New Serbian government, new anti-corruption drive

By bne IntelliNews September 13, 2012

Ian Bancroft in Belgrade -

With a new government now firmly in place, Serbia has embarked upon its latest anti-corruption drive, with some 24 privatisations to be investigated - over a year on from the original EU demand that was largely ignored by the previous administration of Boris Tadic. The list of those under suspicion includes prominent companies such as Mobtel, Jugoremedija, C-Market, Sinvoz, Novosti and the Port of Belgrade, involving some of the country's most renowned businessmen, such as Milan Beko and Miroslav Miskovic. Politics, however, is certain to play a key role in determining which investigations are pursued in earnest.

The first main investigation is likely to centre upon the privatisation of the Smederevo-based steel plant, Sartid and its subsidiaries - which was originally sold to US Steel Kosice, a part of US Steel group, back in 2003 for some $33m, before being re-purchased by the Serbian government this February for the nominal sum of $1. The Anti-Corruption Council - established by the government back in 2001 to oversee anti-corruption activities - argued that the company was sold for less than it was originally worth, and that the buyer was exempted from assuming all the company's debt arrears, which were believed to amount to some $1.7bn.

Though the move to investigate can be explained to a large extent by EU pressure, the emphasis is firmly upon local ownership of the process. As the Delegation of the European Union to the Republic of Serbia tells bne, "we have no views of our own on these cases. The list was drawn up by the Anti-Corruption Council which has raised a number of suspicions on 24 privatisation cases and we have asked the authorities to inform us regarding the follow-up undertaken by law enforcement agencies."

The Croatian example of tackling corruption - namely, the prosecution of high-profile political figures, such a former prime minister, Ivo Sanader, and former deputy prime minister, Damir Polancec - has long been slated for replication elsewhere in the region, particularly in Serbia and Montenegro. By offering up several sacrificial lambs, aspirant EU members hope to demonstrate their commitment to establishing the rule of law, whilst at the same time avoiding the need for more challenging, deep-seated reforms required to fully stamp-out endemic corruption.

The untouchables

Though Serbian Deputy PM Aleksandar Vucic - who was expected to request German assistance in tackling systemic corruption during a recent visit to Berlin - has declared that nobody is untouchable, there are doubts as to how much progress will be made on this front.

As Vladimir Radomirovic, editor-in-chief of the Serbian anti-corruption website Pistaljka (The Whistle), tells bne, "I expect some progress in investigation of suspicious privatisation cases will be made. However, I doubt that big privatisations involving tycoons with close links to high-ranking politicians will be investigated to the full extent."

The investigations will ultimately have profound political ramifications. As Radomirovic cautioned, some cases where former officials, especially from former president Boris Tadic's Democratic Party, were involved will be sanctioned, as Vucic has to make good on his promise to effectively fight corruption. "If Vucic does nothing, his Serbian Progressive Party (SNS) stands to lose in the next elections," he says.

Serbia's prime minister, Ivica Dacic - who promised an "uncompromising fight against corruption and organised crime" - has stressed that his Socialist Party of Serbia (SPS) was "not involved in contentious privatisations", despite his party being part of the previous administration. Such jockeying is already fuelling public accusations that the investigations are politically motivated.

There is much speculation as to whom the so-called "Serbian Sanader" may ultimately prove to be, if indeed such a course is pursed. The man Dacic replaced, Mirko Cvetkovic, has already been forced to strenuously refute allegations that he was involved in the privatisation of Montenegro's Crnogorski Telekom. Cvetković has also denied being the owner of CES Mecon, which has apparently acted as a consultant on a number of high-profile privatisation cases, including those of Telekom Serbia, Knjaz Milos, Frikom, Zmaj, Somoboled and Mlekara Sabac.

With the Democratic Party currently being torn apart by internal rifts after losing both the presidential and parliamentary elections this summer - Tadic is being challenged for the leadership by the current mayor of Belgrade, Dragan Djilas - those cast into the wilderness will not only be made scapegoats for Serbia's current plight, but may find themselves without the necessary political cover to prevent targeted corruption investigations.

The legacies of Serbia's hasty and largely unregulated privatisation process continue to weigh heavily over the country's development. Whilst some justice may finally be delivered, and some dubious privatisations reversed, the move will prove too little, too late, to undo much of the damage caused to the Serbian state - damage which is estimated to amount to billions of euros in lost revenues, asset values and jobs.

For the country to continue its path towards EU membership, however, tackling corruption and establishing the rule of law will - aside from the question of Kosovo - prove the most challenging condition.

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