By Zoran Radosavljevic

ZAGREB, Sept 28 (Reuters) - Croatian leaders denounced the U.N. war crimes tribunal on Friday for "shameful" sentences for a 1991 massacre by Serb-led forces near Vukovar and said they would protest to the U.N. Security Council.

President Stjepan Mesic said he found the sentences "utterly unacceptable" and Prime Minister Ivo Sanader called them "shameful", a "defeat of the whole idea of the Hague tribunal".

"We shall lodge a strong protest with the U.N. Security Council," Sanader said. He also gave orders to send a protest to the chairman of U.N. war crimes tribunal in The Hague.

Parliament speaker Vladimir Seks said "with this verdict, the Vukovar victims are as good as killed once again".

The U.N. court sentenced former Yugoslav army officer Mile Mrksic to 20 years in prison on Thursday for effectively enabling the massacre of 194 people taken from a hospital in Vukovar, then besieged by Yugoslav and rebel Serb troops.

A second ex-officer, Veselin Sljivancanin, was sentenced to five years for torture but cleared of more serious charges. A third, Miroslav Radic, was acquitted on all counts.

Prosecutors had wanted life sentences for all three.

The ruling shocked the Croatian public, which sees Vukovar as a symbol of the country's suffering and its struggle for independence from Serb-dominated Yugoslavia.

"The verdict...is The Hague tribunal's worst scandal to date," top-selling daily Jutarnji List wrote in an editorial, under a headline reading: "22,000 refugees, 3,000 killed, 260 patients executed. Perpetrators free".

Vecernji List daily printed the names of all those killed in the massacre on its front page, and said the verdict "belittled the victims".

The massacre at Vukovar, close to the border with Serbia, is seen as one of the most brutal episodes of the Yugoslav wars.

Besieged at the start of the 1991-95 war, the town fell to Yugoslav forces after a relentless three-month siege.

At least 264 people, mainly Croats who sought shelter in the local hospital believing they would be evacuated, were taken to a farm building in nearby Ovcara by Serb militias.

The captives were beaten for several hours, then transported in groups of 10 to 20 to a site close by, where at least 264 were shot and buried with a bulldozer in a mass grave.

Prosecutors said the victims were largely civilians and sought life sentences for the three officers for effectively allowing the killings to take place. But the judges ruled that Croat fighters were also hiding in the hospital, pretending to be patients or staff. This invalidated charges of crimes against humanity, which apply only to atrocities against civilians, and made the sentences lighter.

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