Croat Coalition Strain Rises on Conflict-of-Interest Allegations

  • Spat flares over involvement of deputy premier's wife with Mol
  • Coalition's Karamarko says situation predates government role

Tension is rising in Croatia’s five-month-old government over conflict of interest allegations concerning the wife of Deputy Prime Minister Tomislav Karamarko, threatening to undo a fragile coalition that’s pledged to overhaul the economy.

The two governing parties, Karamarko’s Croatian Democratic Union, or HDZ, and Bridge, joined forces following inconclusive elections last year and pledged to fix the Balkan European Union member’s economy. Still, disagreements over many issues, including the fate of state-owned refiner INA Industrija Nafte dd, have threatened to upset the fragile parliamentary majority of Tihomir Oreskovic, the country’s first technocrat prime minister since its 1991 independence.

Tension flared on Tuesday after weekly newspaper Nacional ran a story alleging a lobbyist for Hungarian refiner Mol Hungarian Oil and Gas Plc paid Karamarko’s wife for energy consulting services beginning in 2013, before the two were married and when he wasn’t in government. Dalija Oreskovic, the head of a Croatian state watchdog in charge of conflict of interest, said “there is nothing illicit” in the cooperation between the deputy premier’s wife and a consultant from Mol, which is in a legal dispute over management control of INA. Still, she said a potential conflict of interest may exist.

Requesting Probe

Karamarko said he would ask the body to investigate, while an employee of his wife, Ana, said she would pass on a request for comment by Bloomberg.

“I’ve always separated my private life from my official role,” Karamarko said by e-mail to media. “Regarding the cooperation of my wife’s company with another private company during the time I was not deputy premier, I will ask the commission for preventing conflict of interest to investigate.”

The head of the parliament caucus for Bridge, Miro Simic, said by phone the party is “awaiting an explanation from Mr. Karamarko.” Miro Bulj, a member of parliament for Bridge, called for the state anti-corruption police to look into the allegations.

“One can’t be in the government, or in the parliament, and at the same time work as a consultant for someone who is hurting our INA,” Bulj told state radio.

Oreskovic, a former pharmaceutical executive, has a razor-thin majority, however, with HDZ and Bridge controlling only hold 59 and 14 of parliament’s 151 seats, respectively. A small party led by Zagreb Mayor Milan Bandic, which controls two seats, is also backing the coalition. The slim majority was cited by Moody’s Investors Service as factors behind its March decision to downgrade Croatia’s debt rating.

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