How Đukanović became a millionaire: Brother, related company and disputed transactions

The shares of Prva banka were bought by the company "Izomont DV" from the company "Capital Invest" owned by Milo Đukanović at a price five times higher than the nominal price in July 2008 for 1,55 million euros, with a loan previously obtained from Prva banka, it shows documentation that "Vijesti" had access to.

According to the then law on banks and the current Law on credit institutions, it is forbidden for a bank to give loans to other companies for the purchase of its shares - "Purchase of elements of the bank's own funds, with funds that were directly or indirectly obtained from a loan or other legal transaction concluded with that bank, void is a legal business”. This legal prohibition serves precisely to prevent the bank from encouraging the purchase of its shares with its own money and thereby perpetrating fraud on the stock exchange in order to increase the value of its shares.

The majority owner of Prva bank then and now is the brother of the current president of Montenegro, Aco Đukanović, who, according to this documentation, bought the remaining almost 2013 shares from his brother's company from his personal account in April 11, allowing him a net profit of one million euros.

The help of comrades and godfathers

This is the first time since the disputed transaction of Prva banka shares that information has been published about the companies and persons who bought shares from Đukanović's company at enormously high prices and thus enabled him to make high profits.

Through these transactions with "Izomont DV" in 2008, "Capital Invest" returned a loan of 1,5 million euros that it had taken a year earlier from the London Piraeus Bank thanks to the cash collateral paid for it by businessmen and godfathers Željko Mihailović and Dušan Ban. and through Duško Knežević's company.

According to the audit report of Prva banka for 2010, the oldest that can be found in the registers, the company "Izomont DV" is marked as a related company. This would mean that the auditor, from the information he had, discovered ownership or business ties between her and Prva banka or the bank's shareholders. It was stated that at the end of that year "Izomont DV" had a debt to this bank of 2,7 million euros based on a previously approved loan, but it is not stated when that loan was approved and for what purpose.

By buying Prva banka shares from Đukanović at a price five times higher than the nominal price, this company enabled him to repay the loan, as well as to keep the remaining almost 11 shares as net profit. Those remaining shares were formally worth around 6,6 million euros at that moment, which is a very high net profit considering the stake of XNUMX million and the time of only one year since their purchase.

Deleting data from the registry

The company "Izomont DV" was founded in January 2005, however, there is no information in the central register about who were its owners and directors until the end of 2008. So, in the period when that company bought shares of Prva banka from Đukanović's "Capital Invest", and helped him to achieve a huge income, there is no official information in the state registers about its owners and managers. This data still had to be available in the electronic registers, unless they were accidentally or intentionally deleted.

"Vijesti" received information from the "paper archive" that Veljko Danojlić from Trebinje was the founder from January 2005, and that he remained the owner until July 22, 2008, i.e. 12 days after the company bought the shares from Milo. Đukanović at enormously high prices. Then Slobodan Trklja is listed as the owner and director. After his death in May 2015, the company was inherited by his heirs. The company's giro account has been continuously blocked since June 2015.

All related companies at the same address

In the period of the transaction with the shares of Prva banka, the headquarters of the company "Izomont DV" was at Bulevar revolucija 2, where the building of the Republic Institute for Urbanism and Planning owned by Aco Đukanović is located. "Capital Invest" had the same address, as well as Milo Đukanović's previously defunct company "Select Investments" and one of Aco Đukanović's main companies "Invest Nova".

All this may indicate that the company did not accidentally buy shares of Prva banka from "Capital Invest" on the stock exchange on July 9, 2008.

"Capital Invest" subsequently sold a small package of shares on the stock exchange in July 2008 at a price of EUR 610 per share for another EUR 245.

After that, Prva banka ran into serious problems and in December 2008, the government of Milo Đukanović saved it by providing state aid of 44 million euros. At that time, Đukanović still had about ten thousand shares of Prva banka, which were nominally worth about 1,2 million euros, but there was no interest in buying them.

Saved the bank, then benefited

"Capital Invest" sold these remaining shares of Prva banka on April 16, 2013 at a price of 102 euros for a total of 1,06 million euros, which represented a net profit because they returned the loan from the previous sale and covered all costs related to the loan and transaction.

