Fimi Media (Croatia)

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Fimi Media
Location: Croatia
Croatia map.png
Author: Ružica Šimić Banović
Affiliation: Faculty of Law, University of Zagreb

Original text: Ružica Šimić Banović, Faculty of Law, University of Zagreb

The term Fimi Media emerged from a political scandal surrounding the marketing agency of the same name, FIMI-Media, which operated between 2003 and 2009. The agency was established by the Croatian Democratic Union (HDZ) – one of the country’s two major political parties, in power 1990-2000 and 2003-2011 – with the purpose of siphoning money from ministries, state agencies and state companies. In its current use, ‘Fimi Media’ refers to any scheming or misuse of public funds and power by political parties at the local or national level. The term has become a euphemism for the widespread political corruption and fraud involving top officials in Croatia.

High government spending, a strong collectivist culture and insufficient civic participation in Croatia provide fertile ground for the corrupt activities of incumbent politicians under the façade of economic and political reforms[1]. Such simulation is evident in the FIMI-Media court case, where numerous economic crimes, embezzlement and misuse of power were revealed. The exposure of the case also brought to light other similar schemes, in which the Head of the Croatian Chamber of Economy and the Mayor of Zagreb have been implicated among others (these cases are still under investigation).

The FIMI-Media marketing company operated under the direct patronage of Prime Minister Ivo Sanader. Sanader himself, government ministers and other heads of state institutions all gave orders to the directors of state companies to enter into business contracts with FIMI-Media. These contracts were not subject to open tenders, and thus breached provisions of the Public Procurement Act. FIMI-Media would submit invoices for fictitious consultancy services, at rates substantially higher than the market price, and the payments would be duly authorised by state leaders. FIMI-Media’s owner would then deliver the payment, in cash, to the State Secretary Mladen Barišić, who would pass it to Sanader. The proceeds were used both to fund the HDZ political party, and for the personal enrichment of the individuals involved[2]. Sanader fled Croatia in December 2010, shortly before the Croatian parliament voted to remove his immunity from prosecution. He was arrested in Austria a day later, and extradited back to Croatia in July 2011.

The Zagreb County Court’s 2012 verdict (No. 13 K-US-8/12) in this case is quite unique, because in addition to six individuals and FIMI-Media as a legal entity, the political party HDZ was also convicted. The individuals convicted included the former Prime Minister Ivo Sanader, former State Secretary and Head of Customs Mladen Barišić, former government spokesman Ratko Maček, HDZ’s chief accountant Branka Pavošević, and the director of FIMI-Media Nevenka Jurak. The total embezzled funds amounted to over 3 million EUR[3].

Even though the FIMI-Media affair is considered to be a landmark case of the misuse of public power and authority in Croatia and has gained significant domestic and international media coverage, it has been little researched in the academic literature. Nor has Fimi Media as a general practice been subject to academic research. However, media headlines give a sense of both the pervasiveness of Fimi Media as a form of political corruption at various levels, and the expansion in use of the term to refer to corruption in Croatian politics in general. The following headlines are examples from 2010-2014: ‘Is Rizol Media SDP’s Fimi Media?’[4], ‘Euromarket – Fimi Media of Virovitičko-podravska County’[5], ‘Is Labin stan just like Fimi Media?’[6], ‘Is the company RMC owned by Darko and Igris Smrkinić a Fimi Media from Zadar?’[7], ‘Periska is SDP’s Fimi Media…’[8], ‘Pre-electoral imputations or SDP’s Fimi Media?...’[9]. Furthermore, the Economist coined the term ‘Sanaderisation’ after Ivo Sanader, and used it to describe the arrests of the top officials in the region, in particular in Montenegro in 2010[10].

For the past decade, businesspeople in Croatia have consistently ranked corruption among the top three most problematic factors for doing business[11]. According to the most recent Global Corruption Barometer[12] 72 per cent of the general public in Croatia believes that political parties are corrupt, 70 per cent consider the judiciary to be corrupt, followed by public officials and civil servants (64 per cent) and parliament/legislature (63 per cent). However, despite the scandals pre-election opinion polls suggest that HDZ still enjoys high levels of support among voters.

The fact that the term Fimi Media has entered common parlance to describe the embezzlement of public funds points to a widespread societal perception that such schemes remain active even after the FIMI-Media convictions. Shell companies and charity funds serve as a facade to collect cash at the level of the municipality, county, or a nation, and can usually be traced back to a certain political party, political stream or a powerful official. Such firms and schemes are aimed at constructing ‘Potemkin villages’ in order to hide the real beneficiaries and political brokers, but their existence (and the kickbacks associated with them) are an open secret in Croatian society.

Corruption, the misuse of public funds for private gain, appears to be inevitable in post-communist societies. During the transition to a free market economy, economies based on personal relations are slowly transformed into impersonal rule-based markets. Despite its formal shift ‘from a Communist police state to an institution supporting a market economy,’ the role of the government in transitioning post-socialist countries was rather contradictory in the 1990s. On the one hand, in such countries ‘there is consistently more support for authoritarianism and economic intervention of government’ [13], something that is chiefly explained by the communist legacy and cultural inertia. On the other hand, the de facto role of the government has often been that of a ‘grabbing hand’ that feeds parasitically on weak economic institutions[14], including ‘the sale by government officials of government property for personal gain’[15]. The grabbing hand model relies on government officials possessing the opportunity to convert their power into income via the use of politics. In seeking powerful positions, election and re-election, politicians are motivated by their own self-interest rather than ideological goals. In any case, such motivation is substantially different from the idea of welfare maximisation[16].

