He welcomed, on his and the government's behalf, the Maestro operation which saw several HFP officials arrested this morning.
Sanader declined to identify them, saying this would be done by competent bodies which he expects to thoroughly check all the deals the arrested had been involved in, including the completed privatisations.
He said that if it was established that crimes had been committed, the government expected the unlawfully acquired property to be returned to the Republic of Croatia.
Given that those arrested are senior officials, some of whom have been in the HFP for 17 years, he said the government would consider next week which measures to take, including the dissolution of the HFP and the establishment of a new institution that would take care of state property.
The premier said there were two possibilities, either joining the HFP to the Central Office for the Management of State Property or setting up a Property Agency.
In any case, the HFP will no longer exist, he said.
Sanader described the operation carried out by the Interior Ministry, the State Prosecutor's Office, the Office for the Suppression of Corruption and Organised Crime (USKOK), and the intelligence services as one of the most spectacular operations showing the government's determination to crack down on corruption and bribery.
He added that the implementation of the national strategy for combating corruption would continue so as to "eradicate this evil of contemporary Croatian society".
Asked by the press was it not too late to close down the HFP given that 90 per cent of companies had been privatised, Sanader said it was never too late for good and successful operations.
Asked if the ministers and members of parliament in the HFP supervisory and steering boards could not have supervised the Fund's operations better so as to prevent this outcome, the prime minister said that as far as he knew they had nothing to do with this and that it was difficult to say if they could have done more in terms of supervision.
The arrest operation was launched this morning, leaders of the State Prosecutor's Office, USKOK and the police told an earlier extraordinary news conference. Six people were arrested, including three HFP vice presidents. One more suspect is on the run but has been located and is about to be arrested, it was said.
They are suspected, among other things, of creating conditions on the stock exchange under which they later bought shares and of committing fraud with state-owned real estate put at the HFP's disposal. According to previous agreements with investors, they estimated the value of the real state at a lower price or defined prices at bids in accordance with individual investors' wishes, said USKOK chief Dinko Cvitan. He added that an appallingly high number of criminal acts had been committed.
While preparing the operation, state institutions paid HFP officials hundreds of thousands of euros in bribes. However, the suspects asked for amounts in the millions.
Cvitan said the exact number of frauds in the HFP would be known only after an investigation expected to last for months.
The arrested officials' greed is best described by the fact that the undercover agents involved in the operation had to ask the government for higher amounts of money on a number of occasions, bringing the total amount of bribes paid to over 800,000 euros, said chief state prosecutor Mladen Bajic. "Only for entering a deal they asked for 50,000 euros just for a coffee," he added.
Bajic said it was difficult to say when the corruption chain began because the majority of the suspects had been working at the HFP for up to 17 years. He added, however, that enough strong evidence had been collected to describe the Maestro operation as successful.
The Croatian Agency for the Supervision of Financial Services (HANFA), the State Audit and Tax Offices will also be engaged in the operation to shed light on which state companies and property were privatised unlawfully. Unlawfully acquired property will be confiscated.
Bajic announced that the HFP's unlawful decisions would be annulled in criminal or civil lawsuits.
He said the Maestro operation, carried out undercover for more than a year, would have been impossible without special measures such as secret taping and undercover agents. It involved numerous police officers and prosecutors as well as Security and Intelligence agents.
This morning's arrests were carried out after one HFP official told an undercover agent on the phone yesterday that his phones were tapped.
Police chief Marijan Benko said that 350,000 euros in cash had been found in the apartments of the arrested.
Replying to a question from the press, Bajic dismissed the possibility of his vice president being involved in the HFP frauds.