From Dubai With Love

While pengovsky was addressing the wider aspects of multiculturalism, a true human resource drama of nearly Shakespearian proportions was unravelling in Slovenia at the end of which Prime Minister Borut Pahor had to say goodbye to one of his closest coworkers, chief of staff Simona Dimic, who could (had this been a different James Bond spoof) rightly be called Pussy Galore on account of her looks. She was accused of corruption and abuse after it was revealed that she took out a EUR 350,000 loan with state-owned Nova Ljubljanska banka to renovate the house, that workers of the embattled construction company Vegrad worked on her project and even took materiel from a larger Vegrad’s construction site and, tangentially, that her partner’s tourist agency had a suspicious spike in turnover since the new government took over. The pressure was mounting and days later Dimic resigned from her post and reportedly took refuge from the media onslaught in Dubai, accompanied by her partner and their child.

20101028 dubailove From Dubai With Love
Photoshop job by yours truly

The snowflake which started the avalanche was a loan of some 350k EUR which she took out with state-owned NLB to renovate a house she and her partner own in a plush Ljubljana neighbourhood Murgle. This was combined with claims that builders worked on the site incognito and were in fact employed by the embattled construction company Vegrad and that materiel for renovation was taken from one of Vegrad’s nearly-failed housing projects in Ljubljana. This was an explosive enough mix which – combined with some very clumsy PR, a couple of unanswered questions and a few inconsistencies – led to her resignation.

Vegrad and NLB

Vegrad probably deserves a post of its own, but to put in the context, suffice it to say that the company (which recently filed for bankruptcy) became one of the major players in the construction during the construction boom and undertook to build a large housing project in Ljubljana but went under because of if due to combination of the financial meltdown and some gross mismanagement of its CEO Hilda Tovšak (who, by the way, is on trial in the Operation Clean Shovel). As the company started its protracted and painful demise it turned out that wasn’t paying its already miserably underpaid workers, mostly foreign labourers from Bosnia.

With social injustice still (and rightly so) being magnum crimen in Slovenian society, this was and still is a huge story which boiled thrice over, to the point where everyone jumps at the mere mention of the company, almost regardless of the context.

Ditto for NLB, which still suffers from overexposure to bad loans, awarded to various politically or otherwise well connected managers and manager wannabes in the past few years. As a result NLB requires somewhere between 200 and 400 million EUR increase in capital, which will probably come in the form of taxpayer’s money. And since a 350k EUR loan is not peanuts – at least from the point of views of the “ordinary people” (an populist angle Slovenian media are increasingly covering all stories from) – a conclusion that was immediately made (or at least inferred) that the loan was granted without the usual scrutiny and that Vegrad was continuing it’s practice of exploiting its workers – all for beautification of a senior official’s crib.

… the fuck?

It looked bad from the beginning and it got only worse. For all her cunning, Dimic reacted badly and denied allegations but refused to offer further explanations thus only fuelling speculations further. At some point she sort of caved in and presented some documentation. But it was too little to late.

Fair’s fair and it must be said that while big, 350k EUR loan is not impossible. Yes, initially the bank will probably have refused or place some impossible conditions. But since a bank is not a supermarket where you just walk in and pick stuff from the shelf (not any more, that is), there’s always room for negotiations. Especially if your credit is more or less OK.

Furthermore, journalists always pressed Dimic whether it was Vegrad which renovated her house and she continuously denied that. But “Vegrad” is not the same as “Vegrad’s workers”. Pengovsky is not trying to unnecessarily defend anyone, but I can totally see a scenario where a worker or a subcontractor who went without pay for months, simply takes on another job and uses materiel and tools from Vegrad’s construction site to do a quickie somewhere else, cash on the nail. This is pure speculation, but it is somewhat corroborated with inconsistencies in Dimic’s later explanations where it transpired that a) her spouse signed a very loose contract with a small construction company to handle the project and b) there were some cash transactions, possibly to avoid paying taxes.

Escape to Dubai

But that was only the start of a very bad week. An old story about Escape travel agency was revived. This apparently somewhat obscure travel agency is owned by Dimic’s spouse (together with another partner) and is mostly selling Dubai destinations. According to media reports the company’s revenue sky-rocketed after the new government took over and Dimic became Pahor chief of staff, with various government ministries and bodies apparently buying airline tickets directly through Escape. Pegovsky can not say for a fact that there was anything illegal going on, but it does look unhealthy, no matter how you look at it. Especially since there’s a government-wide system for purchasing airline tickets where short-notice tenders are issued and travel agents then bid with the lowest price.

