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UPDATE 1-Croatia checking whether central bank governor has conflict of interest
February 3, 2017 / 5:28 PM / 10 months ago

UPDATE 1-Croatia checking whether central bank governor has conflict of interest

(Adds central bank comment)

ZAGREB, Feb 3 (Reuters) - A Croatian government watchdog is to assess whether central bank governor Boris Vujcic allowed a conflict of interest by several times attending an economic conference sponsored by the owner of Croatia’s biggest commercial bank.

The annual economic conference in the Austrian ski resort of Kitzbuehel is organised and sponsored by Italy’s UniCredit , which owns Croatia’s Zagrebacka Banka.

The State Commission for Conflict of Interest noted that UniCredit “paid expenses to the central bank governor while at the same time the central bank supervises local banks, among which is one owned by that parent bank”.

Last year, Vujcic went to Kitzbuehel with the then-prime minister, Tihomir Oreskovic, to talk to investors about financing conditions and opportunities.

The commission decided to consider the case after a complaint from a local association of debtors in Swiss francs, “Franak”.

The central bank said there had been no conflict of interest. “As is a regular practice at such events, part of expenses was covered by the organiser as the governor was invited as a speaker... We are convinced that there was no conflict of interest, and independence and objectivity of the central bank work was not affected,” it said in a statement.

It is unclear what the consequences might be if the commission finds that Vujcic had a conflict of interest; previous such cases have usually resulted in fines.

Franak has repeatedly accused the central bank of failing to deal properly with a host of loans that sought to take advantage of low Swiss interest rates, but became hard or impossible to pay off when the franc appreciated dramatically.

The central bank has said Vujcic warned publicly a decade ago, as deputy governor, about the risks of taking out such loans. Croatia forced local banks to convert the loans into euros in 2015 and imposed all the costs on the local banks, whose court challenge is awaiting a ruling. (Reporting by Igor Ilic; Editing by Dominic Evans)

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