The leaked Panama Papers have revealed details about the offshore dealings of former dictator Slobodan Milosevic’s associates, that could shed light onto thefts of state money in the 1990s.
Milosevic and his associates are suspected of taking 1bn Deutsche Marks (around €500,000 at the 2002 exchange rate), believed to have been stolen from Serbian citizens, out of the country to offshore companies in Cyprus. The theft has never been proved as an investigation was dropped in 2003.
However, Milosevic’s regime during and after the Yugoslavian civil wars of the 1990s was highly corrupt, and top officials are widely believed to have siphoned off substantial amounts of state money. This happened at a time of economic crisis, when many of the population could not afford food or other basic items.
New data published by the Serbian Crime and Corruption Reporting Network (KRIK), which was working with the International Consortium of Investigative Journalists (ICIJ) on the leaked Panama Papers, gives some additional information about how money could have been sent out of Serbia to offshore tax havens.
Serbian businessmen Zoran Drakulic, the founder and owner of East Point Group Holdings Ltd, was allegedly the authorised representative of an unnamed company that KRIK said was suspected of taking part of the money out of Serbia.
He founded East Point Holdings Ltd in June 1990, with headquarters in Cyprus, and then opened subsidiaries and representative offices worldwide. These include Yu Point in Belgrade, and representative offices in Moscow and another 10 countries, according to information from Serbian Business Club Privrednik.
Drakulic became the owner or co-owner of a number of flour mills and bakeries through privatisations during the last decade. He is involved in grain trading in the region as well as in production of wheat and corn flour, and coolers and heaters. For seven years Drakulic also served as CFO of Genex’s Yougo-Arab company, one of the first Yugoslavian offshore companies that covered business activities in the Middle East.
Slobodan Andjic, a close associate of Milosevic is another name that appears in the Panama Papers as the director of the offshore company Blue Earth Refineries Inc (later known as Accelonic ltd) from the British Virgin Islands since May 2012. KRIK did not provide any more data about the company.
Serbia’s first democratic government under Zoran Djindjic set up a commission to investigate the loss of the money and a Serbian delegation traveled to Cyprus to investigate the case. According to Serbia’s then minister for capital investments Velimir Ilic, one of the delegation’s members, it found documentation showing that DM3bn were taken out from Serbia to Cyprus - though he did not claim that the money was transferred illegally. However, after Djindjic was killed and a new government was formed in 2004, the case was dropped.
The papers also reveal links between one of Serbia’s richest men, Philip Zepter, and Swiss lawyer and oil trader Alain Bionda, who was involved in evading sanctions against Iraq, according to a UN report quoted by KRIK.
The lawyer established a contact with an agent of Mossack Fonseca, a Panama-based consulting firm for registration of companies with law firms, in order to open offshore companies for Zepter. Bionda also served as director of Zepter’s firms. According to the Panama Papers, Zepter had companies in the Virgin Islands, Panama and Cyprus.
The Panama Papers show that Russian money often comes to Serbia hidden behind companies registered at tax havens. The ICIJ revealed that at least four rich Russians have done business in Serbia this way, including some who are on the EU blacklist of people banned from travelling to or working in the EU.
Russian oligarch Igor Rotenberg bought shares in the construction company PTT Inzenjering, while local businessman Milan Popovic entered into partnership with Konstantin Malofeev, a Russian tycoon close to Putin. Both Rotenberg’s father and Malofeev are on the EU blacklist.