sql chunk encoding problem

Hi I have problem with sql chunk encoding and some special char ( croatian specific chars) .
r code works fine with special chars, but sql chunk doesn't - it return U+008 instead Č

select artikl_sifra, artikl_opis from konzum.d_artikl where 
 artikl_opis like '%Č%Ž%' 

I get this:

BO<U+008E>.<U+008E>ARULJICA 50 KOM-ZVIJEZDICA

with R it is OK.
-c("bočice žaruljica")

[1] "bočice žaruljica"

I'm using encoding="ISO-8859-1" in connection string ( also I have put "ISO-8859-1" in global settings under code /saving tab)

....I have found similar problem in this topic:

Can you be a bit more specific on when you see this error? What action are you taking within the IDE?

More concretely, can you provide a reproducible example -- that is, a set of steps we can take to try and reproduce the issue on our own machines?