Pengovsky did some punditizing for media outlets which really should have known better in the last couple of days and weeks which means it’s time both readers of this blog be brought up to speed on the recent developments in Muddy Hollows. Which, fairly or not, have for the past ten days or so been focused on the loan-taking habits of the largest opposition party.
The Glorious Leader holding half a rock.
Namely, it transpired that SDS in order to finance the upcoming election campaigns took out a funny-looking EUR 450.000 loan from Dijana Đuđić, a 32-year-old Bosnian Serb woman. As the story broke, the faeces met with the proverbial rotating air blades apparatus, providing for a spectacular shitshow.
Granted, political parties‘ coffers are under a bit of strain right now as the country will hold four nationwide elections in a span of little more than a year and a half. It all started with presidential elex in November 2017 and will end with European election in mid-2019. In between, we’re up for parliamentary vote in early Summer and municipal elections in late Autumn. In short, if you’re are a CFO of a political party, this will be a year of hell.
Campaign finance
In general, political parties have a limited set of options when tackling this sort of issues. Obviously there are membership fees. But these only really work for parties with large memberships and even then they can mostly cover just operating costs. “Special” projects, as elections tend to be (although one could be excused for thinking they’re more like “regular” projects) mostly require different sort of financing.
When campaigning looms, parties can either dip into their savings, solicit donations or take out a loan. Now, options one and two are more or less off the table. Campaign pace is relentless and most parties are still reeling from a similar-but-larger chain of events from 2006 to 2012 and a triple whammy in 2014 which financially broke most of them. And since donations to political parties from corporations became illegal, donations (or “donations”, i.e. kickbacks) are no longer a popular sport as most private citizens tend to donate to welfare causes rather than to political parties.
Thus, the supposed cornerstones of a democratic and pluralistic society are limited to borrowing relatively large amounts of money from commercial banks. And this is where fun starts. Banks, obviously, loan money at an interest. That’s the business they’re in, after all. However, ingrained in the concept of loaning money to political parties is the expectation that not all loans will be paid back in a timely manner. You see, the primary source of a political party’s income are budget funds which are allocated in accordance with the result in various elections (parliamentary, local, etc…). Which means that a party which takes out a large loan and then flops at the ballot box is saddled with this huge debt which it cannot service. And if (or rather, when) elections follow one another year on year, this can pretty much become a vicious circle.
Obviously, if one has friendly relations with a bank, things get a bit easier. And now you know why no-one is too keen on privatising banks (lol). But even so banks have become less forthcoming providing monetary injections to cash-strapped parties. Social Democrats, for example, had to take out a mortgage on their HQ to bankroll their 2014 campaign and since they underperformed quite spectacularly it took time to pay back the money. Lucky for them they managed to be a part of the ruling coalition putting them in close proximity to state-controlled resources which can occasionally be used to, well, augment projects dear to their agenda.
Bosnian connection
However, a political party can also borrow money from a private citizen. Which is what the largest opposition party proceeded to do as last year drew to a close. This is where it starts getting interesting. The SDS trying to get a half a million loan from a foreign citizen is most likely the biggest act of self-fuckerry ever since that same party got caught using forged documents trying to implicate then-president Danilo Türk into one of their cockamaime conspiracy theories. And just like then the supposed master communicators did everything wrong.
Namely, it transpired quite soon that the reading of the law which supposedly allowed the party to take out such a loan was plain wrong. Which could *almost* be put down to an honest mistake (as the law limits yearly loans and contributions of private citizens to ten times average gross may in the country). But the thing is that it was SDS which co-sponsored the amendment which capped this. Awkward. Doubly so when it turned out that the money was loaned at a surprisingly friendly two-percent interest rate and that the SDS’ share in a media publishing house was put up as a collateral. An when it turned out that the lender is a thirty-something Bosnian woman employed at the municipality in Prijedor, all of a sudden things were starting to look like less like a loan and much more like money laundering.
Appearances matter and even if this was all just a case of a series of utterly bad decisions with no malicious intent it still looks pretty bad. And for several reasons.
First and foremost, it reiterated the propensity of the largest opposition party to snatch defeat from the jaws of victory. Secondly, the immediate damage control the party and its Glorious Leader did only made things worse. And thirdly, with this the SDS just threw away a relatively powerful tool with which they were in all likelihood going to beat SMC over their heads.
Iranian connection
For a while now the SDS was running a parliamentary investigation into the alleged money laundering by an Iranian businessman via state-owned NLB (Nova Ljubljanska Banka) back in 2009. The story has been getting some tractions in Muddy Hollows and beyond although both the amount of money and the extent of criminal activities remain disputed. SDS claims as much as a billion euros were laundered and that NLB aided and abetted breaking the Iranian embargo and financing of terrorism (implying that senior government officials new about it) while NLB disputes the account and claims to have put a stop to this as soon as it became aware of suspicious activity. A criminal investigation is ongoing and the parliament endorsed interim committee reports calling for increased oversight.
Be that as it may it was obvious the SDS was going to scream bloody murder over this all the way to the polling booth. But now, every time they shout “money-laundering!” fingers will not point to Tehran, Iran but to Prijedor, Bosnia.
Hungarian connection
While the party and its leader were getting their story straight, important details emerged which put the affair into the surely-you-can’t-be-that-stupid column. The deed, unearthed by Večer daily, stipulates that as a collateral the SDS provided its 44-percent share in a publishing company Nova Obzorja which, among other things, publishes Demokracija, a magazine considered the unofficial party mouthpiece.
