Split Ferry Port and Split Port Authority at Odds over Concession

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In an open letter to the Prime Minister and the public onMay 31, 2017, the Ferry Port Split stock company detailed a series of what they call “illegal” and “unlawful” activities by the Split Port Authority, which has so far generated potential damages in the amount of 81 million euro, without interest

In an effort to generate public interest for the potentially criminal situation in the Split harbour, representatives of the Split Ferry Port have released an open letter to the public and especially addressed to Prime Minister Andrej Plenković, in order to save the state from at least 600 million kuna in damages, which may be incurred if the case goes to a European court.

We bring you excerpts from their open letter:
“Split ferry port is known for high traffic, but not many are aware it is a gold mine. It seems some have realised this. Any concessionaire can expect in the next 30 years to accrue 160 million euro.

Instead of celebrating 50 years of work and contribution to the construction of the Split city port, the Ferry Port Split stock company (TLS) is fighting windmills for its basic rights. Profiting are individuals from the Port Authority and Split political circles, who used their influence and decisions to gain real estate and unlawful sources of income.

Ferry Port Split was founded in 1967, when it constructed the port and necessary buildings, and was in charge of their maintenance. With the declaration of independence in 1991, TLS comes under state ownership, continuing its activities as before. The Law on Sea Ports (1995) instructed the creations of port authorities, so in 1997 Port Authority Split was founded. Its first duty was to assign a concession over Split harbour for services performed by TLS for the past 30 years.

Upon the formation of Port Authority Split, TLS was obligated to transfer all of the buildings it built, maintained and used, and all the rights to the Port Authority for administration, and by law they were obligated to return them to TLS immediately upon vested rights until the concession was assigned.

This is when the circus begins.

In 1997, TLS requested under law the primary concession over Split harbour, but the Port Authority denies it without a valid reason, so TLS continued to perform activities under vested rights.

The Port Authority also usurps without valid grounds 16 business spaces of 1.200 square metres in the building of the port terminal (which the TLS built, maintained and used and were due to be returned). It should also be said that the space has not been offered to anyone for use or concession in the last 20 years. How much damage has been created only here for Split harbour, city and state?

TLS was privatised in 1999, but that did not change its right for a primary concession over Split harbour. Branko Buljan bought stocks of TLS in 2000 and again submitted the demand for a primary concession. The Port Authority refused to respond within the legal deadline of 30 days and only after 3 years awarded the primary concession to TLS (as the company which operated before the Port Authority was established), but the concession was incomplete.

During the 3-year period of delay, the Port Authority awarded a concession for parking spaces to companies owned by members of the Port Authority Management Council. Interestingly, all of this went on during the reign of Prime Minister Ivo Sanader, a Split native.

In October of 2003, a new law was passed, enabling TLS to independently set the tariffs for port services, which it did in 2005. However, the Port Authority contested those tariffs and returned them to the previously much lower amounts. Instead of the estimated 40, TLS thus earned only 6.5 million kuna annually. The damages stemming from this decision amount to 32 million kuna per year, plus interest.

At the same time, the Port Authority imposed a concession fee which is not provided under law, as it is introduced only in concession awarded in tenders, when tender participants determine their own fee. It is also the highest concession fee ever in Croatia. The Port Authority lowered the income of TLS to a minimum and at the same time charged a maximum fee.

Despite the fact that the concession of TLS formally lasts until March 2018, Port Authority Split published an open call for concessions in August of 2016 (in the middle of the departure of Karamarko and the chaos of early parliamentary elections). The invitation was published in the webpages of the Port Authority, without a public announcement through Narodne Novine (state-run public journal), without an estimate of value, without any studies, without a deadline for submittal of demands and without any data and conditions regarding investments in the harbour area, etc.

As TLS had previously submitted a demand for a concession, and due to the dispute with the Administrative Court, the Port Authority did not have the right to open any tenders.

In September of 2016, when the new government was not formed yet, and the old one wasn’t functioning, the Port Authority withdrew the concession from TLS and gave it to the Legio Quarta cooperative under the excuse that TLS wasn’t paying its concession fee. TLS did not pay the fee as the primary concession never became official and was the subject of a court dispute. The cooperative in question did not satisfy tender conditions as they only had one employee. They solved the issue by persuading 40 employees of TLS to switch companies overnight. But as their unlawful, they were still registered with TLS, which continued to pay for their obligatory contributions. Thus those employees never formally left TLS. Their departure in that manner directly endangered the security of navigation.

It is estimated that TLS has since 1997 lost over 600 million kuna. The state budget lost millions as well, whether through VAT on the use of business spaces and other services or through income tax paid by TLS and contributions for employee salaries.

The Port Authority lost millions as well. But members of its Management Council profited, as they awarded concessions to themselves and made money from business and parking spaces etc.

Proving the situation involves more than the people running the Port Authority is the fact that the court hearings were postponed a dozen times, while four justices have exempted themselves from the proceedings with various explanations.

In court terms, the Administrative Court cancelled in 2004 the concession of TLS (TLS continued to operate by vested rights). In 2006 the same result. In 2009 the Port Authority submitted a complaint to the Constitutional Court on the 2006 decision, although it does not have the right to submit Constitutional lawsuits as it is not a participant in the dispute (TLS and Transportation Ministry were).

The Constitutional Court annulled the Administrative Court decision and ordered TLS to pay the concession fee, although it was not competent to do so. At the same time, the High Commercial Court (more meritorious to decide on concessions), decided that TLS does not have to pay the fee.”

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