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Balkan Crisis Report No. 362 Part I

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    WELCOME TO IWPR S BALKAN CRISIS REPORT, No. 362 Part I, August 27, 2002 SERBIA: CHAIN-SMOKERS AND OFFICIAL SMUGGLERS - A controversial Serbian investigator
    Message 1 of 1 , Aug 27, 2002
      WELCOME TO IWPR'S BALKAN CRISIS REPORT, No. 362 Part I, August 27, 2002

      investigator accuses the government of links to the lucrative black market
      tobacco trade. A special IWPR investigative report.

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      A controversial Serbian investigator accuses the government of links to
      the lucrative black market tobacco trade.

      A special IWPR investigative report

      Spectacular allegations against Belgrade authorities appear to have landed
      a Serbian investigator for a British investigative firm in jail, and in
      fear of his life.

      Vukasin "Wolf" Minic, an employee of a UK-based corporate investigative
      firm, has accused Serbian authorities of complicity in lucrative cigarette
      smuggling, failure to track billions of dollars secreted away from state
      coffers by former President Slobodan Milosevic, and foot-dragging in
      investigating a series of high-profile murders as a result of mafia

      Minic was arrested on July 24 in a dramatic operation by a special police
      unit for unlicensed possession of a firearm - a banal charge in a country
      rife with guns - and given bail of 250,000 euro, one of the largest
      pre-trial release fees ever set in the country.

      Now set free, Minic has travelled to London but remains subject to a court
      case in Belgrade, and convinced that his arrest was directly linked to his
      tobacco investigations. He remains, too, at the centre of a growing web of
      intrigue that threatens to weaken a government already in crisis - pitted
      in a bitter power struggle between federal President Vojislav Kostunica
      and Serbian prime minister Zoran Djindjic, against whom his allegations
      are ultimately levelled.


      For a tobacco investigator, Minic is immediately distinguished by his
      arrogant and threatening manner and his nervous chain-smoking. Constantly
      fiddling with his lighter, and often dropping cigarettes on the floor, the
      37-year-old is by turns boastful and secretive.

      In a series of interviews this year with IWPR, and in recent public
      statements to the Belgrade media, Minic has related tantalising details of
      his investigations into issues that go to the core of the abuse of power
      that has marked Serbian authority over the past decade.

      Claiming to IWPR reporters to be "the best paid cop in the world", and
      touting not credible salary figures, Minic worked from early last year on
      behalf of Forensic Investigative Associates, FIA, with the Serbian
      authorities investigating funds appropriated by Milosevic. He went on to
      represent the Geneva-based Japan Tobacco International, JTI, in an
      investigation into smuggling and counterfeiting in the Serbian market.

      FIA is a London-based firm of private investigators, with sister companies
      in several countries. This spring, Minic was among a group of FIA staff
      who formed a separate company, Interro Limited, to focus on work in
      Eastern Europe and the Balkans, taking over the JTI work but retaining
      close collaboration with FIA.

      One of the central charges made by the Belgrade press - firmly denied by
      Minic and FIA - is that the contracts with Belgrade and with JTI
      overlapped and thus represented a conflict of interest, which could have
      allowed Minic privileged access to government information which he
      allegedly exploited on behalf of his corporate client.

      A Serb born in Gostivar, Macedonia, Minic has bragged widely to
      journalists that he lives in the same building as Kostunica - who is
      well-known for his down-at-heel personal style. He has also helped to
      establish an organisation in Belgrade called Treasure, led by
      representatives of the Orthodox Church and Prince Alexander
      Karadjordjevic - all close to the president - which seeks to find missing
      and stolen Serbian art and church relics.

      While he is dismissed by some as an "amateur" in dark James Bond-style
      sunglasses, Minic has demonstrated a capacity to secure agreements with
      top Belgrade and international officials, and to ferret out key details of
      the real workings of business in Serbia. "Minic is a very enthusiastic and
      extremely brave investigator," said John Roberston, customs director for
      the UN Mission in Kosovo, UNMIK.


      Amid the rash of problems facing the National Bank of Yugoslavia, the
      question of the missing Milosevic funds has been allocated only a small
      team of internal investigators. As vital as the issue may be - the amount
      is believed to be up to 10 billion US dollars secreted away through
      foreign accounts and was the formal reason for Milosevic's arrest a year
      ago - the investigation is not moving fast.

      In a recent interview with IWPR, Minic claimed he approached Djindjic on
      October 10, 2000 - only five days after the fall of the Milosevic regime -
      and proposed drafting in the help of experts from FIA. The firm, which
      employs former senior western officials and law enforcement agents, claims
      past success in tracking secret accounts belonging to the former Romanian
      dictator Nicolae Ceausescu and the late Nigerian military leader Sani

      According to Minic, the contract ultimately signed with the National Bank
      February 2, 2001, envisaged a three-stage investigation. He told IWPR that
      FIA was paid £100,000 for the first stage, but that FIA investigators
      estimated that the entire operation would last up to five years.

