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Zagreb, Globus 22 Jun 01

Israeli Arms Deals With Owners of Croatian Insurance Company

Hrvoje Petrac's Israeli Connection: Retired Israeli Army General and Arms Dealer Amos Kotzer Co-Owner of Hrvoje Petrac's Insurance Company

by Igor Alborghetti:

One of the owners of the former Petrac Insurance, a smaller insurance company which in May suddenly changed its name to Atlas Insurance, is Amos Kotzer, a businessmen from Israel. He invested 1.7 million Kunas in the company, which until recently bore the name of its founder, the controversial Zagreb businessman Hrvoje Petrac, and became the owner of 1,700 shares. At a session held on 12 October 2000, the assembly of the joint stock company Petrac Insurance made a decision to increase the stock capital, and as well as by the Israeli Kotzer, of 85 Jabotinski St, Herzliya, further capital was put into the company by some foreigners and foreign firms: a certain Atilla Hunal from Turkey, Hardeman LDT from Malta, and Imperial Import from Switzerland.

Who Is Amos Kotzer?

Foreign investments in private Croatian companies, like this one by Kotzer amounting to DEM 500,000, are not particularly interesting in themselves. In the case of Petrac Insurance, it is the investor himself who is more interesting. The name Amos Kotzer, Israeli citizen, of course, does not mean anything in Croatia. But in Israel the media had been reporting on him for months because in 1998 he was one of the main protagonists in a spectacular trial involving arms smuggling at a court in Tel Aviv.

But Kotzer's role became clearer only several months later when thegovernment, following pressure from the media and the public, agreed to publish almost 3,000 pages from the confidential transcripts of the trial known in Israel as the Manbar Affair.

Nahum Manbar is Kotzer's former business partner. He is a Jew, and onetime member of a kibbutz, who in the middle of the 1980's emigrated to Switzerland, where he opened a series of import-export companies. He gradually broadened the business. First in Great Britain, and then the collapse of the communist bloc enabled him to enter new markets, initially Poland and Russia.

Naturally, Nahum Manbar turned to the most profitable of all business - the sale of arms, which in the new markets of the east were plentiful and inexpensive.

At the beginning of 1990 he decided one again to diversify his business. This time he extended to Iran, which was not really a politically astute move given Israel's relations with that country and the embargo imposed by the United States, a close ally of the government in Jerusalem, after the Islamic revolution.

Deals With Iran

For this reason Manbar decided to link up with Amos Kotzer, the present co-owner of the former Petrac Insurance. [BKotzer[/B] is a retired general in the Israeli army who has excellent connections in the military-industrial establishment. He was therefore able to put Manbar in contact with the relevant businessmen in the military industry, and in return Manbar offered him a partnership and a place on the board of directors in his company Europol Holding, registered in Warsaw.

The two of them managed to convince the Israelis that there is nothing wrong in dealing with Teheran. They also involved domestic companies in their business arrangements, and the contracts started to be signed.

According to court records, more than 100 companies from Israel sought contacts with the Iranians, trying through Manbar to sell them certain products. Many were successful.

At the same time, the skilful trader did not permit his own dealings with Teheran to lag behind. First of all he sold them through London and his Europol company 30 SA-7 handheld missile systems for $100,000, as well as 50 T-55 and T-72 tanks. All of this came from the arsenal of the Polish army. The contract for the sale of the tanks was worth $100 million because as part of the package the Iranian army was sent electronic equipment produced in the Israeli factory EL-OP, which was assembled by Polish engineers after training in Israel.

For his part, Kotzer proposed the sale of a surplus of tanks, which Israel had seized in 1967 during the six-day war against the Syrians and Egyptians, but the deal was never struck.

But it did not matter, because the retired general and Petrac's
business partner immediately concluded another contract, selling Iran 22 special vehicles equipped for chemical warfare for $200,000 dollars. The trucks were surplus from the Israeli Air Force.

Arrest of Nahum Manbar

After this contract, the Israeli secret service, better known by the name Shabak, started to show an interest in the dealings of Manbar and Kotzer. Even the matter is still not completely clear, it appears that the Americans and British warned Tel Aviv about the expanded trading network with Iran. Were it nor for that warning, the authorities in Jerusalem would probably have continued to tolerate Manbar's dealings, even though they kept both him and Kotzer under control, trying to recruit them so that they would give them information about Iran. But when it became evident that their affairs could leak to the public and cause a political scandal, the situation started to change radically...

The decision was taken to arrest Manbar and stop trade with Iran. The man who had been a valuable partner and promoter of Israeli arms exports became an enemy of the state overnight.

Finally, on 27 March 1997 he was arrested by the secret service. For the next 15 days nobody knew where he was. This is standard procedure in Israel. Three weeks after he had been taken into custody Manbar was allowed to contact his lawyers. The charge read: high treason. He got off lightly. Some others suspected of treason and espionage had previously been held for as long as 10 years without their family or the public knowing about their status.

