Dove sono finiti i soldi della Jugoslavia?-(The Guardian) Searchfor the missing millions

[Paola Lucchesi <paola.lucchesi@mail.inet.it>]

http://www.guardian.co.uk/yugo/article/0,2763,464934,00.html

Search for the missing millions

The United States has set Belgrade a deadline of this Saturday for
arresting the former Yugoslav despot Slobodan Milosevic. The Guardian
opens a three-part investigation into the crimes of his regime. Today:
the plundering of Serbia

Special report: Serbia
   http://www.guardian.co.uk/serbia
Special report: war crimes in the former Yugoslavia
   http://www.guardian.co.uk/yugo

Ian Traynor in Belgrade
Thursday March 29, 2001
The Guardian

Slobodan Milosevic, the former leader of Yugoslavia, lost three wars in
the disastrous drive to create a Greater Serbia. He is indicted at the
Hague tribunal for crimes against humanity. His legacy is still visible
in flattened buildings and destroyed communities from Kosovo to Bosnia
and beyond. Now he could be put in the dock - for buying himself a new
back garden.
    Two days before Nato started bombing Belgrade two years ago last
weekend, Milosevic bought 8,000 square metres of prime land behind his
Belgrade villa in the elite suburb of Dedinje for around £3,000. He
could face charges of abuse of power for buying the plot at such a
knock-down price.
    "It's absurd," snorts Braca Grubacic, a veteran Belgrade analyst.
"The butcher of the Balkans goes on trial for illegally buying an
outhouse and a bit of garden."
    A fortnight ago Milosevic received a summons to the investigating
magistrate looking into the alleged property fiddle. He ignored it. It
was his first brush with the law at home. It won't be the last, for the
property affair is the tip of an iceberg of allegations and indictments
concerning the crimes of the Milosevic era.
    The former president is being hounded from several directions: from
inquiries into political assassinations of opponents under his regime,
to claims that he committed electoral fraud and probes into alleged war
crimes against Bosnia, Kosovo, and Serbs themselves. And then there are
the allegations of large-scale embezzlement, running perhaps to hundreds
of millions of pounds over the past decade.
    "Financial crimes will be the main and the most promising charges
against Milosevic," says Goran Vesic, a lawyer, politician and chief
aide to the current Yugoslav interior ministry.
    The Guardian has pieced together the jigsaw of Milosevic's missing
millions. Our investigation, drawing on interviews with many of his
closest advisers, including his personal banker and Serbian ministers,
as well as with Hague investigators and senior western officials, has
tracked the labyrinthine route in which money was gathered and then
salted away.
    The scale of the plundering of Serbia is awesome. Investigators at
the Yugoslav central bank have posited an overall figure of $4bn. Regime
insiders, including Milosevic's close relatives, are believed to have
hundreds of millions of pounds held abroad in private, numbered or alias
accounts in Cyprus, Switzerland, Lebanon, Russia, Greece, and Israel, to
name a few of the most favoured destinations.
    Cyprus was the hub of an intricate money system. Through Cyprus,
billions were spirited out of Serbia in cash and redistributed around
the world.
    The banker masterminding the system was Borka Vucic, 73, retired, a
Milosevic family friend. Before returning to head Serbia's biggest bank,
Beogradska Banka, in 1998, she spent nine years in Cyprus as head of the
bank's offshore subsidiary.
    Speaking in her elegant Belgrade flat around the corner from
Milosevic's villa, she admits managing a vast surreptitious exercise in
cash dispersal.
    "I am not authorised to say how much," she smiles. "All the banks
did the same to survive. A lot of people were taking money into Cyprus.
There were other people on airplanes carrying the money, but not with
me. If someone was taking money without the permission of the bank or
the companies, it's not my responsibility."
    Milosevic's brother, wife and daughter have bank accounts, now
frozen, in Switzerland, according to Yugoslav government sources and
western diplomats in Belgrade. So do Mirko Marjanovic, the former
Serbian prime minister who controlled the lucrative grain export
business to Russia throughout the 1990s, and Dragan Tomic, a Milosevic
aide and former parliament speaker.
    Two key Milosevic supporters, Nikola Sainovic, a former deputy prime
minister who controlled the precious metals trade and is indicted for
war crimes in Kosovo, and Dusan Matkovic, ex-deputy leader of
Milosevic's Socialist party and head of the giant Sartid steel works at
Smederovo outside Belgrade, have bank accounts in Beirut, according to a
former banker inside the regime. Mladjan Dinkic, the new central bank
governor who is on a crusade to recover the cash, estimates the overall
sum at $4bn. The bulk was used not for personal gain, but to keep Serbia
trading through a decade of United Nations economic sanctions.
    "Milosevic does not have billions stashed abroad. The money was
spent on survival and some people got enormously wealthy," says a
knowledgeable Serbian source who asked not to be named.
    So where did the money come from? Flawed privatisations have been
suggested as one important source. Vuk Obradovic, a Serbian politician,
is heading a commission of inquiry into what happened to hundreds of
millions of pounds that was never booked into government accounts as
part of the proceeds from eight privatisations in the 90s.

