Serbia arrests eight over Agrobanka collapse

By bne IntelliNews August 10, 2012

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Serbian police arrested eight people on August 8 on suspicion of approving fraudulent loans of more than €200m from the failed Agrobanka, Belgrade media reports. The arrested include the former general manager, Dusan Antonic, who had tried to flee the country as speculation mounted that the collapse of the bank would be top of the new government's laundry list.

Agrobanka, which filed for bankruptcy in June after its license was cancelled the previous month, was a central plank in the new government's criticism of the former governor of the National Bank of Serbia. Dejan Soskic resigned earlier this month accusing the government of a "serious violation" of the principle of central bank independence.

In July, Finance Minister Mladjan Dinkic accused Soskic of "sloppiness" in monitoring the country's troubled banks. He named Agrobanka in particular, after authorities discovered an unaudited loss of almost €300m at the lender, in which the state held a 20% stake. Agrobanka was put into receivership and its license cancelled. The government has formed a new bank from the ashes: Nova Agrobanka.

Speculation in Belgrade has been growing for weeks that one of the first moves of the new government, led by the nationalist Progressive Party of President Tomislav Nikolic, in coalition with Prime Minister Ivica Dacic's Socialist Party of Serbia would be a demonstration of its resolve to tackle corruption and solve some of the numerous financial scandals of the recent years. It was also expected that this would start with Agrobanka.

"According to the Serbian Progressive Party, further arrests are expected between now and September, as the new administration strives to fulfil campaign promises," says IHS Global Insight. "Minister for Defence Aleksandar Vucic, with responsibility for combating crime, stated that no one was beyond the reach of investigators, regardless of party political affiliation."

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