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Bosnia: Serb Minister Resigns Over Customs Scandal

International investigators say they have uncovered large-scale fraud which has shaken the political establishment in Republika Srpska
By Dragan Jerinic

The Bosnian Serb finance minister resigned this week over a major corruption scandal that's rocked Banja Luka with charges that crooked customs men filched at least 30 million konvertible marks (15 million euros) from public funds in less than a year.

Senior officials from the international Customs and Fiscal Assistance Office, CAFAO, in the presence of a member of the Office of the High Representative, OHR, disclosed the fraud to leaders of Republika Srpska, RS, at the end of May.

Twenty-seven customs officers were then suspended and Bosnia's top western mediator, High Representative Paddy Ashdown, called for the resignation of the RS finance minister Milenko Vracar, who agreed to step down on Thursday.

The OHR and the RS interior ministry had launched a joint investigation, which is expected to deliver its first results in a few weeks. A spokesman for the OHR, Oleg Milisic, said, " OHR can not comment on the report in detail yet, but expects full cooperation of the RS government in the investigation of these serious allegations. That Mr Vracar, RS finance minister resigned yesterday confirms how important the report is. "

A detailed version of the CAFAO report, which was leaked to the Banja Luka daily Nezavisne novine, stated that the "customs mafia" could not have acted without the knowledge of senior politicians. Independent analysts have suggested that even RS prime minister Mladen Ivanic might have known what was going on.

The report said the "main brain" behind the affair remained unidentified but it indirectly pointed to Goran Popovic, director of the RS customs service and a senior member of the main nationalist Serb Democratic Party, SDS.

According to opposition leaders and independent analysts, Ivanic and two others - Dragan Cavic RS vice-president and deputy leader of the SDS, and Dragan Kalinic, RS parliament speaker and deputy leader of the SDS - may have known about the scheme but were unable or unwilling to do anything about it.

What mainly angered the public was that Popovic himself was not suspended. Ivanic indicated this could still happen but said it was necessary to wait for the OHR and the RS police to complete their investigation. "I strongly believe that everyone should be responsible for their actions and for possibly failing to prevent such things, but I do not wish to pass judgment in advance," the prime minister said.

Opposition leader Milorad Dodik, president of the Alliance of Independent Social Democrats, said part of the money obtained through this scheme was used to cover security costs of the former RS president and leading war crimes suspect Radovan Karadzic.

Analysts also believe that a part of these funds was used to fund SDS pre-election activities. Dodik openly accused the party of running a "customs cartel". No SDS officials have sought to rebut the charge.

The shock waves spreading through the RS politics could lead to a final breakup of the coalition between the SDS party and Ivanic's Party of Democratic Progress, PDP.

CAFAO claims that Nedeljko Milovanovic, head of the RS customs service department for fighting smuggling, was the one who actually ran the scam with the support of 26 of his colleagues, all of whom were named in the original report.

The dossier said a group of senior RS customs service officers formed a secret cartel for the ostensible purpose of "easing" textile imports from Turkey, Bulgaria and Hungary. The system functioned on very simple lines. In cooperation with importing companies, officers invoicing and charging duty gave a fake value to the incoming goods, three times less than their real value. In exchange for these "services" they were highly rewarded.

This group is said to have advised and even forced importers to bring in goods on behalf of non-existent RS companies and to pay a 14,000 konvertible marks "fee" to the cartel so they could pass customs without any problems.

Most of the goods from Turkey and Bulgaria were reportedly entering the RS at the border crossing in Raca, while documentation was "cleared" at the main customs office in Banja Luka. Hungarian products, it is claimed, came in via the Gradiska border crossing, which is also where "clearing" of documents took place.

The report says the bribes were paid to a certain Jovica Joca Bakic, owner of the freight forwarding agency Interkom sped from Gradiska. Because of his alleged role in this chain, his colleagues called him "The Money Collector". It's claimed that junior customs men in this scheme were usually paid up to 2,000 euros, while the senior officers kept the rest for themselves.

CAFAO believes the scam started in September last year, when senior customs officials are said to have approached import companies and told them they must abide by the rules of the new system if they wished to stay in business.

The agency says the first contact with the importers was established by Stevo Filipovic, a customs officer at the Raca border crossing, and Vlajko Kojadinovic, deputy head of the Bijeljina customs service.

According to CAFAO, Filipovic told the importers that they should contact a certain "Nelo" for all further information on making customs agreements and gave them his mobile phone number. It claimed that "Nelo" was actually Nedeljko Milovanovic, then head of customs intelligence.

To all importers who agreed to cooperate, Milovanovic, son of former RS defence minister Manojlo Milovanovic, is then said to have named Jovica "Joca" Bakic as the man who gave the final detailed instructions on the new system of "clearing" goods.

Before Goran Popovic took over as the RS customs service director, Nedeljko Milovanovic, named by CAFAO as "a man at the very the top of the smuggling chain", was the head of the intelligence sector within the department for fighting smuggling. In October last year, a month after the fraud chain was set up, Popovic appointed Milovanovic head of the whole anti-smuggling department.

It has been estimated that duty for approximately 400 import consignments has been collected since September last year through the customs cartel. Most of the goods are said to have ended up at Arizona market near the Brcko district.

Since the majority of the importers of textiles are based in the Federation, the cartel is said to have appointed two company owners from there as its representatives. In this context, CAFAO mentions Senajid Karic, owner of SIDOIL and the Hotel Park in Srebrenik and Kasim Sadikovic, owner of SA Tours, Sarajevo.

The report said every consignment entering the country via Raca meant a bribe for each customs man of 300 konvertible marks. Once they reached the Arizona market, importers are believed to have additionally bribed the local police and financial inspectors with 100 to 300 marks apiece.

The CAFAO report claims that many complaints filed by importers also concerned Nenad Lazic, head of the Gradiska customs. But irregularities were also common elsewhere. For example, on February 2 this year drivers of three trucks carrying goods from Turkey who wanted to declare the goods in Travnik were sent to Visegrad for vehicle and document inspection.

In Visegrad, members of the department for fighting smuggling are said to have "recommended" that they had better declare their goods and pay the customs duty in Banja Luka. The drivers, it is claimed, were asked for money so their goods would not be held up at the customs.

That is when Jovica Joco Bakic, "The Money Collector", gets into the picture again. On behalf of the customs cartel, he is said to have asked for 3,000 konvertible marks per truck from the drivers. The drivers were allegedly advised to declare the goods in future on behalf of a fictitious company named Koming.

According to CAFAO information, a large number of customs service stamps used for paying the duty and tax were forged. It is still uncertain how CAFAO actually came into possession of all this information. The fact that the report cited exact mobile numbers of all key suspects indicated that part of the information came from wire-tapping.

Dragan Jerinic is the editor of Nezavisne Novine