Agrokor Accounts Receivable Fraud and Bond Issuance Case: How a Giant Used Fake Promissory Notes in Circular Financing to Drag Down the Balkan Supply Chain

Who Gets Targeted

Victims are divided into three tiers: First, domestic and foreign institutional creditors and long-term pension funds that purchased Agrokor bonds and participated in syndicated loans. Believing the narrative that 'Agrokor is Croatia's largest private enterprise and too big to fail, and the government will definitely rescue it,' they relaxed their verification of the authenticity of accounts receivable and related-party transactions. Second, tens of thousands of small and medium-sized suppliers who long accepted deferred payments in commercial bills (mjenice) from Agrokor and cooperated with its discount financing arrangements, as they urgently needed funds and dared not offend their largest distribution channel. Third, employees and small retail investors who bought corporate bonds as safe products similar to deposits. Their psychological vulnerability lay in their naive trust in domestic giants and path dependence on the belief that 'the previous refinancing cycle could always be extended.'

骗局怎么运作

• Step 1, Falsifying and manipulating accounts receivable: The finance team reclassified costs and expenses as accounts receivable, concealed related-party transactions, balanced books using transition accounts, and inflated assets in violation of International Financial Reporting Standards (IFRS). The mechanism created a healthy illusion on financial statements of 'booming sales and receivables in transit' to offset real losses.
• Step 2, Circular financing via commercial bills: Suppliers issued commercial bills without a genuine underlying trade basis, discounted them through factoring companies to obtain funds, and the funds flowed back into the Agrokor system via related-party routes, forming a closed loop of self-purchasing and self-selling. The pitch was 'sign a bill and get money early,' thereby deeply binding the suppliers.
• Step 3, High-leverage bond issuance and multiple guarantees: Using whitewashed financial statements as credit backing, Agrokor continuously raised funds from banks and the bond market to sustain operations. The same asset was pledged multiple times, the ratio of net debt to operating cash flow soared all the way, and repayment relied entirely on rolling over new debt to pay old debt.
• Step 4, Concealing real debt and fake dividends: While hiding massive on- and off-balance-sheet debt, the company funneled interests to the controlling party through improper dividends and share buybacks. Prosecutors alleged that related operations caused losses exceeding 179 million euros to the company, while investors saw 'a good company that could still pay dividends.'
• Step 5, Liquidity rupture and government bailout: In the spring of 2017, refinancing became unsustainable, bond prices plummeted, and credit ratings were downgraded sequentially. The Croatian government urgently passed a special law commonly known as Lex Agrokor, appointing commissioners to take over to avoid disorderly bankruptcy and transfer losses to all creditors to share.
• Step 6, Debt restructuring and carve-up: In 2018, the creditor agreement was passed with over 80% of the voting rights. In 2019, core assets were transferred to the Fortenova Group, debt was substantially reduced, and the old entity Agrokor was deregistered from the court registry in 2022, with ordinary suppliers and creditors suffering substantial write-downs in the settlement.

红旗信号（看到这些快跑）

• 🚩 The growth rate of accounts receivable consistently and significantly outpaced revenue growth, with a large amount of pending receivables coming from related parties or unexplained passage accounts, and an opaque aging structure;
• 🚩 Requiring suppliers to cooperate in issuing commercial bills and designating factoring channels for discounting, treating 'cooperating with bill financing' as a prerequisite for continued supply;
• 🚩 The actual controller simultaneously controlled the board of directors, finance, and related trading companies, with intensive related-party transactions and vague disclosures, showing signs of duplicate pledges on the same asset;
• 🚩 The scale of debt far exceeded normal industry levels, yet the company continued to pay external dividends and buy back shares, using the appearance of 'being able to pay dividends' to mask cash flow exhaustion;
• 🚩 Frequent changes in auditing firms, overly close relationships between auditors and management, and responding to external doubts about financial statements with litigation threats or political resource pressure;
• 🚩 Over-reliance on short-term debt rollovers and syndicated loan renewals, while publicly declaring, 'The government cannot let us fail; we employ too many people.'

