TAKE a stroll down the streets of Belgrade and you soon catch the buzz that Cyprus is the hot topic of discussion in street-side caf?s, shops and homes. If you guessed that the island’s popularity among Serbs is because of the Cyprus problem, you’d be wrong.
It is being mentioned because of its connection to the siphoning of billions of dollars of state money in the 1990s during the rule of late Serbian President Slobodan Milosevic.
Partly under EU pressure, the Serbian government has launched a long-awaited anticorruption campaign to fight back against graft.
Earlier this month, Serbian authorities made their first indictment against Mihalj Kertes, a key player during Milosevic’s decade-long rule. Kertes was detained on a request from Serbia’s prosecutor for organised crime. He was charged with abuse of position and criminal conspiracy for allegedly transferring millions of dollars of state money to accounts in Cyprus and elsewhere.
According to a report prepared by The Hague’s chief financial investigator Morten Torkildsen, between 1998 to 1999 Kertes made several trips to Cyprus, bringing with him suitcases full of cash worth an estimated total of $508 million.
An estimated $4 billion is believed to have been moved through Cyprus during the 1990s. The funds were used to buy weapons, equipment and fuel for the Milosevic regime to pursue wars in Bosnia and Kosovo, according to an investigation by the United Nations war crimes tribunal.
Investigators have been unable to trace the funds, although there is a broad perception among Serbs that the money ended up in the pockets of tycoons associated with the Milosevic regime.
Torkildsen was tasked with investigating serious violations of international humanitarian law committed in the Former Yugoslavia since 1991.
The Norwegian expert discovered that eight offshore companies registered in Cyprus were used for sanctions-busting by the Milosevic government. All of them were registered as “trading corporations” by the Tassos Papadopoulos law firm.
Among these, the most (in)famous were Antexol Trade Ltd. and Browncourt Enterprises. The former was struck off the company registrar’s record in August 2003, all its traces having since vanished.
Though not news, the siphoning off of the Serbian people’s life savings abroad is back with a vengeance, following the airing of a series of investigative news reports by Serbia’s privately-owned B92 broadcaster.
A gutsy, in-your-face broadcaster, B92 has been presenting its findings in its ‘Insider’ series, which has got Serbs talking and thinking about little else in the past few weeks.
B92’s news team was recently in Cyprus, interviewing bankers, lawyers, police and politicians.
‘Insider’ features lengthy comments from Pambos Ioannides, a former partner with the Tassos Papadopoulos law office and Ioannis Kasoulides, Foreign Minister from 1997 to 2003.
According to the show, in 1992 the United Nations imposed a strict economic embargo on the former Yugoslavia. Milosevic and his aides found a way around this, through the setting up of offshore companies in a number of countries, including Cyprus.
Say a Serbian businessman wanted to buy something from abroad. He would deposit cash in Yugoslavia’s state-run Beogradska Banka. The money would then be flown out to Cyprus, deposited in the account of one of the eight offshore companies.
These companies all had their accounts with the Cyprus Popular Bank – now known as Marfin Popular Bank.
Though the accounts were with the Popular Bank, they were allegedly controlled by employees of the Beogradska Banka branch here in Cyprus. As soon as the cash was deposited, it became legal. Next, the offshore company in question would give instructions to Beogradska to transfer amounts to the businessman’s account in Beogradska in Cyprus.
But in 1996 Cyprus introduced tougher money laundering laws, which imposed many obligations on banks and financial institutions. Identification of an offshore company’s clients became a must. Moreover, any transaction over £10,000 was subject to scrutiny by banking authorities. Despite this, from 1998 to 1999 some 500 million deutschmarks (DEM) in cash were brought in bags from Serbia to the island.
Alternatively, the money would be loaded onto buses making the trip from Belgrade to Timisoara, Romania, and then onto Cyprus by plane.
For example, in 1999 Browncourt Enterprises, which had an account with the Popular Bank, gave instructions for payment of 112,000 DEM to yacht manufacturers Ferreti for the purchase of a luxury yacht.
And according to a balance sheet dating to 1994 that was submitted as evidence, Antexol had a turnover of £2.35 million, over £1 million in payable interest, and hundreds of thousands of pounds in “management fees”.
What’s more, under the new regulations, the law office registering an offshore company was obliged personally to know the real owners of the company and identify them to the Central Bank.
In the case of Antexol, the beneficiaries were named as Yugoslav nationals Ljljana Radenkovic and Radmila Budicin. But neither had any idea they were being used to front the company in Cyprus. They only heard of Antexol years later, and by that time their names had appeared on a blacklist issued by the Office of Foreign Assets Control of the US Treasury.
With extensive footage of the Central Bank building and the – now abandoned – Beogradska offices in Nicosia, ‘Insider’ also features pictures of Tassos Papadopoulos with Borka Vucic, former manager of Beogradska branch in Cyprus.
Vucic denies that the bank had anything to do with money laundering. Pambos Ioannides, then with the Tassos Papadopoulos law firm, maintains that at the time they were trying to help out by facilitating the export of money from the former Yugoslavia, which could then be used to buy much-needed supplies for the suffering people there.
It’s a cover-up, no doubt about it
PREDRAG DJORDJEVIC, a Serbian businessman based in Cyprus, is convinced that Beogradska masterminded the distribution of the “dirty money”.
Djordjevic, who also appears on ‘Insider’, is currently suing the Popular Bank for compensation and damages in a 900,000 deutschmark transaction that was never completed.
Djordjevic says he first heard of Antexol in 1994, after arranging to sell raw cotton worth DM900,000 purchased from a Russian company to a Serbian businessman.
He had a licence issued on humanitarian grounds by the United Nations that allowed him to sell cotton for making medical products to a Serbian company while sanctions were in force against Yugoslavia.
To facilitate payment, Djordjevic opened an account at Beogradska Banka in Nicosia in the name of Genemp, his trading company. But instead of receiving the full amount from Belgrade directly, Genemp was credited with DM537,000, which had been transferred from Antexol’s account at Popular Bank.
Djordjevic is claiming the remaining DM360,000 plus damages from Popular Bank. He believes this amount was also credited to Antexol’s account at Popular Bank but was used for other purposes.
The Popular Bank accepted Antexol made the DM537,000 payment, but claimed it had no knowledge of the DM900,000 transaction.
Djordjevic believes the transaction went bad probably because his company was mistaken for one of the fronts that were part of the money-laundering web.
He filed a complaint with the police back in 1998, but has since heard nothing about the outcome of the probe.
“It’s a cover-up, no doubt about it,” he says.
??
??
??
??
