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26.06. 2011. / Southeast European Times
By Igor Jovanovic

Experts in Belgrade say the country has lost hundreds of millions of euros due to privatisation corruption.

The European Commission (EC) is demanding that Belgrade look into the potential illegal privatisation of 24 Serbian companies. Experts say this poses a serious test to the Serbian judiciary, which, so far, has failed to respond to allegations of illegal privatisations.

"The legality of the privatisation of more than 20 companies is to be examined under the criteria important for launching Serbia's accession talks with the EU," Serbia's Interior Minister Ivica Dacic told the media.

The minister said he supported the call to investigate privatisations due to the negative outcome in some cases.

"It ended with unhappy workers, the owners pulling out capital from the companies or selling them out, followed by workers coming to fight the police, demonstrate outside the government headquarters or block a railroad. That cannot be the effect of a good privatisation policy," Dacic said.

The head of the government's Anti-Corruption Council, Verica Barac, applauded the EU's call for an investigation into irregularities.

"But, unfortunately, I expect Belgrade to have big problems because of that demand, because it lacks a sufficiently strong judiciary and police to deal with such cases. All investigations conducted by the Council revealed a close tie between the tycoons and state bodies, with the latter avoiding taking action based on criminal reports we filed over certain privatisations," Barac told SETimes.

The Serbian prosecution responded to the demand from Brussels with only a brief news release, stating that the controversial cases were being investigated and the public would be fully informed in due time.

The demand has sparked a heated debate in Serbia on how it will affect the state economy.

Miodrag Kostic, owner of the successful MK group, said examining privatisations would have a negative impact on investment in Serbia.

"The constant checking of closed privatisations is not good. If there was corruption or crime, it is normal to check those cases, but they should not be given that much importance in public," said Kostic, who was singled out by the media after the privatisation of Serbia's sugar refineries.

Institute for Market Research associate Sasa Djogovic, however, thinks there is nothing problematic about the EU's demand, because change of ownership of certain companies is not the issue, but rather potential manipulation.

"Even after the investigation, the company owners will not be replaced, but rather those proven to have been involved in manipulation or corruption will be punished. With this investigation, Serbia can only show that it is a law-abiding state and that will bring it new investment," Djogovic told SETimes.

According to media, among the companies that are to be investigated are Sartid, currently known as US Steel Serbia, Jugoremedija, Mobtel, C Market and Belgrade Port.

One case of unsuccessful privatisation was that of Jugoremedija pharmaceutical company. After the new owners failed to run the company well workers protested, resulting in clashes with the factory's private security. Following the long lawsuit, the sale of the factory was abolished and the workers took over as new owners. The current general manager is the former union leader Zdravko Deuric.

"We are not afraid of the investigation demanded by Brussels, we are even rooting for the punishment of all those involved in illegal activities, but we fear the domestic bodies will not be strong enough to bring about the outcome," Deuric told SETimes.

The privatization of Serbian companies after the collapse of Slobodan Milosevic's regime in 2000 occurred amid numerous complaints about illegal activities, workers' protests, and court cases.

Since 2001, as many as 2,300 Serbian companies have changed ownership. The process was in full swing up until 2004, whereas in 2011 only two companies have been sold.

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