Five years after it was forced into bankruptcy and sold to a Zagreb-based company implicated in the Ukrainian arms scandal, the former military industry giant in Bosnia and Herzegovina could become the subject of an investigation by a newly formed office for combating corruption and organized crime.
The bankruptcy of the Vitezit explosives and rocket fuel factory in central Bosnia has been marked since 2019 by numerous complaints and criminal charges from creditors, who warned of shortcomings, such as the illegal sale of state property.
The Federal Police Administration is currently involved in the investigation, within the framework of a case formed in the Cantonal Prosecutor's Office in Travnik.
The cantonal prosecutor's office told Radio Free Europe (RSE) that witnesses have been questioned so far, additional documentation has been collected, and international legal assistance has been requested from Turkey and the Czech Republic.
Without providing details on what the request for assistance relates to, they say that the case will be forwarded to a special prosecutor's department, colloquially called the "federal USKOK", modeled after the Anti-Corruption Office in Croatia, which will begin work and assess whether the case falls within its jurisdiction.
The most promising part of Vitezit, intended for the production of nitroglycerin and plastic explosives, was sold at the end of 2022, for around five and a half million euros, to Zagreb's "WDG Promet", the company of Matias Zubak, the son of Croatian arms dealer Zvonko Zubak.
In the meantime, that company has entered the factory's premises, although it has not officially registered ownership to this day, given that it has been determined that it is state property that is prohibited from being sold or disposed of.
The sale of the factory in Vitez has been mentioned in recent years, even after the launch of an international investigation into the disappearance of Ukrainian money for weapons, in which BiH was also involved.
The Zagreb company that purchased Vitezit was engaged in the procurement of weapons that were never delivered to Kiev for defense against a Russian invasion, as RFE/RL previously reported.
Lawsuit over sale of state property
Until the war in the 90s, Vitezit was one of the largest factories for the production of rocket fuel and explosives in Europe, with around 3.000 workers. Its facilities remained largely undamaged during the war in Bosnia and Herzegovina.
After the conflict ended, the factory was managed by cadres of the Croatian Democratic Union (HDZ) BiH and the Party of Democratic Action (SDA), and 12 "daughter" companies were founded within its circle.
Under unclear circumstances, Vitezit was left without valuable military equipment at the end of 2009 and beginning of 2010, and investigations into their disappearance, as well as allegations that they were transferred to Serbia, ended without results.
Since 2003, it has been engaged exclusively in the production of commercial explosives. Faced with millions in debts, blocked production and accounts, it was sent into bankruptcy in 2019, by decision of the Government of the Federation of BiH as the majority owner.
Three years later, it was sold to Zagreb's "WDG Promet", which in the meantime opened a company of the same name in Vitez. It was registered as a company for production, trade and services, and the company register states that it has one employee.
A court decision followed, granting "WDG" permission to take over the property, but everything was stopped by the land registry office, which refused to register it, explaining that it was state property.
The BiH Attorney General's Office reacted to all this by filing a lawsuit against Vitezit in bankruptcy and "WDG Promet" before the Municipal Court in Travnik at the end of last year.
It requested the annulment of the verdict on the sale of Vitezit's property, and also proposed security measures aimed at prohibiting the disposal of Vitezit's real estate.
Despite this, "WDG promet" took possession of Vitezit, where it is located to this day.
The law imposed in BiH in 2005 by the High Representative prohibited the disposal of state property until a state law was passed to regulate the issue, which has not been done to date.
When asked to discuss future business steps in Vitezit, given that their ownership registration has been blocked, the company "WDG promet" did not respond.
In previous statements to RFE/RL, they emphasized that the situation with the property registration was merely a formality and that they were confident that the problem would be resolved quickly. Also, in previous years, they announced millions in investments in restarting production.
Endangered property
The largest number of criminal charges against the parties involved in the bankruptcy proceedings was filed by Mario Lujić, one of Vitezit's creditors, who claims that the process was conducted illegally and that the sale must be annulled.
"First, it is state property. Contrary to the decision of the FBiH Government from April 2020, they carried out liquidation instead of reorganization. Now they are destroying buildings, the boiler room, plants, and cutting down the forest around the factory," he claims for RFE/RL.
