State Scams

The temporary blocking of the accounts of the private Interplasttrade Bank and a bankruptcy filed against another private bank, Jugoskandic, signalise the financial authorities' intention to stop ``laundering money'' and begin ``washing their hands,'' which have been deeply thrust in a series of major state financial frauds. Instead of putting an end to the ``state scams,'' the Central Bank is now halting private banking, banning the work of the banks which seem not to be prepared to pay the ``state racket.''

The real story about the dirty money game began in socialist Yugoslavia in 1964 under the banner of ``introducing'' market economy, a prelude to the famed economic reform. The financial laws were that year amended, permitting the access of real money--hard currency--to domestic economy. Hard currency accounts were introduced in domestic legislature and citizens started depositing what is today called ``old hard currency savings.'' Over the next 14 years, i.e., by 1978, 5.2 billion dollars was deposited on these private accounts. More specifically, that is how much commercial banks had owed private citizens with hard currency savings accounts at the time, but they were not capable of ``servicing'' the debt since the money was spent on paying the economy's foreign debts. A ``Solomonic compromise'' was found--the banks' debt to citizens was deposited at the National Bank of Yugoslavia (NBY) and, from it, the National Bank would pay its dues whenever the Federation took another foreigh loan.

For instance, between 1978 and 1991, the National Bank of Yugoslavia ``owed'' citizens 12.2 billion dollars, while it had actually received only 1.7 billion from the commercial banks. The ``Jezda and Dafina'' recipe (called after the two owners of the biggest private banks in Yugoslavia) was actually made in this period, the recipe of luring customers by attractive interest rates and maintaining an illusion of solvency thanks to fresh hard currency savings accounts. Even the highly-profitable Japanese industry would have been unable to pay such high interest rates. This fact partly explains the ``collapse'' of the old hard currency savings, particularly when one bears in mind the consequences of the risky operation of saving the whole savings mechanism of the former Yugoslavia which was launched by former Yugoslavia's last Prime Minister Ante Markovic as part of the convertible dinar policy.

And, what else could Ante Markovic have done at the end of a 15-year-long period in which the net outflow of financial capital stood at 45 billion dollars, 18 billion of which was used to pay the interest rates? He was only left with the choice of trying to sell the world financiers a ``healthy dinar.'' Yugoslavs, of course, rushed to convert the ``healthy dinar'' into ``hard currency savings'' and this mechanism functioned well in 1990. Its weakness--common to all ``hazardous buildings''--was that it was based on confidence in an orientation and the figure symbolising it.

When the citizens realised in the autumn of 1990 that Yugoslavia, Markovic and his Western orientation were finished, they rushed to the bank counters. In October of 1990, citizens withdrew 695 million dollars more than they had deposited. The finale was rapid, and only the Mafiosos belonging to the state leadership and ``bank Godfathers'' managed to withdraw hard currency from their accounts in the following days. Commercial banks practically shut their foreign currency counters in late 1990, and the NBY was left with a 11-billion-dollar ``debt.''

However, in 1988, the new political leadership in Serbia, headed by Slobodan Milosevic, was of the opinion that it was too late for it to draw enough money from the dying Federal Treasury and it had ambitious ``historical'' plans. In early 1989, in the honour of the 600th anniversary of the Kosovo Battle, Serbia floated the famed all-national loan ``for Serbia's economic revival.'' Somebody had mistakenly told the ``successful banker'' Milosevic that it would be easy to amass at least one billion dollars from Serbian patriots in the world and another 2 billion dinars from the nationally-awakened Serbs in Yugoslavia (which would have resulted in a monetary unification of all Serbs of the world prior to their geographic unification). The national loan turned out to be a fiasco.

The people, however, had not been taught a lesson yet. The year 1991 marked the beginning of the era of private banks, spearheaded by the now notorious Jezda and Dafina. Since the annual interest rates on ``old foreign currency savings'' had been two times higher than interest rates elsewhere in the world (8-10%), and the risk had increased tenfold because of the ``Serbian rule of law,'' the new banks simply span a ``wheel of fortune'' by offering monthly interest rates up to as much as 15%. The people rushed to the new banks.

What member of the state superstructure now dare say he had not known who Jezda and the others were; furthermore, can the fact that the ``old foreign currency accounts'' collapsed in ``black'' October of 1991 and that Dafiment Bank was registered at the Belgrade Commercial Court on October 9 be merely a coincidence? The last attempt of a faction of the financial authorities to stop ``Operation Jezda and Dafina'' was made in April 1992, when the NBY Council of Governors withdrew Jugoskandic's and Dafiment Bank's working licences. The Council had reached its decision on April 9, but had soon given up on the two banks, because some ``wise guy'' had noticed that the civil war in Sarjevo had definitely become the focus of attention on April 6.

It is difficult to make a precise assessment of how much the citizens of this country have lost in over 1,000 banks--and whether they have definitely lost what most of these ``money workshops'' owe them. The initial assessments stand at around 2 billion dollars (Dafina, alone, allegedly owes over 2.4 billion DM and Jezda around 350 million DM). The state authorities have not published any figures and NBY Governor Borislav Atanackovic has not yet gotten around to calling a news conference and explaining what the financial authorities know about the business of the key ``para-state'' national private banks. All in all, it could easily be said that Yugoslavia's citizens have been robbed of around 15 billion dollars in the past decade if it were not obvious that the proportions of the overall pillage, including the one that did not go via the bank counters, is much greater.

Just calculate the damage done to an individual who had deposited hard currency in state-owned banks, did not make fixed-term deposits, did not withdraw his deposit on time, built a house on the Croatian part of the Adriatic coast, bought the state-owned apartment he lives in in the first round, subscribed money to the loan for Serbia's recovery, deposited money in Jugoskandic or Dafiment, and is now retired. It is from the robbing of such unfortunate people that the belligerent elite arose, the same elite now urging a ``cooler game'' and the ``legalising'' of spoils. Those who have lost a lot, however, usually nervously insist that the game continue.