Investigation: Albanian Investor Meets Brick Wall in South Serbia

Tuesday, 2 August, 2005

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Nikola Lazic

Nexhat Behluli owned the factory he bought in Vladicin Han, south Serbia, for just four days, though he met all the conditions set by the Serbian Privatisation Agency for its purchase.

Now he awaits a decision from the economy and privatisation ministry, in response to his appeal against the privatisation agency’s annulment of his purchase of Balkan Brik, a construction materials plant.

Behluli suspects his purchase was annulled mainly on account of his ethnic origin. Though a citizen of Serbia and Montenegro, from a village near Bujanovac, he is an ethnic Albanian.

He was the only bidder in the public auction on December 21, 2004 for the company and after buying 70 per cent of the capital in the plant, became the majority owner.

Behluli had replied to an advertisement for the sale of the factory in the Belgrade newspaper Politika, he told IWPR.

As the only bidder, he paid a deposit of 50 per cent of the starting price of 16,082,000 dinars (just over 200,000 euro). He also agreed to undertake obligations to invest in the factory, amounting to almost the same sum he paid to buy the factory.

Although the workers and the director of the factory were satisfied with the purchase, Serb nationalist councillors in the Vladicin Han municipal assembly were unhappy, many voicing fierce opposition to the idea of an Albanian buying a stake in their town.

Vladicin Han is one of seven towns in the Pcinj district, in which the main town is Vranje. It lies on the southern Morava river, along the road that runs from Belgrade to Athens via Skopje and Thessaloniki, about 80 kilometres from the Macedonian border.

At the local assembly, which met on the day of the auction when Balkan Brik was sold, the loudest opposition to the sale came from the ranks of the nationalist Serbian Radical Party, SRS.

SRS members claimed Behluli was a terrorist, as he had once belonged to the ethnic Albanian rebel force that clashed with Serbian security forces in south Serbia in 2000 and 2001. As a result, 37 councillors voted that Behluli was not an appropriate owner for the factory.

The councillors also criticised Dragan Milosavljevic, acting director of Balkan Brik, for allowing a “terrorist” to buy the plant and for submitting unduly low capital assessment reports on the plant to the privatisation agency.

Slobodan Janjic of the SRS was loudest in those attacks, telling the local media it was a dangerous situation when a “terrorist” took ownership of a successful factory.

He also alleged that the sale was irregular, as several buyers had applied to buy but someone had eliminated them on purpose, by falsifying documents. “The Albanian buyer was left on his own and bought it at the starting price,” Janjic told the media.

Behluli disputes all these claims. He does admit he took part in the short-lived Albanian revolt in south Serbia in 2001, but says his past military record is irrelevant to his right to buy and own a factory.

“I was with my people in the Liberation Army of Presevo, Medvedja and Bujanovac,” he told IWPR, “but what does that have to do with the market economy and privatisation?”

The Vladicin Han councillors admitted freely that one consideration was fear of the town’s “Albanian-isation”, though this seems a distant prospect. Most inhabitants of Vladicin Han are Serbs and the rest are Roma and a few ethnic Bulgarians.

Behluli says if the Serbian councillors believe they are “defending their people” through their actions, they are going about it the wrong way.

“You don’t defend people by shutting down their factory and leaving them without jobs,” he told IWPR. “I can only ask these politicians what they have done so far to prevent the collapse of the local economy.”

The privatisation agency annulled the sale shortly after the Vladicin Han politicians made their protest. A few days after their meeting, an advertisement appeared in Politika, announcing the annulment of the auction of Balkan Brik.

Behluli learned of the decision from the press. The agency only officially informed him on December 30.

“If I could not take part in the auction because of my nationality, they should have told me right away,” he told IWPR. “I have incurred big expenses, which someone will have to pay for.”

He is still waiting for the privatisation agency to return his deposit of 100,000 euro.

The official explanation for the annulment, signed by the privatisation agency’s director, Miodrag Djordjevic, listed different reasons for the decision.

In a letter, the agency said it had invoked powers under article 35a of the decree on the sale of capital and property by public auction, which permitted it to annul an auction if it believed “the principles of free market competition have been violated”.

The letter said two other persons had applied to buy 70 per cent of the shares of the state capital of Balkan Brik but had not submitted proof of payment by deposit. The agency said it informed them five days before the auction that their applications had been turned down.

In the next paragraph, the letter said it had indications that Behluli had made a prior agreement with the two other applicants, resulting in the sale of the company at the 200,000 euro starting price.

