Serbia: Mandic Arrest Threatens Karadzic

The detention of Momcilo Mandic by Serbian police on April 13 is likely to help clear the way for the detention of former Bosnian Serb president Radovan Karadzic.

A leading financier of the Bosnian Serb government, Mandic is alleged to have provided much of the funding that has allowed the war crimes suspect to remain in hiding.

Mandic was arrested during the police sweep that followed the assassination of Serbian prime minister Zoran Djindjic. But nearly a month after his arrest, police have not yet specified what charges they intend to bring.

This has led to speculation in Belgrade that his arrest was prompted by requests from the international community rather than having any relation to domestic issues.

The war crimes tribunal has already expressed interest in arraigning Mandic, because he was justice minister in Karadzic's government during the first year of the Bosnian war. As such he was in charge of the detention camps where Bosnian Croats and Muslims were held.

However, Mandic may be of even greater value to The Hague because of his alleged role in bankrolling Karadzic since the war.

The day he was arrested, the Office of the High Representative, OHR, in Bosnia-Herzegovina, Paddy Ashdown, issued a statement welcoming Mandic's arrest. OHR spokesman Julian Braithwaite told the Belgrade news agency Fonet that Ashdown held evidence of Mandic's alleged criminal activities, but that he had no mandate to arrest him.

On March 7, Ashdown had described Mandic as a very important link in the organised crime network in Republika Srpska, RS, which is helping Karadzic hide. "Momcilo Mandic is closely linked with the financing of Radovan Karadzic's operations," he said.

Ashdown was speaking as he issued orders to freeze all transactions by companies owned by Mandic - ManCo Oil and Privredna Banka Sarajevo. At the same time, Mandic and another 23 Bosnian Serb businessmen were banned from entering the US and EU countries or doing business with them, because of suspicions that they were aiding Karadzic.

ManCo Oil and Privredna Bank Sarajevo were two of the 15 companies investigated by the Serbian police and the FBI a year and a half ago. A senior source in the Belgrade police told IWPR that the investigation established that these companies used illegal income to finance Karadzic's concealment and protection.

The same source said this proved that Mandic was a part of an old network of police and criminals, which continued to control much of the black market in Serbia and RS even after former Yugoslav president Slobodan Milosevic was ousted

As OHR moved to close off Mandic's businesses, the US Treasury put out a statement claiming that he remained "a major funding source" for Karadzic through his control of a network of businesses engaged in fraud and embezzlement.

It said he was able to finance Karadzic because he still had "control and influence" over the judiciary, interior ministry and intelligence service in RS.

It is difficult to assess the scale of the alleged support Karadzic has been receiving. In early April, the deputy commander of the SFOR troops in Sarajevo, Colonel Klaus Gerlach, said the former Bosnian Serb leader had as many as 2,000 bodyguards.

Mandic has not spoken publicly since his arrest, but the day after the OHR and US Treasury statements he rejected the allegations about Karadzic in an interview for the Belgrade daily Blic.

"I am ready to go to Sarajevo for all kinds of questioning - even to the US if needed - just so I can finally clear my name and prove wrong the claims that I am aiding Karadzic," he said.

A former Yugoslav judo champion, Mandic, 48, became a wealthy man in the mid-1980s when he opened a number of shops in Sarajevo. At the time, he was working as a judge and later a police inspector in the city. In 1990, as the nationalists took over in Bosnia, he was appointed deputy interior minister, representating Karadzic's Serbian Democratic Party, SDS.

At the beginning of 1992, Bosnian police conducted an investigation which concluded that Mandic had illegally transferred funds from the interior ministry to the SDS. But the case was overtaken by the war, which began in April that year. Karadzic gave Mandic the job of forging a new Serb police force.

"I wasn't his right arm," explained Mandic later, "Radovan needed professionals and, without false modesty, I was a good policeman."

Mandic was rewarded for his role in the first Serb military action in Sarajevo with the post of RS justice minister. "As justice minister I used to put on a bullet-proof vest and wage war as a soldier in Dobrinja (a suburb of Sarajevo)," Mandic later reminisced.

In early 1993, he was sent to Belgrade where, as official representative of RS, he is alleged to have controlled the flow of military supplies to the Bosnian Serbs.

In 1995, Mandic, together with Bosnian Serb vice-president Momcilo Krajisnik, set up a Belgrade branch of a Bosnian commercial bank, Privredna Banka Sarajevo. The bank transferred pensions and retirement benefits earned abroad to Bosnian Serbs.

Mandic was general manager and the bank's biggest shareholder. And the lucrative cash transfer business, in which every delayed pension payment meant an increase in interest, made him one of the wealthiest of Bosnia's Serbs.

After OHR froze its Bosnian assets in March, Privredna Banka Sarajevo also lost its Belgrade branch - its de facto headquarters - when on March 13 police stormed its offices and seized all its documentation.

Mandic is alleged to have invested some of his earnings in illegal oil smuggling, a business carved up between Serbian police and mafia groups. The allegation comes from a policeman who was himself involved. Mandic has denied any wrongdoing.

He survived the end of Milosevic and continued to expand his businesses by investing in real estate in Belgrade and taking part in privatisations in RS and Serbia. In January this year, Mandic purchased Morava, a marble producer in Serbia, with plans to merge it with Mermer, a Bosnian Serb company. He is said to be worth between 100 and 200 million euro.

Mandic has admitted some political funding. He told the Bijeljina-based Extra magazine in December 2000 that he was financially supporting the SDS, then in a difficult position while in opposition. He also said he was paying for the defence of Momcilo Krajisnik in The Hague.

It is said that no decision could be taken in the SDS without consulting Mandic. Given his influence in the region, it is thus no surprise that Bosnian Serb police did not respond to international requests to arrest him.

In RS, the lines between legal and illegal business, and between illegal traders, politicians and police remain far from clear. This environment has provided Karadzic with a life support system until now. Across the border, Serbia is now moving to clear out networks of mafia and officials involved in racketeering and smuggling and to deliver war crimes suspects to The Hague.

The removal of a key figure like Mandic has the potential to weaken some of these networks in both RS and Serbia, and to leave Karadzic more exposed than ever.

Zeljko Cvijanovic is an IWPR contributor in Belgrade