HOW ŠOLAK BECAME THE RICHEST SERB: Ownership stake in United Group makes EBRD protector of Balkan lasso business (20)

In a special series, Kurir reveals how exactly this controversial billionaire fulfilled his 'American dream' in the murky waters of the Balkan transition

Window-dressing Šolak's fake business reputation

Receiving the EBRD's financial injections has always been essential to turning Šolak's business into an expanding empire, which is why without this investor United Group could not dream of being a regional player. The EBRD's first investment in Serbia's main cable operator SBB was made in April 2004. The project included a loan to SBB in the amount of up to EUR 18.5 million and an investment in capital stock of up to two million, through which the EBRD purchased a million of SBB's shares. These funds enabled Šolak to considerably expand his network across Serbia, acquire 25 local providers, introduce new services, and offer broadband internet access- Ten years later, the KKR investment fund became the majority owner of United Group – founded in the meantime – with the EBRD retaining a minority stake.

February 2014 saw another EBRD investment in SBB, in the amount of EUR 50 million. After the BC Partners investment fund became the majority owner of United Group in March 2019, the EBRD remained as its minority stake owner.

The pillar of international credibility for the Serbian billionaire's lawless business

Although investment and business expansion are the usual elements of any line of business, it is inconceivable that certain EBRD officials strategically support a company that does business in the region in the style of the Wild West. Stifling competition, hiding its ownership structure, trading in assets gained in suspect ways, secret transactions, conflicts of interest, and prohibited media campaigns are but a portion of Šolak's United Group's operations.

It is for these reasons that back in August 2020 the Kurir editorial staff sent a number of questions to EBRD Regional Director for the Western Balkans Zsuzsanna Hargitai, asking her to explain how the bank's stake in the ownership structure of controversial United Group fits with the principles and values upheld by this institution. However, hiding behind empty form, this financial institution offered the "responses" of EBRD Head of Media Axel Reiserer, which were no more than denying responsibility of the EBRD for United Group's business operation.

The acquisition of Direct Media by Šolak's company was an especially sensitive issue, given that it is a company formerly owned by Dragan Đilas. According to the EBRD's own criteria, Đilas is a politically prominent person, and as such, someone with whom the bank does not have business ties as a matter of policy. These rules are in place in order to reduce the risk of the bank becoming involved in corruptive practices that individuals holding public offices take part in. Although United Group's controversial assets were acquired at a time when Đilas held a high public office, the EBRD has not responded to the question whether there had been checks to dispel these suspicions.

The EBRD went back on its own principles in the United Group case

This is why the question remains to this day whether the EBRD simply failed to apply its usual procedure or United Group's management hid the information on the links between the rise of Direct Media and Đilas's involvement in politics from their partner. Šolak and Đilas concealed this link behind an entire network of offshore companies, but a Kurir investigation has revealed that the trail of this trade leads back to these two. The question is all the more important given that the ties between Šolak and Đilas include not only the sale of Direct Media, but also other business arrangements that Kurir has reported on in the past.

The question whether the suspicious circumstances surrounding this transaction came to the attention of the bank's management as co-owners of United Group, as well as whether the potential cases of corruption and abuse were looked into, also remain unanswered. What is especially scandalous is the EBRD's silence on the question of the widespread practice of United Group-owned media of attacking Šolak's competitors and mounting prohibited negative media campaigns against them. The spokesperson of this financial institution refused to answer the questions posed, saying by way of explanation that in practice the bank avoids commenting on topics related to specific business entities or private individuals collaborating with the bank.

Among the questions remaining unanswered are those to do with the transparency, integrity, and compliance of United Group's business with the market rules. In addition, the public is left without the information relating to the ultimate hidden owners of the other stakes in United Group

The fact is that the reputation and credibility of the EBRD – its minority stake notwithstanding – serves the interests of United Group and its endeavours to enhance its own credibility. The EBRD's support for Šolak's group is a bid to create an image of a credible company whose ownership and business operation are not either questionable or controversial, although the reality of it all is the exact opposite of this.

COMING UP NEXT: Conflict of interest – A managerial post for EBRD director from whom he got millions