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ZAGREB (Croatia), October 9 (SeeNews) - An audit of the financial reports of units of Croatia's Agrokor has revealed that the ailing concern's consolidated capital stood at a negative 14.534 billion kuna at the end of 2016, or 22.053 billion kuna ($3.4 billion/2.9 billion euro) below the reported end-2015 figure, Agrokor receiver, Ante Ramljak, said on Monday.
"The reported capital of the Agrokor Group in 2015 has been cut by 10.5 billion kuna, or a total of 22.1 billion kuna when the results for 2016 are included," Ramljak said at a news conference aired live by public broadcaster HRT, during which he presented Agrokor's audited consolidated financial statements for 2015 and 2016.
"The figures are shocking. I don't know how they were kept quiet all these years," Ramljak noted, adding that he has filed criminal charges against Agrokor's management believed to be responsible for the discrepancies. He disclosed no names but said the situation is hardest on Agrokor owner Ivica Todoric.
"This is definitely most difficult on him. He will have to answer questions somewhere else," Ramljak said.
The receiver explained that the reported capital at the end of 2014 was 7.192 billion kuna. From there, in 2015 and 2016 combined, accounting irregularities shaved 5.6 billion kuna off Agrokor's capital, value adjustments took a further 10.844 billion kuna and other impacts on equity totalled 5.248 billion kuna.
The total sum by which the capital was reduced from the end of 2014 to the end of 2016 totalled 21.726 billion kuna.
Ramljak also touched on a comment made by Moody's earlier this year, when the global credit ratings agency said that Agrokor will have sufficient liquidity to repay debt maturing in 2017.
"At the end of September 2016, the restricted group reported cash and cash equivalents in the amount of 2,286 million kuna", Moody's said in February.
However, Ramljak explained, the cash on Agorkor's accounts was mostly made up of loans the concern had extended to Ivica Todoric and other legal entities. Combined, those loans amounted to 1.6 billion kuna of the total reported cash and cash equivalents of 2.3 billion kuna. Of the money lent, 650 million kuna was given to Todoric and was never paid back.
In April, Agrokor named PricewaterhouseCoopers LLP as auditor of its 2016 financial statements after preliminary probes revealed that potential accounting errors might have been committed.
Agrokor has been in financial turmoil since January when Moody's downgraded its corporate family rating on Agrokor. Following Moody's decision, Agrokor pulled out of a syndicated loan deal it had struck with several international lenders, which sent the price of its bonds on international markets into a downward spiral.
In April, the Croatian parliament adopted a law allowing the government to appoint temporary administrators in companies of systemic importance to lead a restructuring process at the request of the companies' creditors or the debtors themselves. Todoric was stripped of his managerial rights under the law popularly known as Lex Agrokor.
(1 euro=7.50232 kuna)