How the Former City Administration Gave Away Prime Independence Square Property for a Nominal Fee – The Deal Behind the Lowest Bid

The company owned by businessman Dejan Pejović was granted a 600-square-meter space for the Hard Rock Café following a tender process in which the conditions were altered mid-course, contrary to regulations. As a result, bidders who had offered significantly higher lease amounts were disqualified, while the highest-ranked bidder—Pejović's business partner—ultimately withdrew from the project. This incident mirrors a previous situation in which Pejović secured a lease for a section of Kamenovo beach for a nominal fee.

Andrea PERIŠIĆ

Podcafe F&B LLC was granted a 600-square-meter space in the heart of Podgorica, on Independence Square, under highly favorable terms by the former administration of the Capital City, specifically the Public Institution National Library Radosav Ljumović. This space now houses the Hard Rock Café (HRC), located within the library building, offering views of the Square.

The agreement was finalized in 2022, during the final months of Ivan Vuković's tenure as mayor of Podgorica and the rule of the Democratic Party of Socialists (DPS). Under the terms of the deal, Podcafe F&B, owned by Dejan Pejović and Mladen Brnović, secured the use of a prime location in the City for just 3,684 euros per month, with a 10-year lease and an option to extend for an additional 10 years.

However, even this relatively low rental amount could have been further reduced. According to the contract, which the Center for Investigative Journalism of Montenegro (CIN-CG) had insight into, the lessor is committed to deducting the costs of adapting the premises from the rent, following an investment assessment by a commission appointed by the mayor.

The amount invested in the Hard Rock Café and the rent paid by Pejović's company remain unclear, as CIN-CG could not obtain this information. However, expert estimates suggest that several hundred thousand euros were spent on this upscale establishment. As a result, the capital city may receive only a symbolic sum for such a prime location.

National Library Radosav Ljumović, the institution housing the Hard Rock Café, told CIN-CG that they currently have no information on the amount the company invested in the Hard Rock Café or the exact rent being paid. They explained that, according to the procedure, the rent payments go directly into the Capital City's budget.

According to the documentation held by CIN-CG, rent collection for the Hard Rock Café was initially scheduled to begin on November 1, 2022. However, assessing the value of the funds invested in the building's renovation was first necessary.

The first meeting of the Investment Assessment Commission, appointed by former mayor Vuković in September 2022, occurred in mid-November of the same year. However, the Commission did not provide an assessment. According to the conclusion, which CIN-CG had insight into, it was stated that "without the report from the expert supervision of the works, the Commission will be unable to determine the total value of the completed works, delivered and installed devices, equipment, and other goods and services." Notably, the conclusion lacks both signatures and seals. It is also worth mentioning that the president of the Commission was Sanja Vojinović, who was the assistant director of the Library at the time.

The Capital City informed CIN-CG that, on May 11, 2023, the Library submitted a request to the Office of Mayor Olivera Injac to appoint a new Commission, as two members of the previous Commission, Filip Aleksić and Filip Lalić, were no longer employed by the City. However, they did not clarify whether the new Commission was formed or whether any assessments were conducted.

Until the publication of this investigation, CIN-CG had not received any responses from Dejan Pejović, the owner of Podcafe F&B, to questions regarding the amount spent on the adaptation of the Hard Rock Café or whether rent payments are being made.

It's immediately apparent that a significant investment has gone into the space. The interior features the signature style of the Hard Rock brand, with a spacious bar, high ceilings, and luxurious lighting and flooring. Additionally, there is a store where visitors can purchase branded merchandise.

Pejović's Business Partner, the Top Bidder, Fails to Appear at Bid Opening

Five bidders responded to the public call for leasing the space, issued by the National Library Radosav Ljumović in January 2022: Bip Hotels LLC, Podcafe F&B LLC, Tabacco&Drinks LLC, I&S Team LLC, and Dejan Labović, as an individual. The tender also specified that the future tenant would be required to organize cultural activities in line with the guidelines set by the Capital City.

Bip Hotels submitted the highest bid, offering a monthly rent of 11,408 euros and committing to organizing 43 cultural events.

Tabacco & Drinks offered 10,060 euros per month in rent and organized 12 cultural events, while I&S Team submitted a lower bid of 7,800 euros per month, including 12 cultural events.

Dejan Labović proposed a rent of 7,050 euros per month and committed to organizing 12 cultural events.

The winning bidder, Podcafe F&B, submitted the lowest lease offer, at just 3,684 euros, slightly above the minimum required by the tender. However, the company stood out by proposing the most cultural events, a total of 80.

How could the company with the lowest lease offer win the tender? One month after the competition was announced, the criteria were changed mid-procedure, disqualifying three bids: Tabacco & Drinks, I&S Team, and Dejan Labović. Labović and Tabacco & Drinks filed appeals with the Administrative Court and submitted objections to the Commission's decision. Meanwhile, the top-ranked bidder, Bip Hotels, failed to show up and withdrew from the process. As a result, the company offering the least for the lease emerged as the winner.

This is not the first time Dejan Pejović, co-owner of Podcafe F&B, has benefited from a tender despite not submitting the best offer. In 2016, his company, Kamenovo Beach, secured a lease for a part of Kamenovo Beach, offering just three euros more than the minimum price set in the invitation. As a result, this prime space, famous for hosting student parties, was leased for only 26,475 euros for one year.

Similar to the situation with the Hard Rock Café location, the top-ranked bidder for Kamenovo beach withdrew from the tender despite offering a substantial sum, nearly half a million euros. The first-ranked bidder, Vaso Dedivanović, notably worked as the general manager at Pejović's company on Kamenovo after Pejović took over the beach.