Anyways, point being that the media onslaught was such, that despite expressions of strong support by the PM himself Simona Dimic resigned from her post last Friday by ways of a tearful letter to the Prime Minister, thanking him for all that he’s done for her and the trust he had shown her, but added that it was all just too much and that she can’t take it anymore. The very next day she was on a plane to Dubai together with her son and spouse.

So, what was really going on?

Simona Dimic was one of Pahor’s closest advisers for the past twelve-or-so years, especially during his stint as a Member of the European Parliament. With his ascent to the premiership Pahor picked her as his chief of staff. Dimic was reportedly very effective in this powerful position. Some would say even too powerful, which was probably what caused her downfall. According to media reports her influence over who gets picked to various para-government positions was enormous, but little birdies tell pengovsky she increasingly had a say over various government policies. And with that she presumably overplayed her hand.

There are various competing theories as to what exactly happened:

1) Dimic has outlived her usefulness to Pahor and was starting to reach over his head.

2) The scandal was coalition-induced as a sort of revenge by other coalition parties and their leaders for the shit they had to go through, especially with Ultra Affair and Canine Scandal (Zares and LDS respecitvely)

3) It’s all Janez Janša’s doing, as a warning to PM Pahor that he too is vunerable and that Janša will do everything to destroy Pahor should the Patria Case proceed.

Let’s deal with No. 2 first, as it is highly unlikely. Neither Zares nor LDS at the moment have the capacity to launch a full-scale media offensive on the largest coalition party. In addition, this would require plenty of coordination on the highest levels of both parties, not to mention that it would all have to be planned during election campaign. However, it is highly likely, that all junior coalition parties and their leaders, Katarina Kresal of LDS, Gregor Golobič of Zares and Karl Erjavec of DeSUS just sat back and enjoyed the ride, since Pahor didn’t move as much as a muscle when each of them hit their respective badlands.

But Brutus is an honourable man…

Well, that’s not exactly true. What Pahor did each of those cases is to state very strong support for the embattled leaders of coalition parties. But there’s a twist. Each and every time Pahor publicly supported them but then left them out to dry. It is a shrewd tactic, not unlike what Shakespeare had Mark Anthony say in Julius Cesar but in this case serves mostly to save face and curb his political allies.

I’m not saying that Pahor initiated the whole thing, but if you will look closely, he – publicly at least – didn’t do much to help Dimic either (save the aforementioned expression of support) and not unlike Karl Erjavec of DeSUS she too buckled under pressure and resigned of her own free will, thus diverting at herself all the mud that was beginning to stick to the polished figure of the PM as well. Parallels with Erjavec’s protracted removal from ministry of environment are stunning, in fact.

If I wanted to kill you, you’d be dead by now

It was Virgil Sollozo who said that to Tom Hagen in The Godfather, but it is possible that the media onslaught was orchestrated by Janez Janša of SDS who has his ever increasing pile of elephant shit to deal with. The Patria Case is progressing and the prosecution just upped the ante, changing the indictment from “attempted bribery and corruption ” to “complicity in bribery and corruption” which is a notch or two more serious a charge. If we presume for a moment that the prosecution does in fact have a case, then Janša is probably worried sick. And if that is the case, then he might have just sent Pahor a message, basically saying “I can get to you”.

While we’re on the deep end of the conspiracy pool: in 2005 Pahor and Dimic were returning from Brussels by car and it caught fire in a tunnel on Ljubljana-Koper motorway. Officially foul play was excluded, but some people claimed that it was in fact an assassination attempt. It’s more or less a crack-pot theory, but I thought I’d mention it while we’re on the issue icon biggrin From Dubai With Love

Wrap it up, will ya?

Regardless of what actually happened, even if it was just media sort-of-performing their role in society (although they get no marks for style and only average marks for technical excellence), bottom line is that the PM is now probably better off then he was a month ago, because he removed (or had removed) a powerful courtier whose ego started issuing cheques her body couldn’t cash (to quote another favourite film of mine). And in the final analysis the story was a welcome diversion, steering the public away from other, quite possibly more important issues.

 From Dubai With Love


39 Comments to “From Dubai With Love”

  1. dr filomena Says:

    Am I naive to consider it quite probably that the media onslaught was not orchestrated by a particular political entity, but rather – as you mention in the wrap-up – simply the result of the media coming across the scent of fresh enough blood?

    It is slightly disconcerting with how little attention to hard evidence media charges and for all intents and purposes executions are performed. Who cares about hard facts, when insinuations and allegations that ring true enough suffice for a juicy public lynch?

    PS: I’d like to see all those upstanding citizens yelling bloody murder produce invoices for every single one of construction works in their own homes. Let him cast the first brick… Mortar easily provided by Sollozo et co.

