As a Slovenian Tycoon’s Empire Crumbled, His Bank Accounts Swelled
27 Oct 2020

By Anuška Delić (Oštro/OCCRP), Matej Zwitter (Oštro) and Maja Čakarić (Oštro), OCCRP, 26 October 2020

OCCRP — After Slovenia’s independence from Yugoslavia in 1991, the former socialist state privatized its assets, giving each citizen a certificate to invest in the few blue-chip firms the country had at the time.

The government created “authorized investment companies” where Slovenians could pool their certificates. Those companies then invested in the newly privatized enterprises. Over time, many of the firms merged and became dynamic financial groups, often run by homegrown capitalists.

Darko Horvat, whose Aktiva Group made him one of the richest people in Slovenia, is a product of that era.

As his bundle of special investment companies became global in scope, he moved his family to the United Kingdom, telling a Slovenian financial daily in 2002 of his vision to make Aktiva “a proper multinational.”

But a decade later, his debt-ridden empire collapsed, leaving Slovenian taxpayers liable for a nearly 100-million-euro bailout. Horvat, who stepped away from his businesses in 2009, has faded from the public scene — but he didn’t leave a poor man.

Leaked Suspicious Activity Reports (SARs) filed by banks to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) reveal that, from December 2011 to November 2016, Horvat’s personal accounts and those of entities connected to him were involved in making US$48.2 million in transfers.

Some of that money appears to have originated from companies connected to his business empire. Part of the cost of Aktiva’s demise was transferred to Slovenian taxpayers, as the government was forced to bail out the banks that Horvat’s core company, then known as Aktiva naložbe, was indebted to.

Barclays Bank in New York filed the SAR, describing the payments as being of suspicious origin. The bank noted that in 2015 Horvat was listed as “self-employed with an annual income of about 600,000 euros (approximately $645,508).”

While a SAR is not an allegation of criminal activity, banks file them to let the U.S. financial intelligence agency know when they see transactions that might be problematic.

In this instance, the SAR shows that Horvat was able to retain wealth while everyday Slovenians paid some of the costs of cleaning up his failed business empire. Moreover, the SAR shows that a Gibraltar-based company once related to Aktiva Group sent money to his personal account to repay a loan.

Recouping Losses

Information revealed by the FinCEN Files could provide the basis for legal action to try to reclaim money lost by investors who bought into Aktiva, said Kristjan Verbič, who heads the Pan-Slovenian Shareholders’ Association.

The $48.2 million that moved through Horvat’s personal accounts, and those of entities connected to him, has not been revealed until now. Thus, Verbič explained in an interview, his group must now establish if the money revealed by the SAR should have been considered in compensating almost 80,000 minority shareholders who lost their investments when they were pushed out of Aktiva.

The investors had been subjected to a “freeze out” – the term used when those holding a controlling stake in a company engage in unethical tactics to pressure minority shareholders to sell.

Verbič said his group negotiated a better settlement, but the revelation that Horvat secretly received funds from the troubled company might mean minority shareholders were actually victims of fraud.

“In this case we could most probably start a proceeding, in line with our mission, where we would try to achieve for these … defrauded shareholders a suitable compensation,” Verbič said.

However, pursuing a new case would be a complex undertaking, as it would involve getting information from non-transparent foreign jurisdictions where Horvat based his companies, including the U.K.

Such challenges highlight the need for reforming the murky international financial system, said Maruša Babnik, an expert on tax justice at the Ekvilib Institute, a think tank in Ljubljana.

She noted that investigators, journalists, and others are often forced to rely on leaks like the FinCEN Files because there is little information available about companies registered in certain jurisdictions. Individual banks and law firms enable such secrecy.

“With the disclosure of the FinCEN documents, we have once again gained proof that the current international financial and tax systems are not working,” Babnik said in an email. “Worldwide, tax evasion and other illegal cash flows cost countries hundreds of billions of dollars a year, and Slovenia is not exempt from this.”

Horvat formally relinquished control of the Aktiva Group in 2009, but some of his longtime associates continued to run pieces of it under new names. U.K. company records show Aktiva’s share of the core company established there in 2006 was transferred to Groudle Holdings, a Panama-registered firm, by September 2010.

Horvat keeps a low profile and it’s unclear where he now lives. Multiple attempts to reach him for comment through his law firm, his polo club, and the company service providers he uses were unsuccessful.

In 2018 a Slovenian parliamentary committee wanted him to testify about the government bailouts, which included a bank Horvat once owned. He didn’t attend.

A Humble Beginning

In a 2002 interview, Horvat said he started Aktiva in 1989 as a student with just $1,200 capital, a loan from his mother, Mirka. It was a good investment. Mirka Horvat later became the owner of a villa in the Swiss alpine resort St. Moritz, said to be worth about $53 million at the time.

