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06 Jul 11

EU: Serbia Must Investigate Privatisation Deals

Stevan Dojčinović in Belgrade

Privatisation is a hot topic in Belgrade once more, as the Serbian government is forced to examine the sale of more than 20 companies following EU concerns the deals were marred by corruption.

’Privatisation is riddled with incomplete regulations, weaknesses, gaps and holes,’ says Vladimir Goati (Photo: Media Center Belgrade)

All of sudden, the issue of privatisation has become a hot topic in Serbia. Ten days ago, representatives of the Serbian government disclosed that the European Union has asked it to investigate 20 privatisation deals because of suspicions of corruption.

For years, the government insisted that the economic reforms involved in transition to a free market economy were entirely successful in Serbia.  How things change.

With the former Bosnian-Serb general Ratko Mladic extradited to The Hague, where he will be tried on charges of committing war crimes in Bosnia during the 1992-1995 war, one of the last barriers to Serbia joining the EU has been removed.

Now the Serbian state has acknowledged it must tackle other serious EU concerns that prevent Belgrade from joining the union, primarily related to crime and corruption.

This will not make the government particularly popular with some among the Serbian business community, something Boris Tadic, the Serbian president, acknowledged during an appearance on the national RTS TV channel the day before the official announcement.

“I think most of them do not come to their capital in the economic conditions of the regular game, but they used the privileged conditions at the time of Milosevic and also after October 5, 2000 [the day Milosevic was removed from power]. I cannot prevent all abuses, I do not have super powers, but I am trying,” he said.

This speech was highly unusual and sparked much excitement among the general public and expert observers alike. Tadic’s comments were interpreted in many ways, but mainly as the government preparing for a major confrontation with the domestic ‘business elite’.

Then, the day after the president’s interview, Ivica Dacic, the interior minister, explained what was going on; Brussels had sent a letter to the Serbian authorities requesting they investigate the privatisation of more than 20 companies.

It should be noted that this statement came hot on the heels of last month’s announcement that the Serbian government has received a €2.2 million grant from the EU to more effectively combat money laundering.

Dacic, who is chairman of the Socialist Party of Serbia and part of the coalition government led by Tadic, said in an interview with Tanjug news agency that his party supports the testing of privatisation.

"We have nothing against privatisation… but we should see what should be in public and what in private hands, in a way that privatisation should not be reduced only to robbery and abuse of rights," he said.

This has provoked more excitement among the public, as the media began to speculate which privatised companies will be subject to investigation, as the government has so far refused to identify them.

I called Tomo Zoric, spokesman at the State Prosecutor's Office, to find out what was going on, but he declined to identify the companies concerned saying only: “The prosecution office is checking all questionable privatisation in Serbia, because the priority is the fight against corruption and abuses that occurred during the process of privatisation and the public will be duly notified of the results".

Vladimir Goati, a politics and economics expert and director of Transparency Serbia, told me that privatisation in Serbia was not done in the best possible way.

“It is riddled with incomplete regulations, weaknesses, gaps and holes,” he said.

According to Goati, those managing privatisation in Serbia have failed to learn by the experiences of other countries in eastern Europe while crime and corruption have also had a negative impact.

“Individuals who acquired money in completely illegal ways involved themselves in privatisation in order to legalise the money. Also, dozens of companies were sold… without prominent conditions that the owner is obliged to act responsibly toward the company and its employees,” Goati stressed.

“It is difficult to tell [if these problems were a result of] ignorance on behalf of the state, a lack of a sense of danger, or if it was the desire to make it happen.”

Goati added that people who paid the highest price for poorly regulated privatisation were those employed by the firms.

Commenting on the EU’s close monitoring of Serbia’s financial affairs, Goati said: “It is not normal that economic transactions of a country should come under the scrutiny of international organisations, but the fact is that we want to become a member of the community and we should have an understanding of their interest… [in which country] becomes a member and that they should respect important rules and norms.’’

I was unable to interview the EU ambassador to Serbia as he is on holiday, but his spokesman has promised he will consider an interview when he returns to Serbia.

In the meantime, I intend to interview the people who are responsible for monitoring the privatisation process in Serbia and preventing money laundering, but also those who are responsible for this abroad.

I will also investigate the case of a company that was privatised and ended up in the hands of a criminal who had spent seven years in prison for attempting to kill police officers in a bomb attack.

I hope my story will help raise awareness that privatisation in Serbia has been very poorly regulated and I hope to find a more positive foreign experience for comparison.

Stevan Dojčinović is a Belgrade-based journalist who is participating in the 2011 Balkan Fellowship for Journalistic Excellence.

He will be writing regular updates on his investigation into the privatisation of industry since the collapse of communism in Serbia, Montenegro and Poland.

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