      FIA presented a ten-page report on the first stage of its investigation in
      July 2001, detailing its findings to date and outlining its plans for
      future investigation. The proposal for the second phase, seen by IWPR,
      estimated a cost of 750,000 to 1.5 million dollars.

      The weekly newspaper Nedeljni Telegraf, which is close to Prime Minister
      Djindjic, claimed Belgrade officials were "not satisfied" with FIA's
      preliminary findings. According to Mladen Spasic, chief of the Bureau
      Against Organised Financial Crime in the internal affairs ministry, "At
      the end of the first phase of investigation, FIA submitted a report and
      all contact ceased".

      The FIA report, which was leaked to the newspaper, did not appear to break
      new ground in the investigation. An unnamed source at the National Bank
      criticised the FIA findings as "little better than an average journalistic
      investigative report".

      Mladjan Dinkic, governor of the National Bank of Yugoslavia, declined to
      respond to IWPR's requests for comment.

      Minic has rejected criticism of the quality of the report. He subsequently
      claimed to IWPR that the authorities had iced the investigation because
      they actually do not want to find the Milosevic money. In other words, it
      was a political decision. Although, according to Minic, "foreign
      governments are simply pushing documents into their hands", Belgrade
      officials are less than eager to reveal the full extent of the former
      president's fraud - and perhaps the wider paper trail of culpability it
      would inevitably reveal.

      Minic claims the government delayed six months in actually launching the
      investigation - claiming they were busy stabilising the country after the
      "revolution" - and only started when they were forced.

      "A meeting in April took place because the Yugoslav and Serbian
      governments received an ultimatum from Brussels that they won't be able to
      count on any European Union support if they didn't start an investigation
      into Milosevic's international bank accounts and make a clear break with
      his government structures," he told IWPR. At the time, the US government
      also threatened to cut off all aid if the former president was not
      arrested. Without this pressure to find the missing funds, Minic said,
      "the Serbian authorities would be doing nothing".

      Minic insists that the first phase was only intended to map out the
      investigation, and that the British government and the World Bank offered
      to provide funds to underwrite the research. However, he claims the
      Serbian authorities never responded to the offer. Indeed, he believes the
      secret police have all the information about Milosevic's secret bank
      accounts on file anyway, but did not make this available to FIA.


      FIA's already cool relations with the authorities deteriorated further
      when the job of investigating Milosevic's money appeared to overlap with
      the search for Serbian tobacco smugglers.

      Trade in illicit cigarettes runs to billions of dollars a year in Serbia
      and Montenegro, enriching business and mafia figures throughout the
      region. Allegations have already been made against Montenegrin president
      Milo Djukanovic for cigarette profiteering. (See: Milka Tadic-Mijovic,
      "Djukanovic Threatened by Alleged Mafia Links"
      http://www.iwpr.net/index.pl?archive/bcr2/bcr2_20020607_1_eng.txt Balkan
      Crisis Report No. 341, June 7, 2002)

      "Montenegro has become one gigantic marketplace for smuggled cigarettes,"
      Gunther Herrmann, a German customs investigator, told the Financial Times
      on August 9, 2002. He estimates that cigarette smuggling into the EU from
      Montenegro has cost the union 3.4 billion dollars in lost tax revenue in
      the past two years alone.

      The trade has also raised controversial questions about the major
      international tobacco firms, which were strongly opposed to black-market
      trading on its brands. However, several American tobacco executives have
      since pleaded guilty in court to charges of supporting smuggling and other
      illegal means to expand markets.

      In 2001, FIA was approached by JTI, the international division of Japan
      Tobacco, which was formed in 1999 with the purchase of the international
      operations of RJ Reynolds. A new company, JTI controls the international
      sales of such long-established brands as Camel, Winston and Salem and
      markets the Monte Carlo brand in the Balkans. It sought assistance from
      Minic and his fellow investigators to track down the production of
      counterfeit cigarettes being sold under that name in Serbia.

      Controversy erupted over the timing of FIA's relationship with JTI, with
      Nedeljni Telegraf claiming that there was a conflict of interest. FIA,
      according to the paper, began talking with the Japanese tobacco firm while
      it was still in a relationship with the Serbian authorities to investigate
      the Milosevic funds.

      Nedeljni Telegraf alleges that this position gave FIA access to
      information about connections between the illicit tobacco trade and
      Serbian state institutions. Indeed, this July the paper explicitly
      questioned whether Minic and FIA's pitch to investigate the Milosevic
      funds was "only a smoke screen for collecting the information to protect
      the business of one of the biggest tobacco companies in the world, Japan
      Tobacco International".