  2. alcessa Says:

    So IT IS possible to get such a huge loan with a temporary employment contract in Slovenia? You’re lucky…

  3. dr filomena Says:

    I don’t know the details of the contract, I have no idea how the loan was secured so I will not pass judgement. It’s the bank’s business to lend money. It’s what they do. It’s why they exist. Do you think she would not be able to pay it off? That with her assets and those of her partner she would be unable to keep up with the monthly payments? Because that is the only issue as far as I am concerned. If the loan is made out at a market interest rate and is being paid off regularly, it’s *good business*.

  4. alcessa Says:

    Actually (sorry for not explaining into detail beforehand), what I meant was the fact you mostly won’t get a loan with a temporary employment contract or as a freelancer in Germany regardless of the size of your assets, income, profit… you name it. It is the problem rich doctors and lawyers have, since they work as freelancers, too, if they own their businesses… And my husband has had a few temporary employment contracts, too..

    That’s what I meant with “lucky”.

  5. pengovsky Says:

    I’m with the good doctor on this one. Banks are in the business of lending money. As long as they get their money plus interest it is good business.

    Besides, temporary contract or not (you’re referring to the fact that the duration of her employment is based on the duration of the government’s term, at best), it’s the collateral that counts. If the put up a house or any other tangible asset (and granted, I do not know any of the details) I see no reason for bank to refuse her a loan.

    To draw a comparison: by that same standard MPs, ministers and CEOs who technically hold only temp jobs with four year terms should be automatically refused loans as well, no?

  6. alcessa Says:

    Ouch, sorry: Slovenian media write today Ms. Dimic had a temporary contract. (e.g. http://www.delo.si/clanek/126947)

  7. pengovsky Says:

    @alcessa: Em, obviously my comment is a bit out of focus now. I haven seen your last comment before I posted. Sorry :)

  8. alcessa Says:

    Pengovsky: yeah, that’s a good explanation. And as I said above, I was just trying to compare.

  9. alcessa Says:

    :lol:

    I am sorry for the mess: the link was for dr. Fil.

  10. alcessa Says:

    One more question, though: wouldn’t banks consider MPs and ministers eligible for a loan because they will receive certain fees even after they stop doing what they are doing?

  11. dr. filomena Says:

    @alcessa It is not common practice to grant huge long-term loans to people on temporary contracts *without proper collateral*. Banks hate being stuck with real estate to sell in court procedures, but depending on the type of your assets and especially if you have a solid guarantor at hand who is willing to be legally obliged to make the payments if you can’t (such as your partner), that may not really be the main issue. There is no rule that prevents people on temporary contracts from getting loans. It’s up to the bank to make a call.

  12. alcessa Says:

    Dr. fil: THX.

  13. dr. filomena Says:

    @alcessa Re ministers: they might get the boot after 3 months on the job and get paid for another year thereafter. How is that better than Dimic’s job?

  14. pengovsky Says:

    @alcessa: MPs, ministers and the PM get a year’s worth of severance pay at most (I honestly can’t be bothered to go look for exact numbers right now :)) and that’s still only peanuts compared with the amount of money they would have borrowed to buy a house.

    As dr.fil said, it the collateral that matters. Sometimes a sound investment in a Dubai sovereign fund will do (and I honestly made this one up) :)

  15. alcessa Says:

    Thank you, both of you, my picture is becomng larger by minute.

    You did see Slovenian media are claiming she wasn’t eligible due to the nature of her contract (and nothing else matters)?

  16. dr. filomena Says:

    @alcessa I have not had the pleasure of seeing that yet, but wouldn’t put it past our blood-thirsty selfrightous “journalists” to compare her status to that of some just-out-of-school first temporary-contract job holder and scream “So why could this honest worker not get a loan like Simona Dimic”. Apples and oranges.

  17. pengovsky Says:

    Typical. They didn’t even bother to check how and why, but just passed judgement. They also went to the bank as asked under what conditions a journo could get a loan. Obviously, under virtually no conditions. Journos are a dime a dozen and as a rule have no assets :) But still they went along the lines of “If I can’t have it, how come someone else can?”

  18. alcessa Says:

    Well… Maybe serious journalism simply doesn’t pay out (should you see any irony there, keep it :-) )

  19. pengovsky Says:

    Touché! ;)

  20. Poulette Says:

    Correct me if I’m wrong, but I thought the hoopla was also about the fact that she got a RIDICULOUSLY low interest rate on her loan? One that no bank would grant you or me no matter what our situation?

  21. pengovsky Says:

    Ahem, I thought I mentioned that :? Sorry. Yes, you are right. Although experience teaches that interest rate it inversely proportional to one’s financial state. But yes, her position within the government didn’t do her any harm in getting a lower interest rate.

