A Palace Investigation

The official investigation into the recent chaos on the money black market, judging by a statement after Wednesday's Government session, has ended with it being buried in some safe which will help future researchers of present events. A part of the announcement published in Thursday's dailies, says: "At yesterday's session the Government reviewed the work of inspections organs which during the period 24 - 27 March when an attempt at toppling the dinar's rate was made, controlled the behavior of socially and privately-owned firms. According to the reports, it has been established that a certain number of production and trade companies raised prices or removed their goods groundlessly, for speculative or psychological reasons. Rigorous measures have been undertaken against such firms and they have been ordered to return prices to the level of 24 March."

This is the epilogue of numerous public promises in which Serbian ministers played an active part, claiming that those responsible for the monetary chaos of three weeks ago would be discovered and named. Exactly two weeks before the above mentioned Serbian Government session, one of its vice-prime ministers Slobodan Radulovic told the state news agency that they would know "in two-three days" who was responsible for the attack on the dinar's stability. This deadline passed, and there was no further information. At the end of the previous week the Serbian Finance Minister told the Serbian deputies that 800 inspectors were engaged in the investigation and that the results of the investigation would "soon" be read out in the Assembly.

In the meantime, various scenarios dealing with the monetary shock were launched officially and unofficially (details on this topic can be found in last week's issue of VREME), but all were abandoned tacitly or with excuses. The latter method includes the "Braca Karic" Company's threat that it would sue the President of the Serbian Chamber of the Economy for having named the "Karic Bank" as one of the organizers of the monetary shock. The matter didn't reach the courts because the President of the Chamber of the Economy said subsequently that the journalists had misinterpreted his words, and explained that he hadn't mentioned the Karic Bank. There were no reactions from the authorities to the "hot" interview Constitutional Court judge Slobodan Vucetic gave to the Belgrade daily "Nasa Borba" a week after the monetary shock. The current closing of the investigation has made two of Vucetic's answers interesting. Vucetic explains the situation in the judiciary and its causes with the following words: "The courts have the least responsibility because they rule according to charges raised by the prosecution. The prosecution often behaves selectively and opportunistically, and it relies far too much on the Ministry of the Interior, which is now in the hands of a small group of politicians. It is common knowledge that the biggest crimes today are carried out in the field of big financial transactions and speculations under the aegis or with the tacit approval of the state and the practically legalized state or semi-state smuggling carried out by privileged members of the ruling political and financial oligarchies. This is why the subjects of this kind of 'business' are, as a rule, protected from criminal responsibility by powerful political state protectors and partners. The police are increasingly employed to deal with street hawkers".

Speaking of the Serbian Government's Constitutional and moral position, Vucetic said: "It is not in accordance with the Government's Constitutional function that all the key figures in the Government, starting with Marjanovic, continue to hold their directorial posts in socially-owned firms where they have high salaries and other privileges. At the same time they are also members of several management boards where they receive high fees, all this is unacceptable from the moral point of view. It is a public secret that many Government members own firms at home and abroad, and that these firms have been registered in the names of family members. As a rule they are involved in highly profitable businesses which ordinary mortals can get only after paying enormous bribes."

This is one of the main characteristics of the current situation, and this explains why the Government's noisily announced speedy investigation first lost in speed and then the purpose of the investigation - i.e. why it all ended with the Government's demand that some socially and privately-owned firms return the prices of their goods to the level of the first day of the monetary shock. Secondly, another widely held view, one which originates from those familiar with the ruling economic system, or rather the ruling regime's administration of the economy. The private sector of the Serbian economy is truly marginal in every respect, i.e. incapable of organizing the toppling of the dinar's black market rate. At the same time, the matter doesn't concern just financial incapability, considering that the two markets, according to experts, are very shallow and sensitive to the slightest changes, but to other necessary elements. A Belgrade banker claims that he needs only 10 million dinars in order to topple the present black market rate - on condition that the police don't hinder him in the business. This additional condition, or the approval of the authorities, is something that ordinary businessmen cannot afford.