At the time, other tender participants raised concerns and warned that the beaches were being leased out for an unreasonably low price through fraudulent practices. One company would submit a large bid to eliminate competitors, only for another company to offer slightly more than the initial bid and secure the lease after the first-ranked bidder withdrew.

Pejović was also granted the space of the former student buffet in the Technical Faculty building in Podgorica for the Desetka café during a time when Miloš Pavićević, a close relative of Pejović, was in charge of the University Sports and Cultural Center. Vijesti and other media outlets have previously investigated this.

The interconnected nature of this deal is evident in several ways. For instance, Bip Hotels, which made the best offer for the space on the Square but then withdrew, was previously operated by the owner of the former Pejović bar Desetka. According to the Central Register of Business Entities, Stanko Vidaković, listed as one of the founders of Bip Hotels in 2015, is now the company's owner. Vidaković is Pejović's business partner through Montenegro Beach, a sister company of Pejović's former company, Kamenovo Beach. Furthermore, CIN-CG has been told unofficially that Vidaković is Pejović's godfather. Interestingly, Vaso Dedivanović was employed as a manager at Bip Hotels.

Bip Hotels' address is Studentska Street BB, Lamela 7, the same location where other Pejović companies, such as Montenegro Tourist Service, are based. Stanko Vidaković's LinkedIn profile further reveals that he previously worked as a sales manager at Montenegro Tourist Service.

Disqualified Bidders File Lawsuits

Let's revisit the tender: one month after the initial call, the Radosav Ljumović Public Library has issued Amendments to the Public Call, revising several key points.

These amendments require bidders to hold a certificate for an established environmental protection management system compliant with the "MEST EN ISO 14001:2016" standard issued by an accredited certification body. In the original call, bidders were only asked to refrain from using single-use plastic products in accordance with the "ISO 14001:2016" international certification.

Additionally, the scoring criteria for organizing cultural events have been revised.

As a result, the tender appeared to be specifically tailored to Pejović and his company. Three bidders were disqualified for lacking the required certificate, even though it was not stipulated when the competition was initially announced. The Commission justified its disqualification with claims of "untidy, improperly submitted documentation." This left only Pejović and his godfather in the running.

The bidders who filed complaints, Dejan Labović and Tabacco & Drinks LLC, argued that the amendments to the public invitation altered the conditions in a way that influenced the decision, which they believe violated the procedure and contradicted the bidders' expectations. Their objections focused on the certificate for the established environmental protection management system, the plan and proposal for cultural activities, and the failure to publish the invitation in the public media.

Labović's complaint states, "The notification is filled with unfounded and inaccurate claims, lacking an established factual basis, and contradicts the original requirements. It also questions the legitimacy of the Commission, as it failed to establish the relevant facts necessary for resolving this specific administrative matter, which are outlined in the applicable substantive regulations."

In its complaint, Tabacco & Drinks LLC states that "the client's statements are incorrect and based on generalizations and unverified facts."

At the end of April 2022, Labović and Tabacco & Drinks LLC filed disputes with the Administrative Court. In these lawsuits, lawyer Saša Vukotić, as CIN-CG has learned, argued that obtaining the additional certificate required more time and that such a certificate is not mandatory, primarily if the bidder is not engaged in production activities, in which case the certificate is unnecessary.

In its complaint, Tabacco & Drinks LLC also asserts that the top-ranked company, Bip Hotels LLC, is registered for "hotel and similar accommodation services," rather than for "restaurant and mobile catering activities."

It is up to the new authorities to determine what motivated the Capital City's decision, under Ivan Vuković's leadership, to lease this exclusive space to Pejović. Until then, this privileged businessman continues to control public assets that were essentially handed to him for a nominal fee.

Rents in the City Center Are Significantly Higher

Advertisements from 2022, as shown on the Estitor website, reveal that even smaller commercial spaces in the center of Podgorica were rented for higher prices at that time.

For example, a 260-square-meter business space in the "Hilton" was rented for 4,160 euros, while the 600-square-meter space now occupied by Hard Rock Café was leased for just over 3,500 euros.

A 502-square-meter space in the city center, though in a less favorable location than the one leased to Podcafe F&B, was rented for 5,000 euros. Additionally, a 120-square-meter office space on Bokeška Street went for 2,500 euros, and another 90-square-meter space on Njegoševa Street was leased for 1,400 euros.

Citizens Asked for New Tourist Attractions in the Heart of the Capital

Hard Rock Café is a global chain of themed restaurants, with its first location opening over 50 years ago in London. The brand has since expanded to include cafés, hotels, and casinos, and now operates in more than 200 locations worldwide. The first Hard Rock Café in Montenegro opened in 2015 within the Atlas Capital Plaza complex, marking the franchise's debut in the region. Spanning 800 square meters, it featured a café, a restaurant with over 150 seats, a spacious terrace, a stage, and a Rock Shop offering a variety of merchandise such as t-shirts, caps, hoodies, and more.

However, the bar has since closed due to poor performance, particularly during the COVID-19 pandemic. The Investor portal reported that the restaurant had been operating at a loss from the start, with accumulated losses exceeding one million euros by the end of 2018. At that time, according to Montenegrin media, the restaurant was managed by a company with a similar name, Padcafe, owned by EE F&B HOLDING LIMITED from the Cayman Islands. In contrast, the franchise itself was owned by the Abu Dhabi Financial Group (ADFG).

The reopening of this establishment, however, sparked significant reactions. The public Facebook group Eyes of Podgorica, where citizens report local issues, was filled with mostly unfavorable comments regarding assigning such a prime location to this chain. Many expressed concerns, questioning which tourists would be drawn to Podgorica by brands like Hard Rock Café, especially when they occupy the best space in the City.

Citizens argued that such a prime location should host a venue that would be recognized for its cultural and artistic content.