Vanished

Another common technique involved customs receipts. Boris Begovic, chief
economic adviser to the Yugoslav government, ordered an audit of the
customs service for last year. He claimed tens of millions of German
marks in government revenue had vanished because traders favoured by or
working for the regime were exempted from customs duties.
    "I was stunned by the gap between the nominal customs burden and the
effective customs burden," he says. "And this had been going on for 10
years. They be came more greedy as time went on. The last two years were
the bonanza time."
    There were preferential loans to crony companies and individuals
plus windfalls from manipulating the foreign exchange black market.
Beobanka, an offshoot of Mrs Vucic's Beogradska, was ordered to give
"loans" to the TV company owned by Milosevic's daughter Marija, and to
the trading company owned by his notorious son Marko.
    Under Milosevic in 1993, Yugoslav inflation was at the inconceivable
annualised level of 286 billion per cent, with the central bank issuing
50-million dinar notes. More routinely in recent years the real value of
the national currency was a fifth of the official rate, with the regime
controlling the black market and using it to hoover up hard currency
when it needed it. State-controlled banks were ordered to provide
unsecured D-mark loans at the official rate to countless crony firms and
individuals who could then use the black market to make an instant 400%
profit.
    A regime insider and banker who helped orchestrate the 1990s
operations and had his own bank account in London frozen reckons that
$20m has been embezzled by Milosevic associates. Others put the figure
much higher.
    "We were never charged with taking private funds outside the
country," says the banker. "We were hiding government funds, preserving
them from the sanctions, playing games with the European Union and the
US."
    When UN sanctions were imposed on Yugoslavia in May 1992 because of
the Bosnia war, Milosevic had already anticipated the embargo and
established the infrastructure for exploiting the international banking
and trading systems to bust sanctions and keep importing vital
commodities.
    The elaborate operation was centred on Cyprus because of its banking
secrecy, offshore companies culture, and the sympathy of Greek Cypriots
for the plight of their fellow Orthodox Serbs. Cyprus was the conduit
for billions of dollars in cash from Serbia. The funds were then
dispersed globally or into the accounts of scores of anonymously owned
offshore companies registered in Cyprus.
    In the early 1980s, Milosevic was president of Beogradska Banka and
Mrs Vucic was his deputy. She lays fair claim to being the most
formidable banker communist Yugoslavia ever produced. Shrewd and well
connected, Mrs Vucic boasts of knowing 4,000 bankers around the world
and shows off photo albums and a silver platter she received from
Barclays Bank. If there is no doubt that Mrs Vucic was the linchpin of
the Milosevic money system, she vehemently denies handling Milosevic
family money or doing anything illegal. She insists she was only doing
her patriotic duty in helping her country to evade sanctions.
    "I know Mr Milosevic quite well and I know the family. He was a
fighter, a good banker and a good president," she says. "But we had no
business at all with the family. I believe they have some other banks
but not Beogradska."
    After the toppling of Milosevic last October, Mrs Vucic, by then
overall president of Beogradska Banka in Belgrade, declined to vacate
her office. "I refused to hand over the bank to those unauthorised men,
five of them who came with guns," she explains.
    Serb officials and western diplomats in Belgrade tell a different
story. Mrs Vucic, they say, was evicted from the bank, returned with a
team of armed guards for a "midnight excursion", broke into her old
office in the early hours, and emptied the safe of documents. On Tuesday
Belgrade prosecutors announced they were opening an inquiry into whether
some of Mrs Vucic's activities as bank chief were against the national
interest.
    All through the 1990s she headed Beogradska Banka's offshore
subsidiary in Cyprus, the biggest offshore bank on the island, handling
the accounts of the myriad Serbian offshore companies established there,
such as Yugometall, the state company trading in metals.
    Its shareholders secret, the company was managed in Nicosia by Edo
Alibegovic, now based in Zurich and running a different company which is
currently involved in a Swiss inquiry into alleged illegal Serbian gold
exports. Key clients of Mrs Vucic and Mr Alibegovic in Cyprus were the
Bor copper and gold mining complex in southern Serbia, a state
enterprise that is the fiefdom of Sainovic, and the Sartid steel works
run by Matkovic.
    A former Beogradska Banka executive and an authoritative Yugoslav
diplomatic source say Sainovic and Matkovic have private bank accounts
in Beirut, where Sainovic's son is a trader. Both men were frequent
visitors to Beirut in the mid to late 90s, as was Mrs Vucic. "I like
Beirut. I've been there many times," she says.
    Mrs Vucic's bank in Cyprus and Banque Saradar in Beirut struck up a
cooperation arrangement in the late 90s when the Cypriots were coming
