Zagorec arrived in the courtroom with his attorney Michael Dohr who asked the judge that the hearing be closed to the public. The State Prosecutor's Office and the investigating judge denied his request.
Attorney Dohr reiterated that Zagorec's arrest was politically motivated, adding that his client would be denied a fair trial of extradited to Croatia.
Investigating judge Christina Forstner said she would make a decision as to whether Zagorec should be extradited after she heard witnesses.
Zagorec is suspected of laundering large amounts of money in the Hypo Alpe Adria Bank.
The Austrian weekly Profil has reported that he might have laundered money also in the Austria Creditanstalt bank.
Zagorec, who has lived in Austria for the last seven years, was arrested in Vienna in mid March on an international arrest warrant issued by Croatia.
He was released from custody after paying bail amounting to EUR 1 million.
He is charged with abuse of office and with stealing jewels from a Defence Ministry safe worth USD 5 million.
At two previous hearings at the Vienna court he opposed his extradition to Croatia.