The trial was marked by a series of scandals: ranging from the insistence of the defense that the secret services had known for years what Manbar was doing, but did not stop him, to a request for the replacement of the presiding judge because he was having a love affair with a lawyer in the prosecution team.

One of the main witnesses for the prosecution was Amos Kotzer. According to the media covering the trial, his testimony played a great part in Manbar's sentence - 16 yeas in prison.

Without showing any emotion he shifted always the blame on to his
former partner. The prosecutors were aware of Kotzer's important role in proving Manbar's guilt, so get him away from the public. Amos Kotzer is recorded in the court transcripts simply as "R".

Link With Petrac

According to Globus's sources, Amos Kotzer also sold arms to Croatia while he was working for the convicted Manbar. In a telephone conversation with a Globus contributor in Jerusalem he said that he had traded with Croatia six years ago, with the knowledge of the Israeli authorities. Among the names of people Kotzer said he worked with was that of Hrvoje Petrac. It was in these deals that the business link between Hrvoje Petra and Amos Kotzer was established, a connection that led to his investment in the Zagreb businessman's insurance company.

It is no secret that Petrac had a role in arming Croatia for years. In
a memo to the Assembly the late president, Dr Franjo Tudjman, mentioned the firm Petrac Inc. as deserving credit for the defense of Croatia. Petrac also had good backing in MORH [Ministry of Defense of the Republic of Croatia]: Gen Vladimir Zagorec, but nothing can be said about the precise scale of their cooperation because there are no documents. Except for information, which Globus published several weeks ago, that Petrac supplied the army with coal.

But because of the embargo and internal political reasons, the then
leadership of the HDZ [Croatian Democratic Union], and chiefly Dr
Tudjman, insisted on links with Israel. This was meant to ease the conscience of the late president for denying the number of victims of the holocaust and other unpleasant views about the suffering of the Jews. He saw in this somewhat morbid trade in arms and military equipment a clear opportunity for a rapprochement between the regime in Zagreb and the government in Jerusalem.

Kotzer in Mesic's Office

At the beginning of the war in Croatia, Kotzer was apparently a valuable source of information for Croatian buyers. The "well-connected" former general is considered to be an important middleman for an attempt to promote production in Croatia of the Israeli Tavor assault tank, and for agreements on modernizing domestic MiG 21's, which fell through because of the financial crisis in MORH.

The change of government in Croatia appears not to have discouraged Kotzer. At the beginning of this year he again came to Zagreb to check out Croatian surpluses of arms and military equipment. He was received like an old friend in the Office of the president of the Republic, where he had talks with one of Mesic' advisers.

Shortly after this a communication arrived from Israel for RH Alan, a state firm trading in arms and military equipment. On 15 March the firm LAHAV International Trading asked the enterprise's management to provide it with a catalogue of military equipment for sale together with a price list. The letter was signed by Amos Kotzer.

RH Alan responded to the request, but without result. Kotzer,
virtually in a rage, sent a message to the effect that he knew where the prices were fixed and that people could not deal with him like that. Some people who are well acquainted with Zagorec's mode of behavior were ready to bet that the letter was composed by the former assistant defense minister, who is reported to have become Kotzer's partner after he left MORH and to be trading in arms together with him.

Refuge in Israel

Where does Hrvoje Petrac, old business companion of the retired Israeli general, lie in all of this?

According to the information available, the Zagreb entrepreneur had made considerable investments in Israel in recent years. According to Nacional, with whom he ha good relations, Petrac also owns real estate in that country. The Zagreb entrepreneur, owner of several restaurants, bars, and franchises from foreign firms, could afford it.

Unlke others, Petrac had no problem in declaring the origin of the capital that helped him grow his business empire in an independent Croatia. As early as 1990 he took part in a big financial operation to take away large sums of Yugoslav dinars and change them into foreign exchange, an operation devised by the lae Financial Minister, Jozo Martinovic. Just before the first visit by Pope John Paul II he says he succeedd in collecting in just a few days more than 900,000 DM, which according to the papers always opened doors for him in church circles.

He would later become the business partner of Tudjman's grandson Dejan Kosutic in the Kaptol Bank, where he retained 19 percent of the share capital.

After the killing of Vjeko Slisko in March this year, there were stories that Petrac, together with his family, fled to Israel, worried about the possibility of revenge by people close to the liquidated head of the Zagreb underworld. It is a fact that since the moment of Slisko's killing Petrac has not been in Croatia. He left all hisfriends, including marriage witness Damir Loncaric, head of the HIS [Croatian Information Service, nowadays Intelligence Agency (OA)], whose daughter is employed in one of Petrac's companies.

His house in Bosanska [Street in Zagreb], next to the luxury premises of RH Alan, where his friend Zagorec, about whom he always spoke with great respect, kept court until the beginning of 2000, now lies empty. When Hrvoje Petrac will return it is impossible to say.