Slovene media owned by oligarchs, corrupt politicians

Feb. 13, 2018 – A European Union member since 2004, Slovenia successfully transitioned to democracy but has not been as successful in defending press freedom. Media ownership is nowadays overly concentrated in the hands of oligarchs and corrupt politicians, endangering editorial independence. A report by Blaz Zgaga:

Media in Slovenia: among criminals, politicians and “the barbarians”

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Once praised as a role model country for the Balkans, Slovenia as the most developed part of former Yugoslavia, an EU and Nato member today, is facing many challenges in its media landscape. The transition from a former socialist republic to a parliamentary democracy brought some successes and failures where the media ownership structure seems to remain one of the major blunders, as media owners openly or covertly control editorial policies.

During the transition period local oligarchs made a fortune mostly by collaborating with local post-communist politicians in dubious privatisation processes, which was arbitrary and similar to developments in Russia and other transitional countries. An important issue that affects Slovenia’s media landscape nowadays is that almost all mainstream media owners are under criminal investigation for gross crimes by the FBI-like National Bureau of Investigations and Special Prosecutors which deals with corruption, organised crime and terrorism. Some of them were convicted already.

Stojan Petrič, owner of the Kolektor industry and construction group, who in 2015 purchased the previously most influential daily Delo and the tabloid with highest circulation Slovenske novice, is under investigation for abusing his position and the trust in his business activity. The police revealed that a group of perpetrators, including Petrič, gained at least 1,8 million euros of illicit money.

But his actions as the new owner of Delo are troubling too. Immediately after the takeover he appointed Gregor Knafelc, chief of public relations in Petrič’s main holding company FMR, as acting editor-in-chief of Delo. Knafelc, without a single day of journalistic or editorial experience, consequently fired many of Delo’s media workers, mostly renowned and experienced journalists, and thereby significantly changed the editorial policy of following and covering business related topics. Knafelc was replaced on December 1, 2017 with new acting editor-in-chief, therefore the newspaper will remain without an editor with a full mandate for the next period again.

“Loyalty” and “unity”

In an unusual interview given in February 2018 to his own newspaper Delo, Petrič said that he expects “loyalty” and “unity” from Delo journalists. He praised the Chinese political system and said that smaller nations should follow the Chinese model. He also announced new media takeovers in Slovenia.

Delo today is just a pale shadow of the respected and influential newspaper it once was, comparable to The Times or Le Monde in the UK and France. However, Delo’s credibility crisis did already start in 2005, when Janez Janša’s right-wing government came to power and started meddling intensively with the editorial policy, helped by then owner Boško Šrot, who is serving a sentence of five years and ten months for abuse of office authority in a chain sale trading of a 7.3 per cent stake in the holding Istrabenz in 2007, and who had been given an additional sentence of 5 years in 2014 for abusing his position or trust and for money laundering. Šrot is still in prison.

In October 2017 prosecutors filed a request for a court investigation against Stojan Petrič and co-defendants, who denied any wrongdoings.

Slovenia’s second largest newspaper Dnevnik is owned by the DZS financial group since 2003. DZS’s main business is the tourism industry. Its owner Bojan Petan is under criminal investigations in Slovenia and other countries for different crimes. He faces up to eight years in prison for the alleged crime of abuse of position or trust in business activity during the privatisation of the Terme Čatež tourist resort which allegedly resulted in dozens of millions of euros of illicit gains and damages to the company. Additionally, he was investigated for organised crime and money laundering by special prosecutors in Bosnia and Herzegovina. He denied any wrongdoing.

Business operations in offshore countries

Petan was also co-owner of the major advertising, PR and lobbyist agency Pristop, together with his business partner Franci Zavrl, the founder of Pristop and former owner of the left-leaning weekly magazine Mladina, who is the husband of investigative journalist Anuška Delić who worked with the International Consortium of Investigative Journalists on the Panama and Paradise Papers. Both Petan and Zavrl have business operations in offshore countries and have been investigated by the police for the alleged misappropriation of dozens of millions of euros. The Slovenian elite criminal police conducted house searches in Petan’s and Zavrl/Delić apartments and many other offices in June 2014. Also this investigation is ongoing, and the accused deny all wrongdoing.