      FIA categorically denies this. In a letter to President Kostunica,
      published this July 17 by Nedeljni Telegraf, FIA stated that the company's
      contract with JTI was signed in November 2001 - four months after the
      termination of cooperation with the National Bank of Yugoslavia.

      As Jessica de Grazia, Minic's direct boss at FIA and now a director of the
      new investigative firm Interro which took over the JTI work, insists,
      "There was absolutely no conflict of interest. The two investigations had
      nothing to do with each other."

      Aside from a public statement explaining the relationship between FIA and
      the recently formed Interro, current FIA representatives declined to
      comment for this article.

      For his part, Minic complained in the local press about how difficult the
      cigarette mafia made the conduct of legal tobacco trade. He finally
      discovered that the Monte Carlo trademark had been registered with the
      authorities on May 17, 2002, by a Belgrade company called JTI d.o.o.,
      which has no connection to the Geneva-based and Japan-linked JTI.

      Currently, kiosks in Belgrade mostly sell a counterfeit Monte Carlo with
      near identical packaging - as demonstrated to IWPR journalists by Minic -
      to the original Monte Carlo cigarettes on sale in other countries.

      Minic was also able to obtain samples of counterfeit Monte Carlo brand
      cigarettes which FIA says were seized by Serbian police in Zajecar,
      eastern Serbia, on May 27 this year. Experts at JTI's Cologne laboratory
      concluded that these samples were linked to the contingent of 16
      containers of fake Monte Carlo cigarettes seized by Slovenian police in
      Kopar, Slovenia, a week earlier. According to a letter to the Belgrade
      press from de Grazia, a former Manhattan public prosecutor, the containers
      were en route to Bar in Montenegro.

      These cigarettes, according to Minic's findings, were produced at a
      factory in Greece - one of at least four tobacco factories in the Balkans
      believed to deal exclusively with counterfeit cigarettes.

      Unravelling the details of the Serbian black-market tobacco trade put
      Minic in a very sensitive position, as he threatened powerful local
      interests. According to de Grazia's letter to the media, he started
      getting threatening telephone calls and receiving emails with the one-word
      message, "Quit".

      Sources within the Serbian judiciary confirm the pressures Minic was
      facing. "The main cigarette smuggling bosses in Serbia wanted to eliminate
      Minic and JTI as dangerous competition and, at the same time, to take
      revenge against him for the things he had said publicly about them," this
      source told IWPR.

      Yet Minic persisted, assisting international efforts to clamp down on
      Balkan cigarette smuggling. Following a major international conference on
      the issue held in Pristina this May, Minic worked as JTI's representative
      to establish cooperation with UNMIK's customs service.

      Amid these efforts, at the request of JTI d.o.o., the Belgrade Civil
      Court, on July 2, granted an injunction against MPC Mercata and
      Sportcommerc, local distributors for the international JTI, prohibiting it
      from selling the real brand of Monte Carlo cigarettes on the Serbian

      JTI wrote on July 19, 2002, to both Kostunica and Djindjic detailing the
      "deceitful registration" of the Monte Carlo brand name, allowing the
      Yugoslav market to be "flooded by false cigarettes". Confirming that JTI
      and JTI d.o.o. have no connection, he called for an investigation and said
      all relevant materials on the case held by his firm had been turned over
      to the prosecutor's office.

      Through local attorneys Vladimir Bilanovic and Slobodan Ruzic, JTI
      countered with its own suit against JTI d.o.o. principals Nenad Vajzovic
      and Rusmir Kadragic, accusing them of unauthorised use of the Monte Carlo
      trademark to sell inferior quality cigarettes.

      IWPR sought unsuccessfully to contact Vajzovic and Kadragic. There is no
      JTI d.o.o. office at the address listed in the company registration
      documents, and they could not otherwise be located. Three lawyers who have
      claimed in the press to represent JTI d.o.o. also could not be reached
      through their office.

      DOWN BY LAW.

      On July 18, Minic went public in Serbia's largest-selling newspaper
      accusing Serbian State Security, and indirectly Djindjic's government, of
      involvement in cigarette smuggling.

      Speaking to Blic daily, he alleged that around two dozen murders committed
      over the last few years in Serbia remained unsolved as a direct result of
      struggles within the secret police, where many officers retain direct ties
      to mafia gangs.

      "If it were truly to try to clarify these murders, the state security
      would expose itself," Minic told the paper. "The murder [in August 2001]
      of former state security officer Momir Gavrilovic is directly linked to
      cigarette smuggling, and FIA suspects that the same reasons lie behind the
      murder [in June 2002] of Bosko Buha, former head of the Belgrade police
      and head of the Serbian interior ministry's Public Security Sector."

