Covert Business in Croatia Knows No Boundaries

A series of exposes detailing behind-the-scenes business deals between prominent Croatian officials and companies with the Yugoslav leadership have revealed a dizzying level of hypocrisy within the government of late Croatian President Franjo Tudjman.

The publication of transcripts detailing Tudjman's private dealings with his country's supposed arch enemies have continued to stream from the office of his successor, Stipe Mesic.

Latest reports pinpointed Tudjman's ill-fated attempts to deal with Yugoslav President Slobodan Milosevic just prior to NATO's 1999 bombing campaign. On August 4 the Zagreb daily, Jutarni List, widened the net and levelled allegations against Milosevic's son, Marko.

According to police sources quoted by the paper Marko has built-up a profitable business smuggling cigarettes from a leading Croatian tobacco manufacturer into Serbia. Some of the cigarettes, however, are finding their way back into Croatia, via Republika Srpska, police sources told IWPR, and the resultant loss of tax revenue to the Croatian has prompted their interest in the trade.

The Jutarni List revelations claim the smuggled cigarettes reach Yugoslavia via Slovenia. From the port of Koper the cigarettes are shipped by sea to Bar in Montenegro and then overland to Serbia. Alternatively some shipments travel by land from Koper to Ljubljana, then to the Kelebija border crossing in Hungary, before finally entering Yugoslavia.

Croatian customs inspectors recently uncovered a cigarette shipment destined for Yugoslavia worth around 500,000 German marks. The estimated profit from completed shipments runs to millions.

One truck driver, Ilija Maric from Osijek, claims to have driven four container-truck loads of cigarettes from a tobacco factory in Rovinj to Belgrade. Each lorry, he said, carried around a 1,000 cartons of cigarettes.

The tobacco company denies any involvement with Marko Milosevic. But the company's factory at Ljubljana does trade with an offshore company registered in Vaduz, Lichtenstein, Jutarni Lists sources claimed. Marko Milosevic, the paper alleges, owns the offshore company.

Croatian dealings with the Milosevic family took up further column inches recently with the publication of conversations between Tudjman and Swiss businessman Vanja Spiljak in February 1999.

The transcripts revealed Tudjman and Spiljak - a Croatian by origin and son of a prominent Communist official in the former Yugoslavia - were attempting to strike a deal with Milosevic senior.

Spiljak, who was simultaneously arranging fuel supplies for NATO troops in Macedonia, offered to mediate between Tudjman and Milosevic. He proposed Croatia export generators and spare parts for power stations, manufactured at the Zagreb Rade Koncar factory, to Yugoslavia, where such equipment was in very short supply. In exchange Serbia would export electricity to Croatia. The whole deal, Spiljak estimated, would last three years and yield a profit of $200 million.

On March 9 Spiljak returned from Belgrade and informed Tudjman Milosevic was delighted with the proposal. As Croatia's only power station capable of importing the electricity supplies, at Ernestinovo, had been destroyed during the war, Spiljak proposed routing the electricity through the Gacko power station in Bosnia. From there it would go to an aluminium factory at Mostar, he said. The foreign currency generated from the sale of aluminium would pay for the Rade Koncar spare parts.

A Swiss bank agreed to underwrite the deal. Tudjman said, "We will absolutely proceed with this business." But the NATO bombing of Yugoslavia prevented the deal going ahead and then in December 1999, Tudjman died.

But such arrangements did not end with Tudjman's demise. In spring of this year, Croatian enterprises began exporting wheat to the Ukraine using Yugoslav ships to transport the cargo. Trade has proceeded without problems, although the sight of Yugoslav ships at the Danube port of Vukovar did raise some eyebrows. The town, scene of vicious fighting during the war, has become synonymous with Croatian resistance.

Reports linking Croat officials and companies with the Yugoslav president and his son have come as no real surprise. Despite the recent violent past and the persistence of many unresolved problems between Zagreb and Belgrade, it appears the lure of handsome profits can bridge even the widest of gulfs.

Dragutin Hedl is a regular IWPR contributor.