Sanader, who insists that the charges against him are false, is accused by the anti-corruption agency USKOK of receiving a commission from the Austrian bank in the amount of 3.6 million kuna in the mid-1990s, which is why he has been charged with war profiteering because at the time, Croatia was still in a state of war.

"I met Sanader for the first time in late October or early November 1994," Kulterer said testifying in this case.

The witness mentioned Sanader for the first time today after testifying for more than an hour and a half.

Later in his testimony, the Austrian banker said that he had met Sanader for the first time at the Croatian Foreign Ministry building in September 1994, when the accused was deputy foreign minister.

Asked to say when exactly he had his first contact with Sanader and what he had been doing at the Croatian foreign ministry in September 1994, Kulterer said that he was not certain as much time had passed since then.

The witness also could not remember whether he had talked with Sanader in the period from their first informal meeting to their first official meeting in December 1994.

However, he gave a detailed testimony about a man named Eugen Laxa who was allegedly given the kickbacks, although in his previous statements he could not remember that person.

The prosecution claims that in 1995 commissions were paid into bank accounts registered in Laxa's name. His name is reportedly on slips confirming that Sanader received the money.

USKOK claims that graphological examinations showed that the signature on those slips was not Laxa's. The man died in the meantime.

Asked by prosecutor Tamara Laptos how come that he remembered Laxa today as the man who had requested a five-percent commission for the conclusion of the loan contract between the Hypo bank and the Croatian ministry, Kulterer said that he had to piece everything together.

He said that at his initial questioning he was unprepared and that he later sought documentation from the bank which helped him remember Laxa.

Even though he could not describe how Laxa looked like, he said that it was the man who approached him and offered to him his lobbying services to enable Hypo to enter Croatia's market before its competition, provided that he received a commission.

Unlike other witnesses, Kulterer said that there had been other banks interested in reaching a deal with the Croatian foreign ministry about lending for the purchase of embassy buildings.

It was clear to me that this was a big loan and that the Croatian National Bank was involved in the deal, and the deal could not have been made without the approval from the top level, namely from (the then Croatian President) Franjo Tudjman, the witness said.

Before his questioning by the prosecution was completed, Kulterer asked that his testimony be adjourned because he had to return to Vienna due to urgent duties.

He will reappear at the Zagreb County Court on 7 March, Wednesday, to answer questions from the defence team and the court.