In general, there is a substantial degree of (tacit) tolerance for corruption in Croatia as it is a common way of shortening procedures and solving problems (with public services in particular). Quite contrary to their responses in various corruption surveys, most ordinary people in Croatia have been involved in some corrupt act at street-level even though most of them do not consider themselves as bribe-givers or bribe-takers; business people on the other hand possess a higher level of awareness on these issues[17][18][19]. In a recent international survey [20], Croatia took the top place for perception of the prevalence of bribery/corrupt practices in business: 92 per cent of respondents perceived them to happen widely. Thus, despite nominally criticising corruption at any level, ordinary people still rely on the omnipresent practices that work for them immediately (i.e. petty corruption) rather than time-consuming, fully legal yet uncertain, solutions. These attitudes and behaviours of ordinary citizens, combined with the extremely slow implementation of any top down anti-corruption policies, means that Fimi Media is likely to remain a feature of Croatian politics and administration for years to come.

Notes

  1. Šimić Banović, R. 2015. 'Cutting the red ribbon but not the red tape: the failure of business environment reform in Croatia', Post-communist economies, 27(1): 106-128
  2. Vuletić, I. 2014. 'The Organised Structure of Power and Economic Crime: FIMI-Media Case and a View from the Croatian Perspective', Journal of Law and Criminal Justice. 2(2): 133-149, p.144
  3. USKOK. 2011. Verdict in the Fimi Media case, http://www.dorh.hr/PodignutaOptuznicaUPredmetuFimi
  4. Soundset. 2014. ‘Je li Rizol media SDP-ova Fimi media?’, 14 October, http://www.soundset.hr/vijesti/hrvatska/je-li-rizol-media-sdp-ova-fimi-media
  5. Virovitica. 2010. ‘SDP: Euromarket - Fimi medija Virovitičko-podravske županije', 21 November, http://www.virovitica.net/sdp-euromarket-fimi-medija-viroviticko-podravske-zupanije/14647/
  6. Labin.info. 2010. ‘"Labin stan" kao "Fimi media"....??’, 9 December, http://www.labin.info/1,7590,labin-stan-kao-fimi-media-.aspx
  7. Voxportal. 2011. ‘Je li tvrtka «RMC» Darka i Igris Smrkinić – zadarska Fimi media?!', 6 July, http://www.voxportal.hr/vijest/je-li-tvrtka-rmc-darka-i-igris-smrkinic--zadarska-fimi-media/12185.html
  8. Slobodna Dalmacija. 2010. ‘Marasović: Periska je SDP-ova Fimi media, neka grijehe peru na Bačama!’, 4 October, http://www.slobodnadalmacija.hr/Split/tabid/72/articleType/ArticleView/articleId/117424/Default.aspx
  9. Vidov, P. 2013. ‘Predizborna podmetanja ili SDP-ova Fimi-media?’, Index, 16 May, http://www.index.hr/vijesti/clanak/predizborna-podmetanja-ili-sdpova-fimimedia-voditelja-ostojiceve-kampanje-optuzuju-za-izvlacenje-novca-iz-hza/677941.aspx
  10. The Economist. 2010. ‘Sanaderisation in Montenegro’, 24 December, http://www.economist.com/blogs/easternapproaches/2010/12/arrests_montenegro
  11. WEF. 2015. Global Competitiveness Reports 2003-2015 (yearly editions), http://www.weforum.org/reports/global-competitiveness-report-2014-2015
  12. Transparency International. 2013. Global Corruption Barometer 2013 – Croatia, http://www.transparency.org/gcb2013/country/?country=croatia
  13. Roland, G. 2012. 'The Long-Run Weight of Communism or the Weight of Long-Run History?', in G. Roland (ed.), Economies in Transition: The Long-Run View. Basingstoke, UK: Palgrave Macmillan: 153-171, pp.165-6
  14. Abed, G. T. and Davoodi, H. R. 2000. Corruption, Structural Reforms, and Economic Performance in the Transition Economies. IMF Working paper 00/132, http://www.imf.org/external/pubs/ft/wp/2000/wp00132.pdf
  15. Shleifer, A. and Vishny, R. W. 1999. The Grabbing Hand: Government Pathologies and Their Cures. Cambridge, MA: Harvard University Press. p91
  16. Shleifer, A. and Vishny, R. W. 1999. The Grabbing Hand: Government Pathologies and Their Cures. Cambridge, MA: Harvard University Press. pp.2-7
  17. Ernst and Young. 2015. 'Fraud and corruption: The easy option for growth?', Europe, Middle East, India & Africa Fraud Survey 2015, http://www.ey.com/Publication/vwLUAssets/ey-emeia-fraud-survey/$FILE/ey-emeia-fraud-survey.pdf
  18. European Commission. 2014. Flash Eurobarometer 374: Businesses’ Attitudes Towards Corruption in the EU, http://ec.europa.eu/public_opinion/flash/fl_374_en.pdf
  19. UNODC. 2011. Korupcija u Hrvatskoj: Stvarna korupcijska iskustva građana, https://www.unodc.org/documents/data-and-analysis/statistics/corruption/Croatia_corruption_Report_2011_croatian.pdf
  20. Ernst and Young. 2015. 'Fraud and corruption: The easy option for growth?', Europe, Middle East, India & Africa Fraud Survey 2015, http://www.ey.com/Publication/vwLUAssets/ey-emeia-fraud-survey/$FILE/ey-emeia-fraud-survey.pdf p.21