The Croatian police arrested 12 people on March 26 as part of an investigation related to troubled shipyard Uljanik, the interior ministry announced. The 12, who Croatian media claim to include former executives of the company, are suspected of criminal offenses that have caused damage of more than HRK1.2bn (€161mn).

Uljanik, which owns the Uljanik shipyard in Pula and the 3. Maj shipyard in Rijeka, is in severe financial difficulties. The shipbuilder has lost several vessel construction deals and has seen its bank accounts frozen several times, while its employees went on strike due to unpaid wages.

The Croatian police started the investigation in September 2018, the interior ministry said in a statement. The 12 individuals, which the ministry did not name, are suspected of having commited several offenses of abuse of trust in economic activity and fraud.

More than 100 police officers took part in the action on March 26 in which offices, home and other areas were searched.

Local media reported that former president of the management board of Uljanik, Gianni Rossanda, and his predecessor Anton Brajkovic, were among those arrested. According to Hina news agency, Rossanda was brought in to the police station in Rijeka. His lawyer said the former Uljanik board manager did not consider himself guilty and that he refused to make a statement to the police.

Last week, Croatia's ruling coalition failed to decide if Uljanik should undergo restructuring or file for bankruptcy. Economy Minister Darko Horvat said on March 20 that in the short term the bankruptcy would be a cheaper solution than the restructuring. The economy minister estimated that the restructuring of Uljanik would cost €930mn.

In January, Croatian shipyard Brodosplit submitted in partnership with Italy’s Fincantieri Group an offer to become a strategic partner for Uljanik. On March 5, the Croatian financial agency FINA asked the court to open bankruptcy proceedings against Uljanik for a debt of HRK28.2mn. The court has appointed a temporary insolvency manager to analyse if there are prerequisites for opening the bankruptcy proceedings. 

The employees of the Rijeka shipyard have been on strike since last week, demanding that the government agree on the restructuring plan for the company, or obtain a loan to pay their wages, N1 Zagreb reported.

The problems at Uljanik follow a debt crisis at food and retail giant Agrokor, which is now close to completing its restructuring.