Former army commander General Mladen Kruljac, and former mayor of the eastern Croatian municipality of Sibinj, Ivica Batinic,pleaded not guilty to the charge of embezzling millions from the state budget and municipal budget at a retrial that commenced before the Osijek County Court on Monday.

Another four defendants in this case, dubbed the Sibinj Affair, pleaded not guilty at the commencement of the retrial, ordered by the Supreme Court after it quashed the trial court's guilty verdict last July.

In September 2012, USKOK, Croatia's serious fraud office, issued an indictment against the six men, accusing them of giving valuable land plots, allotted by the government to the eastern municipality of Sibinj for a small enterprise zone, to selected companies and persons below their real price. The criminal activities took place from September 2007 to mid-2008. In order to increase the value of the land, the accused agreed on construction work that was performed by the army, contrary to a decision by the army chief-of-staff banning the use of the engineering corps for work that was not required by the army.

In late March 2014, the Osijek County Court found General Kruljac and the other accused guilty of defrauding the budget of the eastern Croatian municipality of Sibinj of 58 million kuna and embezzling three million kuna from the state budget.

According to the non-final verdict, retired general Kruljac was sentenced to a year and a half in prison. The former municipal head, Ivica Batinic, was given six years, and a former municipal councillor, Ivan Miskovic, was given five years and six month.

Entrepreneur Ivan Rimac was sentenced to three years and ten months in prison and a former local official of the Croatian Democratic Union (HDZ), Zdravko Sockovic, to a year and three months, while haulier Zeljko Garic was given two years.

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