真实案例

• In the first half of 2017, Agrokor's debt pressure became public. PwC audits showed its debt at the end of 2016 was approximately 7.5 billion euros, liabilities exceeded assets by about 1.9 billion euros, and net worth was written down by about 2.9 billion euros. Russian banks publicly accused its financial statements of being inaccurate, and group bond prices plummeted. In April 2017, the Croatian government passed the Lex Agrokor act, appointed a commissioner to take over, and provided about 1.06 billion euros in super-priority financing to sustain operations.
• In July 2018, creditors holding over 80% of voting rights approved the settlement agreement. In 2019, core retail and food assets were transferred to the Fortenova Group, and bonds of approximately 1.157 billion euros were issued for refinancing. The old Agrokor entity was deregistered from the court registry in 2022. Media reviews on the tenth anniversary of the settlement noted that the successor system's debt dropped by about 67%, but a large number of suppliers could only be repaid on a pro-rata basis. (Source: [https://www.intellinews.com/agrokor-successor-fortenova-issues-1-157bn-bonds-167495/](https://www.intellinews.com/agrokor-successor-fortenova-issues-1-157bn-bonds-167495/))
• The Croatian State Attorney's Office brought multiple rounds of criminal charges against founder Mr. A and several senior executives concerning accounting fraud, fake bill financing, and abuse of authority between 2006 and 2016. One case alleged losses of about 179 million euros to the company, while another involved fake bill financing valued at approximately 2.3 billion euros. Some defendants pleaded guilty in exchange for lighter sentences, while Mr. A denied the charges and filed multi-billion-euro arbitration claims against the Republic of Croatia through a Dutch entity.
• In 2017, the Agrokor Group had 50,903 employees in Croatia and Southeastern Europe (2016 data). Following the outbreak of the debt crisis and the Croatian government's takeover via the Lex Agrokor act in April 2017, its core retail and food assets were transferred to the Fortenova Group in 2019, which issued 1.157 billion euros in bonds for refinancing. (Source: [https://en.wikipedia.org/wiki/Agrokor](https://en.wikipedia.org/wiki/Agrokor))

Official Stance

• In April 2017, the Croatian Parliament passed the special emergency legislation Lex Agrokor and established a special administration procedure. The Ministry of Finance appointed a commissioner to take over the group, with the official stated purpose of preventing systemic risk from spreading to the national banking system and labor market.
• Since 2019, the Croatian State Attorney's Office (DORH) has continuously filed and amended multiple indictments against former senior executives of the group, with charges including breach of accounting obligations, abuse of position and authority, and forgery of commercial documents, reporting case progress through official channels.
• Around 2026, the Croatian public broadcasting television network reported on the progress of litigation surrounding the eighth anniversary of the criminal reporting, confirming that criminal cases against the founder and senior executives are still ongoing and reminding the public that the case has not yet fully concluded.
• The auditing team hired during the restructuring phase confirmed in official adjustment reports that previous financial statements were severely distorted, disclosing true financial conditions to creditors through massive impairment records as the official basis for creditor disposition.

How to Protect Yourself

• ✅ When reviewing corporate bonds intended for investment, carefully check the audit report's opinion type and non-standard disclosures. If any abnormalities are found—such as abnormal growth in accounts receivable, an excessively high proportion of related-party transactions, or frequent changes in auditing firms—reduce positions or abandon the investment;
• ✅ When suppliers face major clients substituting cash payments with 'issuing commercial bills for discounting,' they should evaluate their own concentration risk toward a single client, set a cap on bill exposure, and retain evidence of genuine trade background to avoid getting entangled in fake bill chains;
• ✅ Institutional investors can cross-verify whether the same asset has been pledged repeatedly using commercial and court registries, remaining vigilant against narratives of 'too big to fail' and 'government bailouts' replacing financial analysis;
• ✅ Creditors should declare claims and join creditor committees early through bankruptcy or settlement procedures, carefully accept plans replacing old debt with new entity equity, and retain cross-border debt restructuring lawyers to evaluate alternative recovery paths if necessary;
• ✅ Pay attention to accounting fraud precedents reported by regulatory and prosecutorial authorities, and add methods like Agrokor's—which 'reclassified costs as accounts receivable and then used commercial bills for circular financing'—to the due diligence negative list.