Finally, Bojan Petan is well connected, and his business empire serves as a safe haven for many former intelligence and government officials. Sebastjan Selan, former chief director of the main Slovene intelligence agency Sova became one of the most important managers in his business empire. Some other former spies work for DZS, too. Meanwhile former government spokesperson Darijan Košir became the news deputy editor of Dnevnik and simultaneously runs his own PR company.

A criminal case against Petan is still pending. He denies any wrongdoing. But prosecutors dropped the charges against Zavrl in this case. However, this was not the only close encounter of Zavrl with police investigators. He was investigated by Finnish and Luxembourg police for alleged money-laundering of millions of euros in the Patria arms deals*, which was one of the major scandals in Slovenia during the past decade. Also these criminal charges have been dropped.

Former Prime minister Janez Janša, who was together with Zavrl arrested in 1988 by the Yugoslav People’s Army in a “Roška trial” which triggered the so called “Slovenian spring”, a popular movement which lead to democratic changes and Slovenia’s succession movement in then Yugoslavia, was convicted to two years in prison for bribery in the Patria deal. The conviction of Janša was confirmed by all of Slovenia’s regular courts, including the Supreme Court. However, the Constitutional Court later repealed these judgements and demanded retrial in the Patria bribery, then a statute of limitations had passed.

Illicit gains

The third mainstream daily Večer was purchased from Delo by Uroš Hakl and Sašo Todorovič. They paid just one million euro for this newspaper in 2014, but the deal was mostly financed by debt and they immediately started to sell some real-estate owned by the newspaper to finance the takeover.

Todorovič is the former chief executive officer of T-2 telecommunication provider. Hakl is the former director at the Pristop PR agency and was also investigated for the alleged abuse of office and official duty. Hakl and co-perpetrators allegedly made more than a million euros of illicit gains from state aid, that was given to the most impoverished Slovene region. Hakl is facing up to eight years in prison. The criminal case against the co-owner of Večer is currently under court investigation, and he denies all wrongdoing, too.

Another media mogul is Martin Odlazek, who is also a printing and waste management “baron”, and who was sentenced to six months in prison for abuse of position and trust in business activity in 2013. He served his sentence under house arrest. But his criminal past didn’t prevent him from expanding his media empire and starting the new tabloid Svet24 and many other weekly magazines, including the purchase of the right-leaning weekly Reporter. He also owns several Slovene radio stations.

In Slovenia’s television landscape the public broadcasting service RTV Slovenija continues to serve as a political playground for major political parties who implement their influence on the editorial policy though the programme council where 21 of 29 members are elected by the parliament. A recent example happened in July 2017 when new CEO Director General of RTV Slovenia Igor Kadunc attempted to replace the director of the tv programme Ljerka Bizilj for violating editorial standards as she supported news-editor Jadranka Rebernik who approved the promotional programme of the neo-Ustasha Croatian singer Marko Perković ‘Thompson’ in prime-time. Kadunc’s proposal was then repealed by the programme council with a majority of votes from right-wing council members. This case confirms that politics are still controlling public broadcaster editorial policy through many proxies.

The owner of the majority shares of the smaller private television station Planet TV and 100 per cent shares of the widely read online outlet Siol.net is the state owned major telecommunication company Telekom Slovenije which again offers many channels for political influence behind the scenes.

The small party television station Nova24TV, founded by the right-wing SDS that is led by Janez Janša, on the other hand received significant financial investment from Hungary. Some Hungarian media owners who are close friends of Hungarian Prime Minister Victor Orban invested at least 800.000 euros in this small TV station and in exchange received significant capital shares in a media outlet that is constantly spreading right-wing political propaganda. Also SDS’ weekly magazine Demokracija is owned by friends of Orban today. Janez Janša, whose party is a member of the European People’s Party, is closely affiliated with Orban and his anti-immigration and anti-liberal politics.

But the seismic shift in the Slovene media landscape happened in July 2017. Pro Plus company was the owner of the tv channels POP TV and Kanal A who are reaching 70 per cent of the viewers in the Slovene market and who receive an even higher share of advertising revenues in Slovenia. The company was bought by United Group, owned by the New York based private equity firm KKR (Kohlberg, Kravis and Roberts) for 230 million euros. Before that, Pro Plus belonged to Central European Media Enterprises (CME) incorporated in the tax haven of Bermuda.

