Serbia govt's anti-graft drive set to run

By bne IntelliNews January 28, 2013

Dejan Kozul in Belgrade and Nicholas Watson in Prague -

Since winning the election last year, the Serbian Progressive Party and its coalition partners have embarked on a wide-ranging anti-corruption drive that has already snared the country's richest man, tycoon Miroslav Miskovic. Will the leader of the main opposition party and the mayor of Belgrade, Dragan Djilas, be next?

The new government's campaign taps into a rich vein of discontent among the population about the rampant corruption in the country and has boosted the Progressives' standing in the polls. Research by the Anti-corruption Agency of Serbia last year showed that almost 80% of the population considered corruption as the country's biggest problem. In its latest Corruption Perceptions Index, Transparency International ranked Serbia down at 80th out of 179 countries. According to the latest polls, Vucic and the Progressives right would win more than 40% of votes in a new election, up from the 24% they won at the one in May, and allow them to dump their Socialist Party partner and govern on their own.

The anti-corruption drive is being spearheaded by the leader of the Progressives, Deputy PM Aleksandar Vucic, a former nationalist firebrand and today's most popular politician, who like his party has transformed himself into a pro-EU neoliberal intent on remaking Serbia into a modern, western democratic state. The anti-graft campaign is a key element in this, with the arrest of Miskovic, who together with his son and some associates, was remanded in custody on December 14. This, say analysts, is a bold statement by Vucic that no one is untouchable.

That has the Serbian press abuzz with news about who will be next. With the Belgrade Police investigating the scandal over the awarding of an untransparent, legally flawed and questionable tender to introduce and run a new ticketing system for Belgrade public transport, called BusPlus, speculation has been growing that Belgrade mayor and the new leader of the opposition Democratic Party, Dragan Djilas, is in the government's sights.

Taken for a ride

In September 2010, Belgrade's mayor sold the rights to install a new ticketing system for Belgrade's public transport to Apex Solution Technology, a shady company with precious little history. The company is thought to be a phantom company, possibly orchestrated and run by the mayor himself, local media alleges.

According to a citizens group called "We are 99%", there were many irregularities surrounding the tender, as related in a fine investigative piece by the Centre for Investigative Journalism in Serbia (CINS) and the Balkan Investigative Reporting Network (BIRN). The group notes that when Apex took on the BusPlus project, it had only one employee and €500 in capital. The group says the tender was organised and run by Veljko Vlahovic, cousin of Aleksandar Vlahovic, a former minister in the Serbian government and a high-ranking person in the Democratic Party. As a board member of Erste Bank Serbia, the group claims that Aleksandar Vlahovic helped his cousin with a €2.5m loan from his bank even though Apex only had that €500 in capital.

The terms of the contract to run BusPlus are also highly disadvantageous to Belgrade City. Apex gets the right to keep 8.53% of the total amount that passengers pay for tickets, which is a bad deal for the city. Collecting ticket fares currently generates around €4.6m a month, so the consortium can expect to earn just under €400,000 a month from ticket sales alone.

Not that many Belgraders got to hear of this. There was little fuss about the issue during the previous government of Djilas' Democratic Party, unsurprisingly. And even now the story is confined mostly to the tabloid Kurir, which was influenced by Djilas during the former government's time in office, but which since last year's elections has been backing Vucic and the Progressives, claiming now that Djilas had in fact really orchestrated this BusPlus business. Kurir is the place where Belgraders can find information about the next possible arrests, which usually then happen a few days after they were reported.

Suspicions about Djilas don't end with BusPlus, and government sources say the simmering scandal and rising public anger over it offers a way for Vucic and the government to launch a wider investigation into Djilas' business interests without making it look too nakedly political.

Djilas made his fortune as a player in the media market since the 1990s. During his time as Belgrade mayor, much of it while his party enjoyed both the presidency and the government, sources say he has enriched himself by funneling media contracts, especially advertising, to companies he owns, including Direct Media, a media firm that sells advertising space in various Serbian electronic media outlets.

The State Audit Institution has also filed criminal charges against Djilas's administration over the audited budget year of 2010 on suspicion that some activities conducted by the charged persons used budget funds for the purposes other than those that had been stipulated.

Together with the dodgy public transport tender, government sources say the Progressive believe they now have more than enough to engineer Djilas' downfall. And with the Democratic Party also set to suffer in the wake of that, sources say the likelihood is that the Progressives will strike while the iron is hot and hold a snap election before the year is out.

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