In this case, obviously, the game is being played by the managers from the Swedish mother company, in order to pull out of Croatia resources that could cover at least some of their enormous losses. And big Ericsson is stuck in mud to its neck, because of bad management of those same managers. The operation whose victims now include stockholders from Croatia does not aim to save a few large owners in Sweden. They have also lost a big part of their wealth. The operation actually aims to save the mother company. Or, more accurately, it aims to save its management.
The case of Ericsson Nikola Tesla is neither the first nor only disappointment of that sort for stockholders in Croatia. Their entry to capitalism is probably best described by the saying from Qoran that says that "every man loses all the time". Many other cases were far more cruel. For example, recently deputy Prime Minister Slavko Linic warned that six managers of the Investment Fund Dom rewarded themselves for good results in the past year with 2 million kunas each. This fund manages the property of the victims of war. The victims got funds from the state and entrusted Dom and other investment funds with its stewardship, and in return they expect dividends. But, managers decided to split profits among themselves instead of distributing them to their stockholders,.
People imagined that they were co-owners of companies that are merely managed by their management, and only as long as the management enjoys the trust of stockholders. However, in reality, if there is no majority stockholder, and in large companies as a rule there is no majority stockholder, the management is the true owner of the company. The management can do anything it likes, without even asking purported owners (perhaps it would be more correct to say owners of papers), including the sale of parts of the company or investment of funds in purchase of other companies. Thus, for example, management of Montmontaza, together with a post office box in Virgin Islands and other secret partners, bought Vecernji List, without bothering to inform about that even the Oversight Board of the company. The scandal broke out because of politics, not because of rights of stockholders. In many other companies, banks, investment funds, management silently, quietly, controls huge resources that on paper belong to someone else. Tycoons are not the only owners of extravagant villas and castles on the slopes of Zagrebacka Mountain and other prestigious hills and mountains.
The case of Ericsson Nikola Tesla has provoked more public interest because it involves a renowned multinational company. That is why, most likely, its stockholders in Croatia felt somewhat more secure than stockholders of other companies. But, didn't something similar happen with Rijecka Bank? Cheating of stockholders, especially small stockholders, is not a specialty from the kitchen of young Croatian capitalism, or other so-called transition countries. After the fall of the Berlin Wall, it has become widespread in the whole developed western world.
As soon as the threat form the East disappeared, the capitalist world started gnawing at its own foundations. It lost competition, which is the condition for rational behavior. The first victim was the so-called balance between labor and capital in the distribution of the gross national product. Suddenly, even in the richest countries, pensions and national health care systems became too expensive, although some fifteen years earlier their functioning was never questionable. Working hours were extended based on demands of employers. But who are the employers? Who are these individuals who grab so much that that is not enough for the rest of us?
It seems that precisely management spotted and used its big chance. Those grey corporate bureaucrats, usually anonymous, colorless and aseptic, in America increased their salaries eight times on average. Enormous bonuses, which they awarded to themselves regardless of how well their companies were doing, followed. The gentlemen from Rijecka Bank are not the only managers who dared reward themselves with millions of kunas in bonuses, while the company was on the verge of bankruptcy. In 25 largest American companies that are currently facing financial problems, management has taken $5 billion altogether. The fund Dom is not an exception. Majority of similar funds in the world make losses, while their managers are ruthlessly getting rich.
Ordinary people have already reacted. That is why they keep their savings in banks or socks, instead of buying shares. The state has also reacted, in a way. It prescribed that pension funds can only invest in the so-called first class shares, those issued by companies whose finances can be controlled by law. But, there are only three such companies in Croatia, one of which is struggling Viktor Lenac [shipyard] (the other two are Pliva [pharmaceutical company] and Zagrebacka Bank). Lucid Dr. Branko Horvat has been saying forever that ownership has lost its former controlling function and that management renews itself like the Roman emperors: they elect each other. The market is the only control, but until the market starts functioning, especially given existence of various monopolies and "grab all you can, run if trouble comes" philosophy, the company can be totally gutted. Just like Enron, well known in Croatia as well. Thus, Horvat's comparison with ancient Rome gets dark undertones.