The latest number of the magazine "Monthly Analyses and Forecasts" which is published by the Belgrade Institute of Economic Science, brings an analysis of the effects of the shock weekend on the black market foreign currency rate. Author of the analysis Milena Jovcic believes that the sudden increase of the rate is not possible without a "highly synchronized dinar offer on the street" and it logically follows that the "operation started from one source". Ms Jovcic calls this source the financial lobby. It created a profit rate of at least 28% - this figure could perhaps be lowered a little to include the payment of accomplices. The author concludes: "Apart from financial losses for the other participants of this stormy weekend on the foreign currency black market, there are certain losses which we will all bear: the pegged and the black market rates have jumped in the long run, and this will inevitably be reflected on the general price level: this is the result of a disturbed market and a single jump in the price of a certain number of products which will be reflected permanently because of the subsequent rigidity of the downward trend of the prices; and what is most important, the belief that inflation would abate has been shaken, as has trust in the banking system and the dinar's stability. That is why we can expect the following consequences after this shock weekend: pressure to raise the prices, inflationary expectations, and with the impossibility of a price rise - a drop in the offer, pressure for a further rise of salaries and other personal income, and with regard to fiscal expenditure - greater taxation, a drop in the tendency to save dinars and a growing demand for foreign currency, the further growth of the real foreign currency rate, and therefore, an increasingly greater recession and inflationary tendencies at the same time.

These and similar shocks can be avoided only if the black market is recognized as such (namely, if the forces of offer and demand and the resulting relation of currencies are recognized, instead of being 'banned') and if the Central Bank takes active participation in the foreign currency market and intervenes when the occasion demands.

Zoran Jelicic

Podgorica: Bankers Arrested

Who Financed Zhirinovsky

The Jugobanka Podgorica branch directors have been arrested for "abuse of office", but many accuse them of having financed the "big Russian brother" through dubious deals

The public in Podgorica is tickled by the question of how much last year's visit of Russian Liberal-Democratic Party leader Vladimir Zhirinovsky cost Montenegro, especially after a press conference called by the National Party at which member of the party's Main Committee Predrag Drecun, quoted a statement by Petar Ivanovic, owner of the "Oveko-petrol" company from Vienna. Drecun said that the Montenegrin Government had asked Ivanovic to organize a tour for Zhirinovsky and that it had cost five million dollars, i.e. one million dollars more than he had received from the Podgorica Jugobanka.

In a statement to VREME Drecun underscored that he had no communication with businessman Ivanovic, but that he had heard of the above mentioned facts earlier and that it was all logical. These and similar stories cropped up immediately after Jugobanka - Podgorica branch director Radmila Kalezic and her assistant Darko Radunovic were arrested for allegedly suspect business with Ivanovic. In VREME's last issue we published information on the arrest of the Podgorica Jugobanka branch director, and that the direct reason for this was a 2,660,000 dollars advance payment to the "Oveko-petrol" company which was not repaid to the bank.

Apart from Radmila Kalezic, Sava Marendic the former director of a furniture factory in Podgorica is also behind bars, he was voted 1993 Manager of the Year. This is reason to believe that other successful Montenegrin businessmen will start suffering from insomnia, all the more so if the two cases are linked together.

The bankers we talked to in Podgorica believe that the advance payment to "Oveko-petrol" is just an excuse to arrest the Jugobanka director. In their circles they mention much larger sums and many other activities which the authorities tolerated, and because of which most of the bankers are now very jittery. They can't understand why it all happened right now and why the information on the deal with "Oveko-petrol" was leaked, since there are innumerable such cases, and the banks' claims are enormous.

Does businessman Petar Ivanovic owe the bank the sum of 2,660,000 dollars or is the sum much higher, or, if his alleged statements are to be believed, does the bank owe him money? These are questions which will not be answered for some time. The burdened estate mentioned by Director Kalezic, does not even cover the advance payment, because as is claimed by the Podgorica daily "Pobjeda", Ivanovic's house in Italy is worth only 150,000 DEM. Some businessmen in Podgorica claim that a contingent of Ivanovic's goods are on the border and that he repaid all credits in goods, so that there was no significant reason for the arrests, but if there are bigger and more important reasons, the competent bodies are not mentioning them for the time being.

