BOSNIA'S STATE COURT CONVICTS MAJOR PIFWC

UNCLAS SECTION 01 OF 02 SARAJEVO 002725

SIPDIS

SIPDIS

OSD FOR FLORY, NSC FOR BRAUN AND HINNEN, DOJ/OPDAT FOR
ALEXANDRE

E.O. 12958: N/A
TAGS: BK KCRM KDEM KJUS PGOV ICTY KWAC
SUBJECT: BOSNIA'S STATE COURT CONVICTS MAJOR PIFWC
FINANCIER MOMCILO MANDIC - SENTENCE COULD BE APPEALED


1. (SBU) SUMMARY: On October 27, the State Court of Bosnia
and Herzegovina sentenced suspected PIFWC Karadzic financier
Momcilo Mandic and former Serb Republic official Milorad
Govedarica to prison for abuse of office and banking fraud.
The men were acquitted of more serious war crimes-related
charges. Nevertheless, these convictions significantly
disrupt Karadzic's financial support network, and provide a
welcome boost to the public's confidence in the State
Prosecutors' Office. The prosecution was led by an American
secondee prosecutor and secondee investigator, assisted by
Resident Legal Advisors. Their involvement highlights the
benefit of the DOJ/OPDAT program in advancing U.S. rule of
law goals in Bosnia, including strengthening the State Court
as a national institution, punishing official corruption, and
reducing financial assistance to war criminals. The
Prosecutor's Office expects to appeal the acquittal of two
additional co-defendants. Mandic seperately faces additional
war crimes charges. END SUMMARY.

MANDIC CASE BACKGROUND
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2. (U) On October 27, a Bosnian three-judge State Court
sentenced Momcilo Mandic to nine years in prison for abusing
his office and forging bank documents. Mandic, former Serb
Republic Minister of Justice and Director of Privredna Banka
Srpsko Sarajevo, was found guilty of violating RS banking
laws by illegally transferring depositors' funds to political
party accounts, thus bankrupting Privredna Banka. The
sentence, while low by U.S. standards, is substantial in
Bosnia for this category of crime.


3. (U) The conviction owes much to a skillful prosecution,
led by an American secondee prosecutor, assisted by an
American secondee court investigator and DOJ/OPDAT advisors.
Co-defendant Milorad Govedarica was also found guilty and
sentenced to four years. The other two accused, Mirko
Sarovic, former BiH tri-presidency member and high-ranking
SDS official, and business associate Milovan Bjelica, were
acquitted. In addition to serving prison sentences, Mandic
and Govedarica were ordered to pay damages to the Bank
totaling over KM 4.5 million (approximately USD 3 million)
within two weeks. The Bosnian State Prosecutor's Office
intends to appeal the acquittals.


4. (U) Although the four men have long been suspected of
providing financial assistance to International Criminal
Tribunal for the Former Yugoslavia (ICTY) indictee Radovan
Karadzic, they were acquitted of war crimes related charges
on procedural grounds. The Criminal Procedure Code of Bosnia
and Herzegovnina requires that when choosing between the
application of current or past criminal laws, the State Court
must choose the more lenient of the two. In this case, the
Court ruled that it could not find them guilty of the more
serious charge of aiding and abetting a fugitive person
indicted for war crimes (PIFWC),because no relevant law
existed in the RS during the time-frame being considered.


5. (U) In a separate case now getting underway, Mandic faces
war crimes charges stemming from his actions as the Justice
Minister in the self-styled Serb Republic during the war. He
stands accused of ordering an attack by Bosnian Serb forces
on the Sarajevo police training center in 1992, as well as
being responsible for the persecution and torture of
non-Serbs in detention camps around Sarajevo and the town of
Foca from May-December 1992. Mandic fled to Belgrade towards
the end of the war and became a wealthy businessman. He was
arrested last year in Montenegro and transferred to Bosnia.

VERDICT GETS THE JOB DONE
--------------


65. (SBU) COMMENT: We anticipate the Mandic and Govedarica
convictions will deal a major blow to the Karadzic support
network in Bosnia. While less dramatic than being found
guilty of aiding and abetting Karadzic, convictions for
banking fraud and abuse of office get the job done, depriving
the ICTY indictee of a potential source of significant
financial support. Although the decision could be overturned
on appeal, it nevertheless provides a welcome boost to the
credibility of the Bosnian State Prosecutor's Office, which
has come under strong public criticism lately for its

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perceived inability to secure war crimes and financial crimes
convictions. The verdict highlights the impact of the
DOJ/OPDAT program and American secondees in strengthening the
State Court as a national institution, and advancing rule of
law goals in Bosnia.
MCELHANEY