Not long ago, the majority stake in this publisher was acquired by Ripost, a Hungarian media conglomerate circling in close orbit around Victor Orban. Companies connected to the Hungarian populist leader also acquired a majority stake in Nova24TV, another SDS mouthpiece and Fox-news-wannabe (basically bailing out a project that was about to go tits-up due to lack of financing).
And as Janša sought to explain just how exactly a 44-percent stake in a struggling publishing house could serve as a collateral for half a rock, he let it slip that the majority owner (that be the Hungarians) was interested in buying the rest of the company, but only in 2019 (when the final tranche of the loan was to be delivered, supposedly for financing EU elections) and that it was them who put the SDS in touch with the Bosinan creditor/loanshark in the first place.
Why this little titbit didn’t set off all the klaxons is still a mystery to pengovsky. It’s been obvious for a while now that SDS and Fidesz and on the same wavelength on a plethora of issues (immigration and Soros-bashing being just the most obvious cases) while Janša and his party’s rank-and-file (part of it, at least) actively curried favour with Viktor Orban and his people. But when one puts all these things together a more sinister picture emerges.
Janša’s claim that Orban’s friends from the media industry were interested in that same asset Janša put up as a collateral for a loan those same Hungarians helped arrange raises two very important questions: a) was SDS ever really going to repay the loan or was the plan simply to default on it, thereby (nominally at least) letting it end up with a Bosnian citizen who according to Janša is on good terms with the Hungarians and b) where did the money, in fact, come from? Well, turns out some Hungarian media outlets did notice this and are paying due attention.
I mean, hypothetically, the circle-of-life here is fairly simple. A Hungarian actor wants to clear half a million and transfers it to Republic of Srpska (which is apparently the tax haven of the Balkans). An individual there loans the money at a laughable interest and/or collateral to Janša’s party which in turn spends much of the money for advertising in the media it co-owns with (nominally different?) Hungarian entity. The money then re-enters Hungary as a profit from a Slovenian venture, thereby being cleaned. Along the way everyone takes a cut but the Hungarians get their hand on the rest of SDS media machinery, now exerting complete control over the right-wing media landscape in Slovenia. It’s a sweet fucking deal. Hypothetically, of course.
Slovenian connection
In Slovenia, however, most of the attention is focused on one Rok Snežič, a self-proclaimed expert in tax-evasion who just happened to be Janša’s cellmate while the Glorious Leader was doing time for the Patria Affair. Namely, not only was Snežič’s wife the single largest individual investor in Nova24TV at the outset of the enterprise, it turned out Snežič personally knows Dijana Đuđić (the Bosnian lender, in case you lost track). Janša claimed that he had not seen Snežič in a while and Snežič claimed not to know Đuđić at all. But one Instagram photo (now widely reported on) puts at least Janša and Snežič (and possibly Đuđić, too) in the same room as late as December last year, only days before the problematic loan was notarised.
It transpired several media reports later that Đuđić was apparently serving as a frontman – or frontwoman, as it were – for several other similar operations in Slovenia and that she is considered a tax evader by the Slovenian Financial Authority (basically the sub-Alpine version of the IRS). It was also reported that the notary who OK’d the deed, which was in flagrant violation of legislation on financing political parties, has in fact been under investigation by the ministry of justice for some time. There were even rumblings within the party that the whole deal was rotten (or at least incredibly stupid). In the end it all proved too much for the SDS leadership and the party decided to return the money and cancel the deed. Things, however, do not stop there.
Fallout
That the whole clusterfuck damages the narrative SDS was trying to set up is beyond doubt. What remains to be seen is how (or if at all) will this affect the grip Janša has on the party. Namely, ever since his prison sentence was overturned and he walked out of jail, the SDS leader is turning from the party’s biggest asset into its biggest liability.
His attempts at damage control did more harm than good. He claimed not to have seen Snežič for a long time but was discovered to have lied. He tried to put a daylight between himself and Đuđić claiming to have seen her at the notary for the first time but now this claim is problematic at best. He also claimed he wasn’t operationally involved in securing the deal but was sharing details of how it was put together nevertheless. And finally, he tried to shift the blame on the notary saying that he was the only one responsible for the legality of the deal. Which may or may not be the case, but goes to show that Janša apparently knew the whole thing was dodgy.
In the end even the party faithful were becoming visibly disgruntled which led the leadership to rescind the deal and return the money.
But this particular move opens up a whole different can of worms. Having returned the money the party basically (and wholly uncharacteristically) admitted to wrongdoing. Sure, the evidence was overwhelming but this has not stopped them before. Additionally, it doesn’t answer the question of just where the money was coming from in the first place.
It also brings back painful memories of the Patria Affair which also involved dodgy middlemen, transfers of large sums of money and accusations of money laundering. Could it be the party will have to defend its leader from the same set of accusations again?
And, last but certainly not least, the mere fact that after having embraced nationalism and Blut-und-Boden populism of Victor Orban, Donald Trump and the likes, the fact that Janez Janša would OK a dodgy loan from Middle-of-fucking-nowhere in Bosninan Republic of Srpska, was proving just too much for the base.
Which is why the party machinery is now engaged in some serious rear-guard action, trying to deflect attention by crying wolf and point out that there are others political players in Muddy Hollows who (gasp!) have business and political ties with leader of Republic of Srpska Milorad Dodik and that this is just horrible. While that may or may not be true (and fact is that the young SD deputy who is the target of this “controversy” deserves a healthy dose of ass-kicking just for being a douche-bag that he is), the SDS don’t seem to realise that by this they only keep the story of their loan/money laundering alive.
And that’s before they even started explaining their role in that other fuck-up, the TEŠ 6 powerplant.
Things in Muddy Hollows sure got interesting, if a bit awkward, much sooner than expected.
