualified people from Anti-Corruption Council warned and insulted state officers, the prosecution and the courts, saying that they were corrupted. Current politicians are accusing their predecessors to have met our requirements illegally. And current opposition blames the politicians in power to be acting the same. We want to clearly stress that those depending on populism should find another victim somewhere else, says Ivana Veselinović answering the question why Luka Beograd had recently requested the reinvestigation of privatization.

How was Luka Beograd purchased? Is it true, as Stanko Subotić claims, that he lent you the money?
It was purchased on a takeover bid in Septembar 2005. Takeover bid is a financial mechanism which Serbia took from the European practice after 2000 because it stimulates competition, reaching the highest price for shareholders as a very safe and transparent process. The money was obtained from Hypo Alpe Adria bank loan which is still being paid off. Besides, the bank publicly confirmed this.

If Worldfin's capital was 31.000 as it is stated in the report of the Anti-Corruption Council, how did you pay the shareholders?

From the bank loan, as I already said.

Was there 42 million euros on Luka's accounts at the moment of purchase?
That's absolutely false. Two financial inspections came to Luka to confirm that. The person who brought up that issue and is now waving the papers, doesn't actually know how to interpret financial reports.

When you offered them 800 dinars per share, were you aware of the Institute's estimate, which was officially published on the same day as the transaction took place. According to it, the company was valued at 7.38 billion dinars or around 1,700 dinars per share?

We weren't aware of it but the estimate wouldn't influence our offer. The market regulates the values and not the estimates. Why didn't someone else reply to the public auction (i.e. takeover bid), when it was available to everyone at such a convenient price?

Was Luka purchased because of port services or because of the land?
We found that Luka was a lucrative venture with further investment and expert knowledge. We put the money and knowledge in it, but the investment doesn't pay off. After 5 years of work we increased the income and the revenue from port services by 60%, reduced the expenses by 30% and made an extraordinary project "City on water" with the leading world architects and city planners. But we still don't have any interested investors. The Government claims that the enacted Law on planning and construction would attract the capital. Then why is there no interest? And why Poland and Czech Republic still have foreign capital income in all kinds of real estate? The companies were purchased because of their activities and because of construction rights. That is why such prices were reached. Without construction right Luka wouldn't reach the price of more than few million euros. Until this day it has cost us more than hundred million euros. Simply because we purchased and paid for the construction right. This right is now not only disputed but also denied in order to resell it to us. Such practice certainly discourages international investors.

According to the previous law, the property owner has the right of use over the land as long as the property exists which means that you couldn't obtain the construction right for residential area by purchasing the company?
Who interprets the law so provisionally? Are you suggesting that when the owner of an old house wants to build a new one, he loses everything? That's not true. Such interpretation is legally absurd because the law prescribed it differently. Ask Privatization agency which ensured the investors that was the way to obtain construction right.

Would you be able to purchase Luka for 40 million euros if the land value was included in the estimation of the company's value?
That is exactly how we purchased it, with the right of land use. In the prospect of Luka Beograd's privatization which was signed by the authorized ministry, the value of the usage right over construction land was estimated, paid and therefore obtained. The Privatization agency gave its interpretation to interested investors saying that the construction right on particular lots was inseparably connected to the ownership of legally constructed buildings on those plots. So where was that right lost with this law? Our attorneys in Serbia and in Brussels are ensuring us that we have the right to damage repair on the grounds of deprivation of construction right which we previously acquired.

Did you know that the City had been registered as the land user before purchase?
We didn't know that the City of Belgrade was registered on the part of port land before our arrival. We were shocked to discover that the City was trying to possess that land after 30 years and according to the contract which had never taken effect. Our complaint was twice proved by the District court in 2006 and 2008 which also annulled the City's registration. We appear at the court for the first time and we hope that public criticism of the public prosecutor against the court will not influence the court's objectivity. But such behavior didn't disturb anyone from the government. What the investors are experiencing after purchase has been largely criticized with the remark that in Serbia we actually buy a pig in a poke. The Russian ambassador has recently spoken about it and not only him. We seemed to be proud of our arrogance.

What part of land, according to your estimate, belongs to Luka?
It is not a matter of personal estimate but the contract right and law. We are defending that in court. We are dealing with 96 ha and approximately half of it is disputable for the City.

Since property relations over the land are still unclear, to what extent will it prevent the planned construction of 1,8 million square meters of residential and business space?
The land on which the "City on water" should be built according to the draft of Daniel Libeskind is not disputable. However, the realization of the project will be influenced by the economic crisis and the new law which took our construction right and imposed the new obligation to pay the conversion. Since the law hasn't been put into practice, we still don't know how much the conversion should cost. We are especially worried about the price which will be calculated behind closed doors and not according to the previously formed pricelist as is the practice with construction land fee where everything is public and transparent. Therefore it shouldn't be surprising that the construction in Belgrade decreased by 92% compared to last year, but we should be surprised that only the construction workers are concerned about it. Until these circumstances are solved, there won't be the "City on water". Meanwhile, it will be replaced by the "City in barracks". If I understood correctly, that example will show how good the law is, as well as the capability of the state and inefficiency of the private sector and city administration.

Did you file request for the conversion of the usage right into the property right over the land and do you know how much you will have to pay?
No, we didn't, but we intend to as soon as it is possible in practice. The law was enacted last September but it is still not carried out in terms of conversion. We are waiting for the pricelist to see how stimulating it is for the investors and how it will influence the price of the constructed square meter, because it will still have to be purchased.

Do you see the new Law on planning and construction and the Law on ports as the revision of privatization?
I don't think so. In a regulated country the laws shouldn't be enacted on a vindictive principle or out of populism. Still, I know that among the press, the experts and politicians, this issue is widely speculated in a similar manner. Some of our colleagues commented at public expert meetings that the whole real estate and construction development in Serbia was "the victim" of Luka Beograd and whose victim are we and why? I think the Law on planning and construction considerably contributed to it with its unfinished or unfeasible proposals. Likewise, when the authorized minister says that this law was enacted in order to prevent the injustice in the process of privatization, that inevitably creates controversy that it was not an investment law but rather another law on extra profit. And in spite of all that, we were in favour of the Law. Serbia needs transparent ownership relations over construction land as everywhere else in the world. This law contributes to that and we want to help its improvement with our suggestions.

How do you interpret the Law on ports which reduces you to the operators when the port becomes public goods and its purpose cannot be changed?
Serbia needs the Law on ports. I only hope that we won't build ports where there is no place for them and especially that without proper fees the construction right, which the owners possessed, won't be nationalized as if we were in 1945. One law will denationalize and the other confiscate. Although I suspect that there is intention to do that as in 1945.

Nowhere in the world are port aquatory and infrastructure in the hands of private owners. How can it be deemed nationalization or confiscation if the facilities which you acquired through privatization still remain your property?
That's not true. There are three models in Europe: the state as the owner, private owners and the combined model that you mentioned. But no one in Europe nationalized something that has just been privatized. The case of Luka Beograd is simple. We are not even asking for the aqutory of the Danube. The 11 ha basin is ours. It was constructed with Luka's resources and was registered as Luka's facility. Since we don't have the docks on the river but only bank revetment which we also built, we won't oppose the state's acquisition of it with the appropriate market fee. Luka also constructed the internal railway tracks, internal road network and the vertical quay for the overload.

Marijana Avakumović
Daliborka Mučibabić


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