Institute for War and Peace Reporting | Giving Voice, Driving Change

Bosnian Graft Charges Cue The Return Of 'The Untouchables'

In response to reports of rampant corruption in Bosnia, a latter day Elliot Ness, backed by a team of 'Untouchables' from the United States, is back on the case.
By Janez Kovac

In an effort to get to the bottom of media reports and speculation about corruption in Bosnia, a US team is now investigating to try and identify the missing millions.

Heading the investigation is Robert Frowick, a career diplomat who is returning to Bosnia, where he used to head the Organisation for Security and Co-operation in Europe's mission, to discover what has happened to $5.1 billion of international aid.

Frowick's fact-finding trip was prompted by an article which appeared in The New York Times last month, alleging that at least $1 billion had gone astray in Bosnia since the end of the war in December 1995.

Following publication, some of the Bosnian leaders mentioned in the story have decided to sue the newspaper, and the US State Department denied the allegations. In response, The New York Times published a front-page part-retraction acknowledging that parts of the article were exaggerated and misleading. However, the speculation has failed to die down.

Many here suspect that the allegations contained in The New York Times' article are but the tip of the iceberg. Some feel that factions in Washington eager to see the United States reduce its spending in Bosnia may have deliberately leaked the information. The US Agency for International Development (USAID) has already begun to cut back projects.

Meanwhile, corruption stories are so rife throughout the former Yugoslavia that international news agencies can barely keep pace with the revelations published in the local press. Newspapers like Feral Tribune and Jutarnji List in Croatia and Slobodna Bosna and Dani in Bosnia seemingly uncover fresh cases of crime and corruption on an almost daily basis.

In many respects, The New York Times' article was but a pale shadow of numerous detailed reports researched by local journalists seeking to expose fraud and thus help create a prosperous and economically sound country for the generations to come.

Soon after his arrival in Sarajevo Frowick met with Alija Izetbegovic, the Muslim member of Bosnia's three-person presidency and one of those named in The New York Times' story. In the wake of that meeting, Izetbegovic's aide Mirza Hajric issued a statement saying that he was sure that Frowick will discover that no international money has been misappropriated.

Izetbegovic himself has challenged the international community to present the evidence on which the allegations are based. Meanwhile, the largest donors, the European Union, the World Bank and the US government, all have precise mechanisms to account for all their expenditure in Bosnia.

So just how prevalent is corruption in Bosnia and what evidence is there?

Some international agencies complain that several million dollars of their money is blocked in accounts of BH Banka, one of the biggest Bosnian banks that is about to declare bankruptcy. However, banks go under all over the world, not just in Bosnia, and legal channels can be pursued for the reimbursement of these funds.

Otherwise, 7,000 tombstones to place on the graves of exhumed war dead were ordered and paid for, but have never been delivered to the northern town of Tuzla. But the sum involved is only in the tens of thousands of German marks, nowhere near the $1 billion which are frequently talked about.

However, at the same time, many of Izetbegovic's closest associates have certainly come into money in recent years and now own hotels, big companies, restaurants or discotheques, even an airport and airline company.

In addition, several senior wartime officers of the Muslim-dominated Bosnian Army are currently building new, state-of-the-art hotels and motels around Lake Jablanica in southern Bosnia. Yet before the war none of these individuals was considered wealthy.

Moreover, the situation in the parts of Bosnia controlled by the armies of the two other ethnic groups is virtually identical. The most senior Bosnian Croats have taken over the biggest and best companies and hotels in the territory under their control. And even the new Bosnian Serb elite seems to be doing pretty well out of post-war reconstruction.

The opportunities for graft stem from the war years when vast sums of money circulated on all sides in cash and various unconventional methods were improvised to raise revenue. In the absence of accounting transparency, it is extremely difficult to trace money flows.

Wartime leaders have swiftly transformed themselves into peacetime businessmen. With the benefit of absolute power over the territory under their control, many have been able to continue wartime practices, including, in particular, various smuggling operations.

Often all that is left to investigators is the evidence of new found great wealth - but no evidence that the wealth was gained illegally. But when people who were on meagre salaries before the war are found to be immensely rich today, questions are certain to be asked - especially if they are past or present politicians.

Former Bosnian Interior Minister, Bakir Alispahic, for instance, is now the joint owner of both a hotel and a paint-manufacturing company. He is unlikely to have made the necessary savings on a meagre police salary. Another of Izetbegovic's friends, Senad

Sahinpasic Saja, who was an owner of a small shop in eastern town of Gorazde before the war, now owns a bank, a publisher and several other companies.

Then there is Mehmed Alagic. The former mayor of the north-western town of Sanski Most and a wartime commander of the Bosnian Army, Alagic has become the owner of several properties totalling thousand square metres. He was recently dismissed by former High Representative Carlos Westendorp for obstructing the peace process.

The so-called ZPP payments bureaux, a legacy of the old communist system used instead of commercial banks by citizens to pay taxes, gas, electricity, water and many other bills, are believed to be one of the best channels for finance of the ruling parties.

Information about the circulation of several million German marks every day in and out of the three clearinghouses, controlled by elites from Bosnia's three ethnic groups, is a closely guarded secret. International organisations have been attempting unsuccessfully to disband the ZPP and reconstruct the payments system for more than a year to no avail.

Frowick will likely be able to report back to the US Congress that international money in Bosnia can largely be accounted for. But tracing the money that should rightfully belong to Bosnia's own citizens; that will almost certainly require the sleuthing skills of the "untouchable" Chicago crime fighter Elliot Ness.

Janez Kovac is a pseudonym for an independent journalist from Sarajevo.