“The Barbarians at the Gate”

Two founders of KKR, Henry Kravis and George Roberts are known as inventors of leveraged buy-outs and their take-over of the RJR Nabisco company in the US was made into a Hollywood movie in 1993: The Barbarians at the Gate. However, these “barbarians” find strong support for lobbying in the Balkans in KKR Global Institute chairman David Petraeus, former director of the CIA and commander of US military forces in Afghanistan and Iraq. He served also in the Nato peace operation in the Balkans.

Petraeus visited Slovene Prime Minister Miro Cerar on May 18, 2017 and lobbied for the purchase of Slovenia’s major television company which also owns the most visited online outlet: 24ur.com. Additionally, KKR bought Croatia’s most watched tv channel Nova TV simultaneously, but Croatian regulators did not approve this part of the deal. Minority shareholder and chairman of United Group, Dragan Šolak met premier Cerar on April 19, 2017, too.

Without a doubt, after Petraeus’ lobby work the Slovene Agency for Protection of Competition Protection Agency (CPA) did probably greenlight the 230 million euros KKR deal despite the fact that such an investment is creating a vertical integration in the media and telecommunication markets as it bears the danger of a monopoly in many other local markets. Moreover, the appointment of CPA’s new director Andrej Matvoz raises many questions about his independence. Despite him lacking any experience in this demanding field of law, he was appointed by the Minister of Economic Development and Technology as acting director. But the Slovene court later declared the decision as illegal. Additionally, the Slovene Commission for the Prevention of Corruption filed charges against Matvoz for cheating in an expert exam to the Slovene police. Nevertheless, all these serious questions didn’t keep the ruling political coalition from confirming Matvoz in the parliament.

Intensive lobbying is also confirmed by a decision of Slovenia’s Ministry of Culture which formally determined that Pro Plus is not a related party of POP TV and Kanal A programmes which are owned by Pro Plus with 100 per cent of the shares. Thus, the Ministry of Culture excluded itself from making any decision about the United Group (KKR) takeover in its role as a regulator of the media industry.

United Group, registered in the Netherlands, also owns the SBB and Telemach telecommunications company, SportklubTotal TVNet TV and many other media companies in the region of former Yugoslavia. It reaches 1.74 million households and made 488 million euros of revenues in the last year. It is one of the most important telecommunication and media providers in the Balkans, offering also mobile phone services, and it airs the N1 TV channel, the local partner of CNN in Croatia, Bosnia and Serbia.

The Serbian-Slovenian minority owner of United Group, Dragan Šolak – one of the richest man in the Balkans – regularly operates in offshore countries. According to the Croatian weekly magazine Nacional*, its subsidiary United Media with headquarters in Zürich, Switzerland, managed to funnel 6.7 million euros out of Croatia to secret bank accounts in Liechtenstein and Cyprus for broadcasting licenses without paying any significant tax. Additionally, KKR and the European Bank for Reconstruction and Development (EBRD) are hiding their ownership of United Group behind a complex corporate structure with more than a dozen offshore companies in tax havens of Delaware, the Cayman Islands and Luxembourg.

Among such a concentration of media owners with a criminal past and present, with corrupted politicians as well as aggressive Wall Street barons it’s almost impossible to work as a professional independent journalist in Slovenia. Many experienced journalists already left their profession or were forced to leave. On the other hand, a new generation of young journalists seems to be fully adapted to business interests and the goals of new media owners. Professional solidarity among Slovenian journalists lies in the long forgotten past. The professional and personal ethics of journalists who are serving these criminals, politicians and “barbarians” tend to reach new lows again and again.

By Blaž Zgaga for European Centre for Press & Media Freedom

* The Patria scandal was unearthed in 2008 in collaboration between Finnish journalist Magnus Berglund (YLE) and author of this article.

** The investigative story in Nacional was written by the author of this article.

The author of this article started his journalistic career at the national desk of the newspaper Delo in 1993. In 1998 he joined Večer where he spent the next ten years. In 2007 he initiated the petition against censorship and political pressure on journalists which was signed by 571 Slovene journalists, one quarter of all professional journalists in the country. Because of mobbing and censorship he quit Večer and works as a freelance journalist since 2008. He is a member of the International Consortium of Investigative Journalists (ICIJ) and one of the Information Heroes of Reporters Without BordersHis articles are regularly published in the Croatian weekly magazine Nacional.

www.rsf.org