      Government representatives have dismissed Minic's allegations. Zoran
      Zivkovic, federal minister of police and vice-president of Djindjic's
      Democratic Party, told IWPR, "I don't have any comment and I don't care
      what he said." The government's official spokeswoman also refused to
      comment on the allegations.

      Yet the authorities have responded to the allegations in another way. On
      July 24, Minic attended a meeting at Hotel Moskva, in central Belgrade,
      during which a memorandum of understanding to combat smuggling was signed.
      Although a Yugoslav customs official who was expected did not show, UNMIK
      customs official Roberston and JTI representative Denis Mylonas signed the
      document, which Robertson describes as "a vital weapon" in the effort to
      bring uncollected customs under control of the state authorities.

      Only ten minutes later, however, Minic was arrested. He was travelling
      with four bodyguards when several special police units swooped upon his
      car. His bodyguards were members of the Tigers protection agency, founded
      by the notorious paramilitary leader Zeljko "Arkan" Raznatovic - himself
      gunned down by unknown assailants in January 2000.

      The bodyguards were subsequently released, while Minic's detention was
      extended on August 1 for another month, though he denied ownership of the
      pistol that had been the cause of his detention. While Yugoslav law
      stipulates a penalty of between three months and three years imprisonment
      for possession of an unlicensed firearm, Serbia's gun culture is infamous
      and courts usually only pass suspended sentences.

      Rejecting any link between Minic and the firearm, and noting the dramatic
      style of the arrest, Interro is in no doubt as to why its representative
      was arrested. "We believe individuals who where threatened by the
      counterfeiting investigation orchestrated the arrest through their
      official contacts," said de Grazia.

      Even when JTI put up the extraordinary 250,000 euro bail, Minic was not
      released automatically. Despite Municipal Court Judge Zoran Ganic's August
      9 decision to accept the bail offer, sources close to the prosecutor told
      IWPR that they believe associates of the Serbian prime minister Djindjic
      exerted strong pressure on the prosecutor to appeal against the bail and
      keep Minic in prison. The Serbian government press office did not respond
      to IWPR's enquiries on the issue.

      IWPR sources close to the state prosecutor's office say that while in
      detention, Minic was interrogated by the secret police - the same forces
      against whom he has made allegations of an effective cover-up. Questions
      were asked about relations with Kostunica and his political party, but
      there was apparently no evidence of any connection or handover of
      information against Djindjic to the president's camp.

      Minic was finally released on August 14, on condition that he remains
      available for the completion of the judicial process. "The prosecutor's
      office behaved strangely but the court made the correct decision," Minic's
      lawyer, Mihajlo Bakrac, told IWPR.

      Minic has since stopped speaking to the Serbian press. Sources at the
      court confirm to IWPR that, with consent of the court, he has travelled to
      London. He is due back in Belgrade by September 25 for his trial on
      charges of possession of a firearm. The defence appears to hope that,
      lacking evidence to link him to the weapon, charges may be dropped.

      Meantime, the local press have continued to stir the controversy, led by
      the pro-Djindjic Nedeljni Telegraph and, in Montenegro, by the
      pro-Djukanovic newspaper Publika. They have hit back against Minic with
      allegations that JTI is in fact the biggest cigarette smuggler in the
      Balkans, pointing to connections in Macedonia and Kosovo.

      In a case not yet highlighted by the hostile Belgrade press, the EU has
      accused Japan Tobacco Inc., JTI's parent company, of smuggling. When the
      Japanese company acquired RJ Reynolds' international interests in 1999, it
      also became a defendant in a lawsuit filed against RJ Reynolds and Philip
      Morris by the EU, alleging lost customs revenue due to cigarettes smuggled
      into the union from the Balkans. The case, before the US District Court in
      New York, was dismissed this March. But a month ago, just five days before
      Minic's arrest in Belgrade, the EU appealed.

      Through a spokesperson, JTI expressed confidence about prevailing in the
      courts. A source close to the tobacco company said, "When the company was
      formed it took responsibility for the past, but it is also trying to make
      a new future. JTI has an active stance against smuggling and a desire to
      move forward, which is why it has hired private investigators and is also
      providing support to governments."

      All these cases then - of smuggled cigarettes, spirited funds and murdered
      cops, of a former president, British investigators and a Serbian wolf -

      The IWPR research and writing team for this report was led by Gordana
      Igric, Momir Ilic and Milorad Ivanovic, with Anthony Borden, Alan Davis
      and Dragana Nikolic Solomon.

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      Editor-in-Chief: Anthony Borden, Managing Editor: Yigal Chazan, Associate
      Editor: Gordana Igric, Assistant Editors: Dragana Nikolic and Mirna
      Jancic, Kosovo Project Manager: Nehat Islami. Translation: Alban Mitrushi
      and others.

      The Institute for War & Peace Reporting (IWPR) is a London-based
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      Copyright (c) 2002 The Institute for War & Peace Reporting

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