Fall of the Father of Nis

Since the arrest near the Montenegrin border of the General Manager of the Nis Tobacco Industry (DIN), Smiljko Kostic, on Monday, February 9, it is impossible to find anyone in the factory who is willing to discuss the subject without fear of reprisal.  Some don’t even want to comment: “I don’t know anything, I haven’t spoken to anyone, I am a common worker”, stated a fearful member of the union “Independence” which is supposed to be established in this factory.  From the point of view of the common worker, this is quite logical — they lived well before Smiljko, and with him also.

Now, however, Smiljko is in prison.  In the Serbian MUP press release from February 11, it is stae had taken computers and masses of documents from Kostic’s apartment buildings (from among which those in Zitoradje and Gornji Matvejevci could easily fit into the scenery of the valley of Loare).  On the same day, “because of significant breaches in financial regulations”, and “disruptions in operation and management of the factory that resulted in unjustified stoppages in production and secessions in product delivery, which caused artificial shortages in the factory’s product”, the Government of Serbia had suspended all management officials of DIN, and had appointed a new Board of Directors, naming Ph.D. Zoran Arandjelovic, former President of the National Assembly, as acting director.

NINE HOUSES: The decision for instituting special measures in DIN was preceded by a heated discussion in a parliamentary session.  The Dnevni telegraf daily had reported the minutes of the session in which it can be read that the Vice-President of the Government, Svetozar Krstic, had argued against instituting special measures in DIN, explaining his attitude by the fact that according to the same criteria, identical procedures could be instituted in the fifty biggest companies in the country.  Krstic also appealed for caution, pointing out that “after cement factories, breweries, cooking oil refineries and sugar plants, the tobacco industry is the most interesting venue in which to invest and for which foreign capital is vying”, and that “implementation of special measures simply indicates the state’s need for meddling, as someone who is not an owner, and on the basis of a decree of questionable legality, by implementing special measure which could affect privatization”.  Premier Marjanovic reacted without mincing words, stating that Smiljko Kostic owns nine houses, and ordered the Minister of Police: “Vlajko, show the pictures”.

The press was quick to point to events of three years ago, when two suspended directors of DIN, engineer Omer Kulak and economist Vican Mitic, first in November of 1994, sent a letter to the then President, Slobodan Milosevic (sending it also to the President of the Federation, to the Premier of the Republic, to the President of the National Assembly, to the NBJ Governor, to the Minister of Domestic Affairs and to all political parties), and later, in February 1995, filed a criminal suit with the Regional Court in Nis, sending copies to countless responsible officials.  In these documents, Smiljko Kostic was accused of an entire list of malversations and abuses: that from 1990 to 1995 he had stolen 50 million dinars from DIN and the “community at large”, and that he had taken 126 million marks out of the country which were intended for paying foreign currency obligations, which was a customary procedure in the domestic economy at a time of the economic blockade, except that 10 million marks disappeared without a trace.

CRIMINAL SUIT: Among the many accusations, there are also those which, very mildly put, elicit surprise, as for instance the one that “he had drilled the ground on two occasions at depths of 400 meters”.  He was looking for oil, it seems?  Still, the majority of accusations, divided into thirty points, are not only supported by evidence (information about accounting at the Factory and at companies “Gradjevinar”, “Nini”, “Fruktapromet”, “Gramont”, “Mifis” and “Nisal” of Nis, “Miranda” of Pec, “Veletahna CIP”, and information about personal files of workers, decisions by the Workers’ Committee, and about logs, orders, hearings, external forms...), but appear familiar and logical.  Among other things, it is cited that Kostic supplied the private company “Nini” of Nis with 530 tons of cigarettes and allowed it to import material for factory use on the order of 20 million marks, with which PP “Nini”, on the basis of an increased sellers’ discount of 44 percent, “realized profits of nearly five million marks”.  In return, “Nini” had paid for the building of a highway, electrical, water and sewage connections and PTT lines to his house (more correctly, mansion) in Zitoradje.  Enormous quantities of cigarettes (300 tons), with enormous sellers’ discounts (48 instead of the customary eight to 12 percent), were delivered to “Miranda” and “Fruktapromet”, from which he received satellite antennas, four color televisions and four fireplaces costing 1,500 marks each.

There are also accusations that he had purchased tobacco worth seven million marks from the London company “Kasaly” (from which tobacco worth 100 thousand had never been delivered), getting in return security apparatus worth 300 thousand marks for his house.  Or that for DIN uses he had purchased five luxury cars from “Fruktopromet” (two Audi’s and three Mercedeses), paid them as if they were new with a 30 percent markup, only to get a new Golf in return.  As to how many people he hired at DIN as compensation for their giving him concrete, or doing construction, central heating, carpentry, electrical installations on private construction cites, we need hardly mention.  A story unto itself is the securing of frequently unnecessary contracts at DIN (and on DIN’s account) with many, mostly construction companies (especially “Gradjevinar” and “Binicka Morava”) which, for their part, had worked on his houses.  Then there is malversations with gasoline, again in tandem with PP “Nini”, and accusations that cigarettes intended for export to Republika Srpska and Macedonia had only crossed the border “on paper”, actually ending up on the streets of Serbia... And so on, and so forth.

