A Zagreb County Court panel of judges on Wednesday excluded as unlawfully collected evidence all secretly recorded phone conversations and text messages from an investigation into Zagreb Mayor Milan Bandic and a dozen other persons charged with defrauding the city and state budgets of more than HRK 25 million.

The court excluded the said material following a motion by defence attorneys for Bandic and the other accused.

The court will rule on whether the indictment in the case is founded after the Supreme Court decides if the evidence in question was collected lawfully.

Anto Nobilo, attorney for the accused Petar Pripuz, said that the secret recordings were declared unlawful because the court order relating to surveillance measures in the case had not been properly expounded and that the case would be referred to the Supreme Court.

Representatives of the anti-corruption agency USKOK said they would appeal against the court's decision, noting that it was unusual for a court to dismiss as unlawful measures it had previously approved.

In previous similar cases, the Supreme Court took several months to make a ruling.

Nobilo explained that the basis for today's court decision was adjustment with practices of the European Court of Human Rights and that the court hearing would be adjourned until the Supreme Court ruled on the fate of the unlawful evidence.

"After that, the hearing will resume and a decision will be made on whether the indictment is upheld or not," said Nobilo.

The defence for the accused said that a representative of the Zagrebacki Holding multi-utility conglomerate said at today's hearing that the city-run company had not been harmed by the activities Bandic and the other accused were charged with.

Nobilo said it happened rarely that a representative of the injured party disagreed with prosecutors, adding that the indictment against Bandic and the others was entirely unfounded in respect of Zagrebacki Holding.

USKOK representatives, on the other hand, confirmed that the first plea-bargain was entered into at today's court hearing, with the accused Dragutin Kosic receiving a conditional sentence of ten years in prison, which he will not serve if he does not commit a criminal offence in the next two years.

Today's court hearing was not attended either by Bandic or by the two other most important indictees - Petar Pripuz, owner of the CIOS waste management company, and Slobodan Ljubicic, former chair of the Zagrebacki Holding Management Board.

The Zagreb mayor and 15 other accused in the case - his associates and business partners - are charged with embezzling HRK 25 million.

USKOK submitted the indictment to the Zagreb County Court in mid-November last year.

The investigation was launched because of the suspicion that the mayor and his associates defrauded the city budget through a number of illegal activities. Bandic is also suspected of defrauding the state budget in a case relating to the 2010 presidential election campaign when he failed to pay taxes on donations received after the election.

Aside from the contentious donations, Bandic is also charged with favouring his business partners' companies, with peddling influence in the unlawful hiring of persons close to him by the city administration and Zagrebacki Holding, and with using official cars for private purposes.   

After he spent some time in custody, in April 2015 the Constitutional Court granted his release and allowed him to continue performing his mayoral duties.

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