RFE/RL was unable to obtain official information about the status of Vitezit's assets and the current activities of the company "WDG promet", given that the Government of the Federation of Bosnia and Herzegovina did not respond to the inquiry, nor did the bankruptcy administrator or the Zagreb company.
The security of Vitezit's assets was supposed to be discussed on April 23 at an extraordinary meeting of the Vitezit's board of creditors, but there was no quorum for it, as most members were not present.
In a letter sent to the bankruptcy judge by some of them, it was stated that the session was unnecessary, considering the dispute initiated by the BiH Attorney General's Office, and that it was necessary for the company "WDG promet" to leave Vitezit.
They also warned of the security situation, which is particularly threatened by the "illegal introduction of WDG traffic into possession."
"They do not have the consent of the Government of the Federation of Bosnia and Herzegovina, they do not have any permits, and I believe that this method of taking possession is illegal," Vlatka Mlakić, a former Vitezit employee and member of the creditors' committee, told RFE/RL.
She was among the members of the creditors' committee who also asked the bankruptcy judge to form a commission composed of former employees who would inventory Vitezit's property in the presence of the police.
However, the minutes of the session from April 23, which RFE/RL had access to, show that, in the presence of the bankruptcy judge, the bankruptcy administrator, and the president of the creditors' committee, security issues regarding Vitezit's property were nevertheless discussed.
Thus, among other things, it was warned of the danger of property disappearance and that the Government of the Federation of BiH needed to be involved.
Also mentioned was the April meeting of bankruptcy stakeholders with representatives of the Government of the Federation of BiH, from which they allegedly took the position that it was necessary to open a conversation with the buyer "about withdrawing from the process".
The minutes of the session also stated that the company "WDG promet" has not paid the real estate transfer tax to date, which is one of the conditions for submitting a request for registration in the land register.
The money from the sale of Vitezit, by decision of the bankruptcy judge, was frozen in the bank account of Vitezit in bankruptcy and its spending is prohibited.
The bankruptcy administrator, as stated in the minutes, pointed out at the Board meeting that Vitezit, in bankruptcy, does not have the money to pay the salaries of the remaining insurance workers, as well as the electricity bill.
The criminal charges filed after the sale of Vitezit also mention that the company "WDG promet" does not have a permit to operate in a specialized industry, and that the sale violated the Law on Foreign Investments in BiH.
According to the Law on Foreign Investments of BiH, a foreign buyer cannot own more than 49 percent of a company that manufactures and sells weapons, ammunition and explosives for military use. For a larger share of ownership, in this case, the consent of the Government of the Federation of BiH must be given.
The buyer is also obliged to continue operating in the field of specialized industry, for which he must have a permit from the Ministry of Foreign Trade and Economic Relations of BiH and the consent of the Government of the Federation of BiH.
The relevant federal Ministry of Energy, Mining and Industry did not respond to RFE/RL's inquiry as to whether "WDG Promet" had received approval for activities in the field of specialized industry and how they plan to resolve the problems in Vitezit.
The disappearance of Ukrainian money
Along with one Ukrainian and several European companies, the buyer of Vitezit was also mentioned in the scandal about the disappearance of money for Ukrainian weapons.
To defend against a Russian invasion, the Ukrainian Ministry of Defense ordered 2022 grenades in October 100.000 and paid about $36 million for them. However, the weapons were never delivered, and Ukraine has initiated legal proceedings to recover the money.
The company "WDG promet" previously confirmed that they were involved in the procurement process, but that Ukrainian money, a total of 5,6 million euros, was stolen from their account in a Czech savings bank.
They accused employees of the savings bank of theft, which, in turn, responded by claiming that the Vitezit factory was "bought" with money intended for Ukrainian weapons.
In addition to Ukraine, an investigation into the disappearance of money was also launched in the Czech Republic, and was joined by police and judicial institutions in BiH, at the request of Europol.
The Cantonal Prosecutor's Office in Travnik claims to RFE/RL that they provided international legal assistance to the National Agency for Organized Crime in Prague, which was provided with certain data from banks in BiH.
When asked what was done during the investigation, the Czech agency told RFE/RL that they could not discuss specific cases.
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