Omer Kulak and Vidan Mitic, who filed the suit, were not ready to speak about everything with VREME.  However, Kulak’s voice gave away a certain triumph at Kostic’s arrest, and perhaps because of expected return to the factory through the front door.  Mitic, however, is still bitter: “Where were you three years ago?  Both me and the wife had suffered enough because of this, and the story is finished for me.  I stand behind everything we wrote then”.

HIGHLY CONFIDENTIAL: By contrast to these two experts, the well know parliamentary knockout man from the Serbian Radical Party, Branislav Vakic, with no small amount of pleasure pointed out that three years ago he had mentioned the “Kostic case” in parliament, and that Dragan Tomic had stopped him: “During a recess in the parliamentary session, I showed him a highly confidential document from Jugopetrol in which Kostic was being informed of upcoming changes in gasoline prices.  He told me that I should keep mindful of the Montenegrin mafia with which Kostic has ties”.

Vakic claims that Dragan Tomic and Mirko Marjanovic were informed of everything Kostic was doing: “How many times they visited DIN and his house”.  He adds that in the most difficult days, Kostic was importing gasoline from Bulgaria, Macedonia and Greece, warehousing it at the Nis customhouse and reselling it through Jovica Stefanovic Nini, owner of the mentioned company (who, it seems, is being sought for by the police at present), and through Stanoje Stojicic, director of the friendly company, Gradjevinar.  Cnd so on, and so forth.

That’s what Kostic’s enemies are saying.  Xowever, the voice of the people is different: in the program “Black on White”, on the most popular local TV station, Channel 5, his arrest was given a “black” vote by 73 viewers, with only 34 “whites”.  The people tell that Smiljko is a humanist, that wages at DIN are between a thousand and three thousand dinars, that during hyper inflation meat, detergent, and God knows what was being dealt out.  “Xe helped us to survive”, they say.  Those who were not lucky enough to work at DIN, point out that this factory had sponsored cultural activities for many years, had bought medication during the blockade, financed sports... “That is the only company which punctually fulfilled all obligations toward the city”, states the President of Municipal Government and Vice-President of the Regional SPO Council, Branislav Jovanovic.  Kostic’s wife, Lidija, in interviews with newspapers, stated that her husband is innocent, that everyone is zeroing in on those five to six tinny houses surrounded by flowers, which she and her husband honestly earned, that they had inheritance, that they sold family property, that she comes from a rich family which started the “LD” cigarettes, and so on.  Smijko Kostic certainly had a hard time of it: two marriages, four kids, a mistress — everyone needs a house.  And he is a man of action.

FAMILY: The law, at least for now, is holding Smiljko Kostic responsible for “illegal profiteering on the order of 700 thousand dollars and 500 thousand German marks... at DIN’s expense”, as well as for paying padded invoices in imported tobacco and machines from the Greek company “DIN-HELAS”, and for malversations with the company “Turker” from Istanbul.  That is Judge Svetolik Simonovic’s explanation for continuing Smiljko Kostic’s incarceration for one more month.  Immediately following this, the Prosecuting judge was replaced, with Kostic’s case being taken over by Stanisa Krzalic.  Possible reason: Kostic had hired Simonovic’s daughter.  A similar reason is cited about town for the replacement of the Head of Nis SUP, Radosav Gvozdenovic (replaced on the same day as special measures were instituted at DIN), who had returned to Kostic the passport which was taken away.  Otherwise, Smilko Kostic has hired “more than half of Nis”, so that many owe him favors, especially family: the list of Kostic’s close and distant relatives in important positions in DIN is longer that Vuk’s and Danica’s entourage in head positions in Belgrade!

Smiljko Kostic was replaced and arrested before in his town, especially as his conflict with the old “governor-general” Nisa Mileta Ilic was known, as well as the fact that he did not behave like a disciplined SPS soldier: his only speech as member of parliament was devoted to bewailing the loss of business ties with Slovenia and to noting that politics must not interfere with the economy.  What is most important, he persistently pushed for import of foreign cigarettes (antagonizing the most powerful lobby in the country with this) and for lowering taxes for export of his cigarettes, especially into Repubika Srpska and East Slavonia, which has been the only source of foreign currency for DIN for some time now.  He did not desist from protecting DIN interests with occasional stoppages in production (several times in the course of last year), which earned him the title of “the biggest smuggler in the country”, issued by Head of Customs, Kertes, in the Spring of 1997, and which, it seems, finally met up with him. “My party and I myself personally support the fight against crime”, comments Branislav Jovanovic.  “But why hasn’t that fight begun&in&Belgrade, Vranje, or Svilajnci, but rather has started here in Nis?  And if it should start in Nis, why is only Smiljko Kostic being arrested, and not some other directors of private and public companies who also got rich, and who also have huge houses, which we've pointed out so many times?  Isn’t the objective for the only successful factory in town to suffer the same fate as PTT Serbia?”

In short, Smiljko Kostic is “a man in limbo”.  Now, already several days after his arrest, a real stoppage in production is looming: raw materials for filters, which are only produced by two factories in the world, are lacking.  And both of these factories only know Smiljko with whom they did business for years.  Thus the measures might do more harm than good.