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News 25 Nov 14

Serbia Arrests Tycoon for Alleged Bank Fraud

Miroslav Bogicevic, a Serbian businessman and former Democratic Party donor, was arrested on suspicion of defrauding the mainly state-owned Privredna Bank of 15 million euros.

BIRN, B92, Tanjug
Miroslav Bogicevic, the owner of MB Farmakom Concern. | Photo by Beta

Bogicevic, the owner of MB Farmakom Concern, was arrested alongside the president of the credit board of Privredna Banka on Monday on suspicion of abuse of office.

Police said in a statement that the two suspects allegedly defrauded Privredna Banka of 15 million euros by signing bad loan agreements.

According to the police, as a result of an agreement between Bogicevic and his alleged accomplice from the bank, Privredna Banka issued fraudulent loans to nine companies between October 2012 and March 2013.

All the loans were between one and two million euros and MB Farmakom Concern was a guarantor for all of them. According to the police, the same day the companies received the money from the bank, they would transfer the funds to MB Farmakom Concern as corporate loans.

Bad loans and banking woes

Bogicevic’s arrest came ten days after the arrest of another Serbian businessman, Goran Percevic, the owner of the Interkomerc group and a former high-ranking official of the Socialist Party of Serbia.

Percevic was arrested on November 15 on suspicion of committing financial crimes involving millions of euros, related to Univerzal Banka, which declared bankruptcy early this year.

According to the police, Percevic used his position to secure loans for a number of companies through direct deals with Univerzal Banka’s management.

The bank allegedly issued around 11 million euros worth of loans that could not be repaid due to lack of credit and inadequate security, which was known at the time the loans were approved.

Percevic's Interkomerc owed about eight million euros to Univerzal Banka.

Univerzal Banka also went bust due to bad loans issued without adequate security.

On the same day as Percevic was arrested, Serbian Prime Minister Aleksandar Vucic stated that Bogicevic and Percevic, along with “some politicians”, were getting millions of euros worth of loans from Srpska Banka, while giving only mining waste as security.

The police also stated that Privredna Banka approved these loans without adequate guarantees, only with the bill of exchange as security.

None of the loans were repaid to Privredna Banka, which according to the police means that the bank lost 15 million euros, which MB Farmakom Concern gained through these transactions.

Privredna Banka, of which the state owns 64 per cent, went bust in October 2013 due to losses incurred by approving bad loans.

MB Farmakom Concern, founded in 1989, includes seven companies - the Dairy Sabac, Industrial Combine Guca, Battery Factory Sombor, Foundry Pozega, Mine Lece Medvedja, Agricultural Combine 7 Juli Debrec and the Zajaca mines and smelting plant.

Bogicevic helped finance the Democratic Party while it was in power. The Club of Economic Journalists declared him the businessman of the decade in 2011.

His decline started after the Democrats lost power following general elections in May 2012 and after he took part in the sale of the Politika newspaper.

In July 2012, Germany’s WAZ Media Group sold its 50 per cent share in Politika to the Moscow-based OOO East Media Group, headed by Miroslav Bogicevic.

In the summer of 2012, the ruling Progressive Party accused the Democrats of controlling and using the paper for their own promotion. BIRN has learned from Politika’s management that tensions eased after Bogicevic agreed not to interfere in editorial policy, following pressure from the Progressives. On June 17 last year, Ljiljana Smajlovic was appointed the new editor-in-chief of Politika.

Since then, media have been reporting that Bogicevic’s MB Farmakom Concern is highly in debt, owing money to the banks, his employees and suppliers.

Serbian Prime Minister Aleksandar Vucic stated in October that Bogicevic’s company had one of Serbia’s largest tax problems.

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