According to the documentation that "Vijesti" had access to, these shares were bought by Aco Đukanović, paying for them from his custodial account in the Crnogorska kommerciolja banka. In this way, he helped his brother earn the first legal million euros. Five days before this transaction, the shares of Prva banka on the stock exchange were worth only 76 euros, but in four working days they had a total growth of 34 percent achieved with very low turnover.

After that, the shares of Prva banka were never again at that price, and the last time they were traded on the stock exchange was in January of this year at a price of EUR 24,88.

Milo Đukanović was the Prime Minister at the time of the sale of these shares, and by receiving the money for his shares from the majority owner of a bank, it brings him into an additional conflict of interest, because he also had a personal benefit from the previous state aid and rescue of this bank.

The bank's shares rose exactly when they were supposed to

"Capital Invest" received a loan of one and a half million euros on July 11, 2007, and on August 3 of the same year, it participated in the recapitalization of Prva banka, when it received almost 1,46 shares for 12 million euros at a nominal price of 127 euros. At that time, the value of shares on the stock exchange was 188 euros, but after that, their price began to rise almost daily. According to the rules of the stock exchange, the growth of its shares was limited to 10 percent per day, but that percentage was most often achieved, sometimes with the turnover of just one share.

Just one month later, its shares were worth 334 euros, that is, almost three times more than the price at which "Capital Invest" got them. While two and a half months later, they exceeded the figure of one thousand euros. If "Capital Invest" had found a buyer at those prices, it would have earned ten million euros. After that, stories about problems in Prva banka began to appear in the public, but the value of its shares with small volumes of turnover was maintained at a level between 600 and 700 euros.

A month after Đukanović sold the shares at that price, almost all major interest in their purchase ceased. It was only at the end of 2009, when the limit on the daily growth and decline of shares of 10 percent was abolished, that there was a drastic drop in their value, and already in February 2010, the shares of Prva banka on the stock exchange were worth 52 euros. Now they can be bought for 22 euros, but there are no buyers.

In May 2018, Milo Đukanović gifted the company "Capital Invest" to his son Blaž.

No response from the cabinet, Prva banka and "Capital Invest"

Regarding new facts and evidence about this case, "Vijesti" sent questions to the office of President Milo Đukanović, "Capital Invest" and Prva banka.

Answers were requested from Đukanović as to whether he sold his shares to the company "Izomont DV" and to his brother, whether he knew the owners and directors of that company, as well as whether he arranged these transactions in advance with that company and his brother.

Answers were requested from Prva banka as to whether in 2008 it gave a loan to the company "Izomont DV" from Podgorica, for the purpose of buying shares of Prva banka on the stock exchange, as well as whether that loan was legal in view of the then Article 79 of the Law on Banks and current Article 177 of the Law on Credit Institutions.

In addition to the answers, "Vijesti" asked them to let them know if they could expect answers at all, but they did neither.

How Đukanović spoke about the disputed job

Đukanović said in July 2008 that rational reasons led him to sell part of the shares for one and a half million.

"I do not want to work with that company while I am prime minister, nor with any other company. That loan produced an annual cost of EUR 70-80.000 based on interest. That's why I decided to sell the shares and pay back the loan in order to avoid expenses until I'm not engaged in business, because it would be really dangerous and I don't need anything", said Đukanović at the time.

Five months later, when, as Prime Minister, he approved EUR 44 million in aid to rescue Prva Banka, answering questions from members of the Parliament, he said that he was not in a conflict of interest.

"The facts of family relations between me and any other government representative with one of the shareholders of Prva banka or any other banking entity must not be a reason for that bank to have an unequal position on the market, even when it comes to the application of the specified law. Otherwise, the depositors of that bank, the legal and natural persons you rightfully care about, and thus its shareholders, would be put in an unequal position compared to the depositors and owners of other banks. This would also mean a direct violation of the law because laws cannot be applied selectively. So, in this way, I hope, I quite convincingly reject one insinuation you uttered in your question about the fact that this is a move with which I primarily take care of my own interests", said Đukanović at the time.