Bankers in Podgorica say that Mme Kalezic inherited a lot of problems which were such that the former director committed suicide, and didn't die suddenly, as was announced. The Montenegrin Government opposed Radmila Kalezic's election to the post of director, so that there is justified suspicion that she refused to carry out orders from people in authority and was sacrificed as a result. This would be much clearer if it were known if the arrest followed as the result of an order from both Belgrade and Podgorica.

In Podgorica Jugobanka has the reputation of the bank which transferred the greatest amount of money to London and Cyprus. 57% of its capital belongs to the Belgrade headquarters, and the rest to Montenegrin firms, of which amount half belonged to the Podgorica Tobacco Plant. Montenegrin Prime Minister Milo Djukanovic said in an interview to "Pobjeda" that capital should be returned to the country as soon as possible. He complained that the banks had not supported the Government's program, and mentioned only three small banks which he believed to be working properly and were following the efforts of the firms.

It is clear however, that some privately-owned firms have built up whole empires thanks to the support of banks. There are stories in Podgorica, confirmed unofficially by competent persons, that several directors have been interrogated in connection with the "Jugobanka case".

In the existing monetary chaos some have functioned very well, and the way things stand, Zhirinovsky also made a profit. During a press conference in the villa "Gorica" last year, Petar Ivanovic showed up and surprised Zhirinovsky with the greeting "Heil Zhirinovsky". Ivanovic was introduced as the sponsor of this tour and the European one too.

There is talk in Podgrica that Ivanovic is no great businessman but that he knows how to collect his fee. It is said that he entered business thanks to his friend Jovo Popovic, the former director of the Federal Security Institute and currently the security officer of the First Football League. Ivanovic took part in the transfer of several football stars. The advertisement "Oveko" has stood in the stadium in Gorica for years, but some football club officials are bitter because Ivanovic spirited away some of the money from the transfers. At home, in Podgorica Ivanovic has always been very generous to people he thought would be of use to him. He even gave cars as presents: one of Montenegro's top prosecuting officials drives one such "Mitsubishi". Ivanovic has never stinted when meeting high guests to Montenegro and he organized sumptuous lunches and suppers, which he knew how to make good later.

Velizar Brajovic

Belgrade: Slavija Bank

Director On Giros Diet

Two clients, complained the director, have robbed the bank; one is dead (?), while the other has run off to New Zealand

During a trade union meeting at Slavija Bank, the bank's general director Milomir Spasovic told employees that their salaries would not be raised because "two of our clients have robbed the bank so that there is no money on the accounts."

Spasovic did not manage to move those present with claims that he was practically starved during trips to Greece and that he had to eat giros on the streets because his per diem was very small. Of course, he didn't go into details who the clients were, and who had allowed them to get credit and under what conditions, because this is all a business secret. A bright investigator would soon find out who had robbed the bank by questioning Slavija Bank's credit board members (Milomir Spasic, Veljko Skoric, Milan Novicic, Branko Jovanovic and Bogoljub Cvetic), and would easily learn under what dubious conditions the credit was approved and who had proposed that the credit be given. One thing is sure - one of the clients who did business in Russia is dead (some claim he was killed) so that there is no one to return the money now. The second client, Angel Angelov, is much more interesting, not just because he is a foreign citizen, but because he had well developed business interests in Belgrade and was a great friend of Slavija Bank's executive director Dragan Stankovic who had once worked as the head of the information department in "Tehnogas", the nursery of Serbian politicians (such as Slobodan Milosevic and Ivan Stambolic). According to unofficial data, Angelov got several credits from Slavija Bank (total sum 4.5 million DEM) and according to bank gossip, skedaddled off to New Zealand with around 40 million DEM which, as an expert on laundering money, he collected from several firms and some of our "businessmen". Slavija Bank employees say that Stankovic praised Angelov claiming he was a business wizard and could make money out of nothing. Angelov owned several firms in Belgrade ("Kenzo Medical", "Nastimex", the "Rapsodija" pizzeria...) It is interesting how it came about that the two clients robbed the bank. "Real estate is given as a security and it usually has no market value. If it is land, then it happens that it is not registered in the land registry books, or ravines which no one wishes to buy, which means that there was a planned nonchalance when approving credit", claim the Slavija Bank employees, underscoring that credit was usually approved to the director's friends and the friends of the credit board members. Allegedly, one of Angelov's guarantor's for a credit totalling 1.5 million DEM was the insurance company ZOIL Dunav. His creditors, two private businessmen have already taken over the "Rapsodija" pizzeria and "Kenzo Medical" in order to cover their losses (1.5 million DEM again).

