Authorities in Croatia began an investigation Monday into the production and distribution of sugar packets bearing the likeness of Adolf Hitler and Holocaust jokes, following a request by the Simon Wiesenthal Center in Jerusalem.

"The local district attorney in [the town of] Pozega has opened an investigation and is currently looking into the matter," said Martina Mihordin, of the State Prosecutor's office.

The Novi List daily newspaper reported officials at a small factory in Pozega have confirmed the sugar packs were produced on their premises.

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The newspaper noted that the packets have become very popular in local cafes and restaurants.

The incident is an embarrassment to the Croatian government, which has been keen to play down the country's past links with the Third Reich.

Croatia's Ustasha regime sided with the Nazis in World War II and enforced ethnic laws under which thousands of Serbs, Jews and Gypsies, as well as anti-fascist Croats, were killed in local concentration camps between 1941 and 1945.

The Wiesenthal Center director, Dr. Efraim Zuroff, expressed his "revulsion and disgust that such an item could be produced these days in a country in which the Holocaust not only took place, but was for the most part carried out by local Nazi collaborators."

"If nothing else, this is a disgusting expression of nostalgia for the Third Reich and a period during which Jews, Serbs and Gypsies were mass-murdered [in Croatia]," he said.

Zuroff urged Croatia to force the factory owners to recall the sugar packets immediately, in line with a law against racial, religious or ethnic hatred.

Under President Franjo Tudjman, who governed Croatia from its 1991 independence until his death, in 1999, some of the Ustasha symbols were tolerated and their crimes often dismissed in public, which strained relations with Israel.

Subsequent Croatian leaders, who set the country on the road to EU membership, apologized for the Ustasha crimes.