BAMC Internal Audit Finds No Fault in Logatec Land Case

By , 02 Jun 2019, 23:35 PM Business
BAMC Internal Audit Finds No Fault in Logatec Land Case lonstroff.com

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STA, 31 May 2019 - An internal audit of the controversial sale of land by the state-owned bad bank to Swiss Lonstroff for an elastomer plant in Logatec has found that the bad bank had not suffered financial damage in the deal, while some employees did commit several violations.

The Bank Asset Management Company (BAMC), whose management has been overhauled in the meantime, announced in a press release on Friday that its commission for legal evaluation of responsibility had found that BAMC had not suffered damage in the deal, which was first reported on by the media in September 2018.

The bad bank added that "in different phases of the deal, BAMC employees did commit several violations of their working obligations, as they failed to respect internal BAMC acts, but these did not affect the result of the sale".

The media reported at the time that BAMC had sold a 51,000 m2 plot in Logatec, on which Lonstroff, the Swiss subsidiary of the Japanese multinational Sumitomo Rubber Industries, was building its plant, to realtor Svet Re for about EUR 40 per square metre.

Just days later, Svet Re sold a 33,000 m2 plot to Lonstroff for EUR 90 per m2, making EUR 1m in net profit in the process, and using the proceeds to pay BAMC. The bad bank sold the remainder of the plot just months later to logistics company Hoedelmayr at EUR 40 per m2.

Regarding the damage liability of the employees, the commission said that their acts related to the price of the land plot and the sale procedure had been carried out in line with the internal rules of BAMC.

The entire plot was sold to the companies Svet Re and Hoedlmayr at EUR 40 per square metre, which was a price higher than estimated in an internal appraisal, the bad bank added.

"Even if the employees in question had carried out the sale procedure completely in line with the binding rules, it is not possible to conclude that the property would have been either appraised or sold at a higher price."

BAMC added that penalties against the employees could only be carried out if there were signs of a criminal act, which had not been established in the case.

In the audit, the commission took into account the recommendations and forensic audit made by the consultancy Ernest & Young, interviews with employees and several legal opinions.

BAMC said that the procedure had resulted in "changes to acts regulating internal processes in BAMC which will help prevent similar violations from happening. A majority of the changes are already being implemented".

The media reports were soon followed by a visit by criminal police officers at the BAMC headquarters, while the Ljubljana police conducted several house searches a month ago.

The newspaper Delo reported at the time that Lonstroff Slovenia boss Peter Weber was being suspected of defrauding his company of EUR 1.7m in relation to the deal.

BAMC noted today that the president of the management board and all three executive directors had been replaced in the meantime. "BAMC will continue to cooperate with the authorities investigating the case," the release adds.

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