By the mid-2000s, Horvat controlled Aktiva Group from The Netherlands, investing in opaque financial centers such as Gibraltar, Luxembourg, and the United Kingdom. His personal assets were usually estimated at around 200 million euros, landing him near the top of a financial magazine’s annual list of the richest Slovenians.

But the 2013 liquidation of a key company of the group, formerly known as Aktiva naložbe, revealed more than 250 million euros of claims against it. Criminal investigations regarding Aktiva’s bank loans followed.

Ongoing bankruptcy proceedings for three Dutch Aktiva group companies started the following year. Dutch Trustee Jasper Berkenbosch said in a report produced during the bankruptcy procedure that the group’s complicated international structure made it impossible to determine its income and liabilities.

The trustee has managed to tally at least 332 million euros in various claims against the companies. Berkenbosch has reported suspicious activities, including destruction of company paperwork, alleged fraud, and a potentially illegal share transfer.

“Many cross-border issues play a role in these bankruptcies. That complicates an accurate estimate of the expected manner and term of settlement,” he wrote.

In 2013 and 2014, Slovenian banks transferred 100 million euros in non-performing bank claims regarding Aktiva naložbe — by then renamed CG Invest — to Bank Assets Management Company, a public company created in 2013 to administer unpaid bank debt in the aftermath of the global financial crisis. Slovenes call it “the bad bank.”

In response to questions about Aktiva and Horvat, the Bank Assets Management Company said it “supports investigations into every case of suspected crime and actively cooperates with law enforcement authorities.” However, the public company said it “cannot or it may not comment on individual cases of investigations.”

Barclays filed its SAR on Horvat in 2017 due to the unexplained sources of his wealth, media reports naming him, and his relationship with the Hassans International Law Firm in Gibraltar, which had been mentioned in previous, likely unrelated, SARs.

Hassans did not respond to requests for comment.

Lawyers on the Rock

In 2016, the accounts held by Hassans International Law Firm at Barclays Bank were closed. The bank noted that “Hassans client account acted as a third party payment processor for multiple companies located in high risk jurisdictions for money laundering with no apparent presence in the public domain.”

Before the accounts were closed, Hassans, the largest legal services provider in Gibraltar, appears to have facilitated $39.6 million of the $48.2 million in flagged transfers to Horvat and companies connected to him.

The law firm sent about $5.8 million directly to Horvat’s personal bank accounts in the U.K. and Switzerland. Another $30.3 million was transferred through Hassans in the name of Lynville Services Limited, which was registered at the law firm’s Gibraltar address and is linked to Horvat.

Lynville’s sole shareholder was Line Holdings Limited in Gibraltar, which owned AI Services Ltd. AI Services originated three wire transfers totalling $160,000 to “an account identified as Darko and [his wife] Petra Horvat,” Barclays reported. The payment instructions field referenced “repayment of loan.”

AI Services Ltd. was established in May 2007 as Aktiva International Services Limited. It changed its name in March 2012, around the time other Aktiva companies were also rebranded. Why a company related to the Aktiva Group would repay a loan to the Horvats’ personal account is unclear.

Hassans also transferred $3.4 million to a company in California called SBJV Holdings LP. At the time, it was owned by SBJV Holdings GP LLC, another California company that listed Horvat as manager.

There was one payment that Barclays didn’t add to the overall tally of the SAR. It was a million dollars sent by Andreas Heeschen, then the controlling shareholder of German arms manufacturer Heckler & Koch, to Hassans in 2014 with Horvat’s name listed in the payment instructions field. The bank decided it wanted to look into that payment in a separate report.

Heeschen told Oštro he and Horvat were friends. At the time, he said, Horvat was “promoting his investments in the USA and he solicited investments from us and others.”

Heeschen said the payment was intended to pay SBJV Holdings GP for “oil and gas explorations”.

When asked why he sent Hassans the money, he said he didn’t have the contract in front of him but “assumed that Hassans acted as the USA companies’ trustees and then sent the money forward to SBJV Holdings GP LLC.”

Playing Polo

One reason Horvat was flagged in the SAR was a Slovenian Press Agency report about a 2015 criminal complaint by Banka Celje against Horvat and other executives who were suspected of failing to repay three loans totalling almost 20 million euros. According to a Slovenian prosecution document from 2019, police closed the investigation in June that year because they could not confirm the suspects had defrauded the bank.

However, the Slovenian special state prosecutor’s office is still investigating loans made to four companies from Slovenia, The Netherlands, and Cyprus. The money was lent by Factor banka, where Horvat was a supervisory board member from 1998 until June 2012. Aktiva was the bank’s second-largest shareholder.

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