At the time a local military equipment producer, Djuro Djakovic Alatnica, reached a deal on selling some 5,100 rockets to Macedonia, the Vecernji List reported.

As the producer did not have the requested quantity of 128-millimetre (5-inch) rockets it was agreed that the defence ministry loaned them, the daily said.

However the rockets were never returned returned or the ministry compensated, it added.

The probe was prompted by a defence ministry's internal report on the missing rockets made in July last year.

"The investigation is led by the Zagreb district attorney's office, civil and military police," Martina Mihordin, spokeswoman for the state attorney's office, told the Vecernji List. She did not elaborate.

While confirming the deal to lend the rockets to the Djuro Djakovic Alatnica company, Jozo Rados, defence minister at the time, told the paper he did not know what happened later.

The seven-month conflict between Skopje's security forces and ethnic Albanian rebels, which almost led the former Yugoslav republic into civil war, ended in August 2001 with a Western-brokered peace accord.

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