Behluli denies having ever known the other two buyers, adding that he wanted to buy the factory mainly because he had been doing business with it for 15 years.

Asked by IWPR, the privatisation agency maintained that the annulment had nothing to do with Behluli’s nationality or his wartime record.

“We had indications that the principles of market competition had been violated,” said agency spokesman Rade Sevic. “This is neither the first nor the last time that an auction has been annulled for these reasons.”

Slobodan Janjic of the SRS said he had a different explanation for the annulment.

He told the Serbian media that the auction to sell the plant was annulled as a result of the pressure his party exerted on the government of Prime Minister Vojislav Kostunica.

“Tomislav Nikolic, [the deputy SRS leader] our deputy in the Serbian parliament, intervened with the prime minister, threatening to launch an initiative to topple the government if the sale of the brick plant was not annulled,” Janjic said.

Behluli is not taking his defeat lying down. He hired a lawyer who submitted an appeal to the economy and privatisation ministry, which is the final arbiter under the law.

IWPR contacted the ministry but spokesman Dejan Gligoric said he could not comment in public on the annulment.

Apart from the appeal to the ministry, Behluli and his lawyer sent letters to the privatisation committee of the Serbian parliament, President Boris Tadic, Prime Minister Kostunica and the speaker of parliament, Predrag Markovic.

“We haven’t had a reply from any of them so far,” Behluli’s lawyer, who wishes to remain anonymous, told IWPR.

He said if the ministry confirmed the agency’s decision, he would then appeal to the Serbian supreme court.

The lawyer said the agency had produced no documents in support of its position, which was based only on assumptions. He added the decision was also unprecedented, as no auction with only one bidder had been annulled since the start of privatisation in 2001 on account of alleged violations of the principles of free market competition.

Behluli said that another 14 companies were sold the day he bought Balkan Brik, and six of them involved just one bidder.

“Only my purchase was annulled,” he said. “The previous day, there were four auctions with just one bidder.” This information is confirmed by the privatisation agency’s own website.

Behluli and his lawyer are determined to go all the way. “We will appeal to the International Court of Justice if the ministry and supreme court uphold the agency decision,” Behluli’s lawyer said.

Vladicin Han is a poor town. About 3,000 of the town’s 24,000 population are unemployed and monthly salaries average 8,000 dinars (about 110 euro), almost half the Serbian average.

Balkan Brik is one of the town’s few “healthy” companies. It employs 282 people who, along with their managers and moderate local politicians, say Behluli’s past role as a customer is the main reason why the factory is so successful.

Thanks to Behluli, they say, the plant has branched out of local markets and expanded its sales base to include the demanding market in Kosovo, which similar companies have failed to do.

Behluli says he was the biggest single purchaser of Balkan Brik’s bricks and tiles in the past 10 years. His business relationship with the plant did not stop while international sanctions were in force against Serbia in the Nineties or during the armed conflict in south Serbia.

He says a large part of the plant’s 73 million dinar debt (just under one million euro) is owed to him.

The plant managers and workers now fear for their jobs, as Behluli has halted cooperation until the privatisation situation is cleared up.

“I want to work and earn a living. I don’t care who the owner is as long as he pays well and regularly,” one disappointed employee told IWPR.

“We received regular salaries when we worked with him [Behluli]. I fear for my existence if Behluli stops working with us.”

Factory manager Dragan Milosavljevic agrees. “We want to work and get paid and we are not interested in politics,” he told IWPR. “The cooperation with Behluli to date has been excellent. He does business with all the factories in Vladicin Han and as far as I know no one’s had any problems with him.”

In the meantime, everyone is sitting on idle time and the workers are on 40 days’ paid leave.

Not all local politicians in Vladicin Han back the SRS’s aggressive campaign to “defend” the town from inroads by Albanian businessmen like Behluli.

Branislav Miljkovic, the mayor and a member of the Democratic Party, DS, makes no secret of his disappointment with the decision of the local council that he chairs.

He said the first problems appeared when the plant was sold at the 200,000 euro starting price, as more had been expected.

“After that the question of the role the buyer played in the conflict in southern Serbia was raised,” he said. “However, he is a citizen of Serbia and no one needs this scandal.”

Miljkovic said the people of Vladicin Han had no reason to fear an “Albanian who is the best buyer of the products of the brick plant and who its workers want”.

The mayor concluded that the factory faced a bleak future if Behluli ceased doing business with it.

“I am afraid the brick plant will be left with nothing to do,” he told IWPR. “Without Behluli it will not have access to the markets that he has taken over.”

Nikola Lazic is a journalist with Novine Vranjske