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Hungarian-owned company started construction project without permission on a rented island in Croatia

The Rogoznica local government has confirmed that a company registered in Croatia, owned by the Hungarian OTP Group started a construction project without permission on a “private island”, which was rented from the Croatian state for 30 years. Smokvica Vela, 25 km west of the city of Trogir, belongs to Rogoznica, but is a special military area because the Croatian army has buildings there. Since 2018, the island has been rented by a Croatian company, Zelena Nekretnina d.o.o., which was established by OTP’s property management fund, Balansz Zártkörű Nyíltvégű Ingatlan Alap (Private Open Ended Real Estate Fund). The Croatian press reported earlier this year that ‘Hungarians renting the island are building to their liking’ and that ’40-tonne crawler excavators, loaders, trucks and other heavy machinery have been delivered’ to the island.

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According to Croatian newspapers, Viktor Orbán, Prime Minister of Hungary visited this island by helicopter in 2019. “The questions addressed to the Prime Minister on whether he visited Smokvica Vela in August this year, if so, whether he arrived by helicopter, whether the costs of the trip and the holiday were paid by the Prime Minister or he enjoyed it as a guest of Sándor Csányi, and if the Prime Minister paid, whether he is willing to present the bill to the public are all questions related to the private life of the Prime Minister and are based on press reports, and thus do not concern the government’s duties and powers,” – the news site 24.hu wrote in its September 2019 article, quoting the Speaker of Parliament, László Kövér answering a question by an opposition MP about the Prime Minister’s holiday.

In 2019 the Communications and Social Relations Department of OTP Bank said that Smokvica Vela was not receiving any guests because of the developments taking place there. At the time, it was promised that “services on the island are expected to be available from next summer”. The Croatian press wrote about the island again this year because, although there is a building ban on the island, residents in the area reported the presence of construction machinery and construction works there.

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Two years ago OTP’s communications department stressed that “the island of Smokvica Vela is owned by the Republic of Croatia and the lease of the island was won by open tender for a period of thirty years by the Croatian interest of the Balansz Real Estate Fund. This is managed by OTP Real Estate Fund Management Ltd. The ownership structure of OTP Bank Plc. is public, Sándor Csányi does not have a controlling stake in it or in the OTP Group, so it cannot be said that the island of Smokvica Vela – which is owned by Croatian State – would be the interest of Sándor Csányi in any way.”

With the help of local journalists Atlatszo now learned that the company renting the island from the Croatian State (Zelena Nekretnina d.o.o.) is indeed owned by Sándor Csányi, CEO of OTP Bank Group, as he is the one listed in the Croatian company register as the “ultimate beneficial owner” (UBO) of the company. An EU directive, which has since come into force as part of the anti-money laundering effort, requires the identity of the UBO to be disclosed.

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“Destruction of Paradise Island near Rogoznica: Rich Hungarians build without permission”

This was the title of an article published in Slobodna Dalmacija about Smokvica Vela in January this year. The article recalls that the Hungarian owned Croatian company renting the island was registered only 20 days before the tender was announced on 12 May 2018. The tender was closed on 20 June 2018. The newspaper also reports that while in the earthquake-affected areas of Sisak-Moslavina county, locals need building permits for reconstruction, none of these are needed on Smokvica.

“The Hungarians who rented the island last year have been building as they please, bringing 40-tonne crawler excavators, loaders, trucks and other heavy machinery to the island.”

According to Slobodna Dalmacija, on 8 May 2020 the local municipality notified the construction authority. The newspaper reports that not only tourists and the local municipality, but also the relevant county services and even ministries and supervisory bodies were not allowed on the island. Photographs of the construction site of the new tenants were also published.

Atlatszo contacted the local government of Rogoznica, where we learned that since the island was leased in 2018, the new (recently elected) leadership of the city is not aware of the details of the case. However, the municipality informed us that, as Smokvica Vela is a military zone, access to the area is only possible with a permit. For the same reason it is not under the control of the Rogoznica municipality from an urban planning point of view, and they could not issue any building or other permits for the area.

The municipality also informed us that no new buildings can be built on the island, only modifications to existing ones, and they admitted that they were aware of illegal constructions going on there:

‘The last information we have about this island is that investors brought machinery to carry out the works and they erected 9 bungalows illegally. This was reported to the building inspectorate and on their instructions the investors subsequently removed everything.”

It is likely that the bungalows mentioned by the municipality can be seen in the photos of the 24sata.hr portal, which published an article earlier this year on the state of construction works on the island in February this year.

This paper published an article with the title “Hungarians have ploughed up Todoric’s island and built 9 bungalows. And they are not stopping”. They wrote that according to their information, the state building inspectorate had inspected the island a week earlier, but the newspaper did not receive the results of the inspection. In response to a question from journalists, the Croatian Ministry of Physical Planning, Construction and State Property confirmed that there is a building ban on Smokvica Vela.

We obtained the contract on the island

Previously the island was used for several years by Ante Lušić and then by a Croatian entrepreneur Ivica Todorić and his family, after which it was returned to the Croatian state and leased to the Croatian company with Hungarian ownership.

According to previous press reports, the 168,865 square metre island is home to preserved military buildings, holiday homes, luxury apartments, restaurants and sports fields. We also asked OTP’s fund management company about the construction projects there, but all we were told by OTP Bank’s Corporate Communications Group that they are “unable to provide information on the questions sent to the Real Estate Investment Fund Manager.”

Zelena Nekretnina d.o.o. is renting the island from the Croatian state for 30 years for 6 million kuna (approx. EUR 804 451) per year. According to the contract (PDF) we obtained through a FOI request with the help of the Ostro investigative journalism centre, the island can be used for personal and catering purposes, and any changes or construction work requires the prior consent of the relevant Croatian ministry.

Written and translated by Gabriella Horn (Atlatszo), additional reporting by Masenjka Bacic (Ostro). The Hungarian version of this article is available here.

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