One of Slavija Bank's big undertakings was the life insurance of current account holders (without their knowledge but with their money) in which Angelov was supposed to play the role of middleman between the bank and the ZOIL Dunav insurance company, with his ACD system. There has been no explanation why the project failed, but Angelov's reputation in Slavija Bank grew. And of course, trust. A second big chance cropped up when the Slavija Bank top management decided to buy a VAX computer system abroad, because the existing system was allegedly inadequate during the period of hyperinflation because of the great number of naughts. There are many Slavija Bank employees who claim that Angelov's son who lives in America acquired a second-hand VAX for one million dollars. The money was later taken out of the bank illegally and spirited abroad by trustworthy persons. The commission of the supplier remains a secret. But, the country is under sanctions, and how is a machine to be brought in? This is where Angelov enters the picture again and for 80,000 dollars manages to transport the VAX in a truck from Sofia to Belgrade with false documents. Then it turned out that the VAX was out of order.

Slavija Bank employees still talk of the business, i.e. import (from the USA again) of super modern "Kirby" vacuum cleaners for the bank. Naturally, the supplier was Angelov's son again, while his second son demonstrated how the vacuum cleaners worked. After some time the vacuum cleaners started falling apart, there were no spare parts and there were no dust bags, so that the cleaning ladies went back to their brooms.

Jovan Dulovic

Priboj

Uncovered Bills

Since September 1994 the Beobanka branch in Priboj and its branch office in Prijepolje are practically bankrupt. The citizens of Priboj, Prijepolje and Nova Varos have not been able to get their money for days, while private businessmen who have their accounts there are trying to transfer their money to Jugobanka.

There has been no official information since the beginning of this scandal, but journalists managed to learn that Beobanka has been robbed of about five million dinars. The money was paid out to wheeler dealer Dragoljub Kokovic who claimed to be an oil trader from Belgrade. He left uncovered bills in the bank and according to information heard during the investigation, Kokovic gave 200 kilos of silver and 80 kilos of gold jewelry as security.

There are many indications that a great number of people in authority, "ranking officials, Government people, those in the Oil Industry" are involved in this affair. Their names are being kept secret in the interests of the investigation.

The arrest of bank director Radomir Jecmenica has resulted in monetary chaos. Private shop-keepers refuse to accept Beobanka checks, and the citizens are in a panic, afraid that they'll lose their money. The investigative organs arrested Jecmenica after three months (February 1995) and let him out of pre-trial detention, while the other protagonists of this bill scandal are still in jail.

Leskovac

Director's Credits

Director of the Yugoslav Export and Credit Bank Miroslav Stojanovic was arrested in early April on charges of "abuse of office" when approving credit in Leskovac, and of illegally buying and selling foreign currency. During a press conference it was learned that Stojanovic made the approval of credit to private firms conditional to their buying premises in his name in the city center. In this way he became the owner of 400 sq meters of office space. Stojanovic is also accused of making a profit by making the granting of credit conditional to buying goods from the firm "Presto" which is owned by his wife.