Economy

Will Croatia's Quest For Energy Independence Cost It Krk?

A popular tourist destination in the Adriatic sea is bracing for the construction of a floating, 400-million-euro regasification facility.

Krk Island, Croatia
Krk Island, Croatia
Jean-Arnault Dérens and Laurent Geslin

NJIVICE — The tourism season hasn't begun yet on the island of Krk, in the northern Adriatic, where silhouettes of tankers and container ships on their way to the port of Rijeka stand out against the background of the Kvarner Gulf, casting their immense shadows on the fishermen's boats.

Drazen Lesica looks out at the sea from the window of his family restaurant, founded in 1934 by his great-grandparents in the village of Njivice. "Fishing is our wealth," he says. "We've been working with the same families of sailors for three generations. But with the construction of the gas terminal, the bay will turn into a chlorinated pool."

Tourism also contributes to the lives of the locals. In a few weeks, the first contingents of German pensioners should begin to colonize the hotels and campsites. During the summer months, vacationers bring the island's population from 19,000 to more than 190,000. But this financial windfall could dry up if the Croatian government's projects come to fruition.

For a decade, the inhabitants of Krk heard repeatedly that the diversification of Europe's energy sources could one day involve their island, but until now, it was all just talk. What was decided, in 2015, was to build an onshore regasification terminal, but then the plan changed.

Clear waters off the island of Krk, Croatia Photo: Kiedrowski, R/ZUMA

"We were not delighted by this project, but we had decided to accept it because the ecological consequences seemed limited," explains Mirela Ahmetovic, the mayor of the municipality of Omisalj, in the northern part of Krk. "We granted a building permit for the onshore terminal but, without telling us, the government decided to build an offshore terminal instead and use a polluting technology that uses seawater for regasification. This decision violates the laws of the Republic of Croatia on urban planning, the environment and the protection of maritime property."

It would supply gas to a large part of central Europe, still dependent on Russian supplies

With a capacity of around 2.5 billion cubic meters of gas per year, the terminal — a 300-meter long ship anchored on the side of the island — is expected to cost 383 million euros. The European Union pledged in July 2017 to contribute to the tune of 101.4 million euros.

It would supply gas to a large part of central Europe, still dependent on Russian supplies. "A 16-member commission was set up to assess the project's environmental consequences, but nine of them were appointed by the government, and of course they concluded that the terminal was safe," says Vjeran Pirsic of the environmental association Eko-Kvarner.

Desperate measures

In defiance of local opponents, who demonstrated in Rijeka on March 3, and to override opposition from the municipality of Omisalj, Prime Minister Andrej Plenkovic is considering special legislation to allow construction to begin. U.S. President Donald Trump himself welcomed the project, which could provide an outlet for U.S. gas.

"We are accused of being pro-Russian," Ahmetovic says indignantly. The mayor believes that the "geopolitical" arguments serve mainly to hide private interests, while no study on the profitability of the offshore platform has been made public.

"The Kvarner Gulf is connected to the rest of the Adriatic via only three canals. Tts shores are home to 200,000 inhabitants and as well as big industrial centers," says Milvana Arko-Pijevac, a biologist at the Natural History Museum in Rijeka. "The bay's northern seabed is devastated and the use of seawater for regasification will lead to another disaster. To rid the water of organic matter, you need to add chlorine, up to 2 milligrams per liter. Discharged into the sea, the wastewater will sterilize the seabeds. Soon, our children won't find anything alive on the continental shelf."

We are accused of being pro-Russian.

The offshore terminal should be located on the western bank of Krk, between Omisalj and Njivice, near the Jadranski naftovod oil terminal (JANAF) and the Dina Petrokemija chemical plant. "The island was industrialized during the Yugoslav period, but we now derive most of our income from tourism," Ahmetovic explains.

A few kilometers from the future terminal, 80 homes are under construction on a wooded hillside. "We have invested millions of euros to improve our accommodation capacity, but pollution will make the sea unfit for swimming," sighs Zvonimir Tudorovic, co-owner of the Njivice Hotels group. The businessman says that unless the government backs down, the inhabitants of the island will have to mobilize. "Our only resort will be to block the bridge to the mainland."

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