    But ultimately the interest rate is negotiated. It’s just a matter of how much leverage one has in those negotiations. Besides, the bank still makes money off of it (provided Dimic is repaying the loan as per agreement)

  22. dr filomena Says:

    @Poulette: I would appreciate to a link with a reliable quote on the interest rate she got on her loan. Then I can comment. Since I was on the market for a real estate loan not too long ago, I can actually compare to what I was offered.

  23. Poulette Says:

    @Dr Filomena: no idea where I read that, I only follow Slovene politics sporadically, but if memory serves I think it was in the range of 2,5. Variable, fixed, that I do not know (which basically renders this little piece of info useless). I recently managed to negotiate a loan for an apartment from 4,2 to 3,55 (yeah!), but this doesn’t say much, because there are fluctuations from week to week, not to mention depending on how much you borrow and how much you bring to the table, as Pengovsky says – however, there are certain points below which no bank will go, and the way I understood things, her rate was well below that.

  24. dr. filomena Says:

    @Poulette: Thing is, I can’t find a reliable quote. What info I found was in comments on online articles. There, I read that the interest rate was 3.6%. It’s so easy to just say “incredibly low” without quoting the exact rate and get everyone’s hearts racing. I refuse to judge without knowing the details of the contract both in terms of the interest rate and in terms of collateral.

  25. St. Luka Says:

    The interest rate was six month Euribor + 1,6% they said. That is not 3,6 as far as I understand these rates, but much less. And talking about good business, Dimic was not (contrary to her claims) just one of the “ordinary folks”. She was more or less second in command, and getting such loan from a state owned bank doesn’t really sound like a business relationship to me.

  26. dr. filomena Says:

    @St. Luka: 6-month Euribor at the moment amounts to 1.27% (but is most certain to rise). The (current) sum of 2.87% does not include any cost of insurance and the processing fee that the bank charges, so we still do not have complete information. If the bank is making money on the loan and if she is paying it off regularly, it’s business. We can speculate and assume, but hardly *know* all that much.

  27. crni Says:

    I was personally very surprised that the bond girl in question was so inept at handling this PR issue. I thought Pahor’s people would have been the masters of handling such things.

    As far as the bills and documentation and casting the first stone goes: just goes to show you that the taxes in SLO are to high if the socially conscious powers that be are also avoiding them.

    About Vegrad workers working there without the couple’s knowledge: supposedly also the overseer was the same as on the CD complex. I smell something fishy here and the couple really did not have very good documentation o the 350K transaction.

    About the interest rate: It’s a sign of old age when people know the interest rates and start comparing them :) Welcome to the club everyone, hehehe. In zee Germany it’s possible to get a 5 year fixed interest rate around 2.9% and a 10 year around 3.4-3.5%.

  28. alcessa Says:

    Crni: is it?

    (feeling happy for having just proved I don’t belong into the old age bracket yet :-) )

  29. pengovsky Says:

    @Crni: I almost resent that last part of your comment :mrgreen:

  30. St. Luka Says:

    @filomena: We don’t need to know more, we know enough! You’re right, the interest rate is unimportant, the simple fact is these people are too rich! But worry not, for the wrath of the Lord Almighty will come upon them and we shall get our vengence. Blessed are the poor workers of Vegrad for they shall inherit the Kingdom of God … no, wait… they are all muslim, right? Well, sorry, they get nothing then.

  31. Poulette Says:

    @Crni: I got 3,55% (fixed) for 20 years in Belgium. That said, I had to flash my boobs at my banker in return.

  32. dr filomena Says:

    @crni & Poulette: I was offered a rate of 3.83% (fixed) in Luxembourg to purchase a property in Slovenia (!), but thankfully Hilda’s boy screwed us and sold the apartment we were interested in and had “reserved” :)

    @St. Luka: Will get back to you after enlightenment.

  33. dr filomena Says:

    (PS: that was 3.83% w/o boob-flashing… there was room for negotiation yet :mrgreen: )

  34. alcessa Says:

    Alcessa (taking notes, murmuring): …good interest rate…20 years…boob-flashing…

  35. dr filomena Says:

    @alcessa: Also, play it safe. Use French letters and go for the fixed rate ;)

  36. alcessa Says:

    French! Yeah, I can do that, thx, Je parle un peau. Now, about that fixing you mentioned…. (shuffles off dreamily)

  37. Camille Says:

    I was coming here to say what I see the good Dr. has already so eloquently said in the first comment. The Slovenian media is (by and large) completely vicious, and if they get a whiff of any prey they can take down they will rip the whole thing to bloody shreds. I smelled the first few whiffs of the Dimic story a few weeks ago and I could already see her rotting corpse in my mind’s eye. It’s SO ugly, and so much of it could be avoided if these people got good contracts and decent pay….

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