under strong US pressure to close down the Serbian operations. A typical
scheme to siphon off the money, sources say, was for Mr Matkovic to
agree to sell Sartid steel to a Lebanese client. The deal is financed
through the Banque Saradar in Beirut. The steel is delivered. The client
complains falsely that the steel is sub-standard. Both sides nominally
agree to half the price and the other half is split between them.
    Lebanese banking secrecy laws proscribe divulging information on
accounts unless the funds are suspected of being involved in the drug
trade. The Yugoslav airline JAT was required to act as a courier for the
shipment of large volumes of US dollars and German marks, in cash in
bags and suitcases, from Serbia to Cyprus from where it was taken to
Beirut, also in cash, or transferred to Switzerland and other countries
using accounts at Cyprus Popular Bank, Serbian and international sources
say. JAT's general director, Zika Petrovic, was shot dead outside his
Belgrade home in May 1999, allegedly because he knew too much about how
the regime used his airline to ship the cash.
    The airline is also said to have been used as a courier for drugs,
with Milosevic regime associates implicated in international drug
trafficking. This month Serbian police found more than 600kg of
high-grade heroin deposited in a Belgrade bank vault by Milosevic's
secret police. When two key Milosevic henchmen, Rade Markovic, state
security chief, and Mihalj Kertes, head of Milosevic's customs service,
were arrested earlier this year, police found drugs in their offices.
    "There is considerable evidence indicating that Milosevic and his
entourage constitute an OC [organised crime] structure and are engaged
in drugs dealing, money laundering, and other criminal acts," said a
confidential German intelligence report leaked just after last October's
revolution.
    The hard evidence of corruption and embezzlement against the
Milosevic regime is mounting weekly. Seven former Milosevic loyalists
were detained this week in Belgrade on suspicion of property fiddles,
fraud, and profiteering in medicines. But given that most of the stolen
funds are dispersed internationally, the financial case against
Milosevic is also being hampered by the lack of a concerted
international effort to pool intelligence.
    For example, every time Mrs Vucic or someone else took Serbian cash
into Cyprus, they had to fill in a Cypriot customs slip which was then
lodged with the central bank in Nicosia.
    "The customs declarations would be very interesting," says a western
diplomat in Belgrade. "Some people at the Cyprus central bank want to
cooperate but they are being stopped by people higher up." Cyprus has
refused to turn over the customs slips to Serb investigators.
    The Hague tribunal, too, has had a small team of financial
detectives working confidentially at the Cyprus central bank for the
past year. They report personally to Carla del Ponte, the chief
prosecutor in the Hague who, highly unusually, was recently given 25
crates of documents on Serbian accounts by the Cypriots.
    But Mrs Del Ponte is in a feud with the new Belgrade government and
refuses to share her information with Mr Dinkic, preferring to withhold
it as leverage to encourage Belgrade to extradite indicted war
criminals, most notably Milosevic himself.
    If Cyprus was the main hub for the dispersal of regime monies
worldwide, there is not much Serbian money left on the island now. So
where is it? It is thought to be sitting in moderate amounts in hundreds
of accounts across the world, not one of them known to be bearing the
name of Slobodan Milosevic. One analyst in Belgrade said last week that
more money will be spent searching for the missing millions than is
recovered.
    'I don't expect much money back at all," says Mr Begovic. "We don't
include it in our budget calculations." The authorities appear to be
struggling to build a watertight case on the bigger charges, because for
more than a decade the hallmark of Milosevic's modus operandi was
plausible deniability: never leave a paper trail that might incriminate
yourself and always shift the blame for political, military, diplomatic
and economic mistakes on to hired-then-fired underlings.
    Despite this hurdle, of all the inquiries now under way against
Milosevic the financial one looks most promising. Until last October,
observers liked to compare Milosevic to Saddam Hussein. Now the common
comparison is Al Capone. In the end, the FBI put the racketeer and
murderer in jail but could only nail him for financial crimes.
    Slobodan Milosevic, meanwhile, is living out what look like his last
weeks as a free man, cushioned from the corruption and bloodshed he
unleashed throughout a decade of absolute power. Around the corner from
Mrs Vucic's flat, the former president of Yugoslavia enjoys the comforts
of a government villa at Uzicka Street Number 11, on millionaires' row
in the elite Belgrade suburb of Dedinje.
    He is not paying his bills or rates, say government officials. He
is, however, funding a retinue of private security guards who patrol
behind the high metal fences along the street from Milosevic's private
home, with its new back garden.

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