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Identifier
Created
Classification
Origin
07BELGRADE1065
2007-07-27 15:59:00
SECRET
Embassy Belgrade
Cable title:  

VISAS DONKEY CORRUPTION 212 (F) SRM (MISKOVIC, Miroslav)

Tags:   CVIS  KCOR  KCRM  ASEC  PGOV  PREL  ECON  KFRD  SR 
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VZCZCXYZ0006
OO RUEHWEB

DE RUEHBW #1065/01 2081559
ZNY SSSSS ZZH (CCY ADXEB5530 MSI8200 611)
O 271559Z JUL 07
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1247
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
						S E C R E T BELGRADE 001065 

SIPDIS

VISAS DONKEY CORRUPTION 212 (F)

STATE FOR INL/C/P, CA.VO/L/C, EUR/SCE

PARIS PASS STRASBOIRG

SIPDIS

C O R R E C T E D C O P Y - CAPTION FOR PARIS ADDED

SERVICE/ERROR MESSAGE
E.O. 12958: DECL: 07/27/37
TAGS: CVIS KCOR KCRM ASEC PGOV PREL ECON KFRD SR
SUBJECT: VISAS DONKEY CORRUPTION 212 (F) SRM (MISKOVIC, Miroslav)


CLASSIFIED BY AMBASSADOR MICHAEL POLT, reasons 1.4 (b,d)



1. (s) Summary: Miroslav Miskovic, dpob: 5 July 1945, Serbia, is
the richest man in Serbia and, according to the most recent Forbes
ranking, one of the richest in the world, with over $1 billion in
wealth. He dominates banking, insurance, and consumer goods in
Serbia after obtaining massive wealth as a beneficiary of official
corruption by Slobodan Milosevic in the mid-1990's. We now have
solid that Miskovic was the beneficiary of egregious political
corruption, which has had a serious adverse effect on U.S. national
interests mentioned in Section 4 of Presidential Proclamation 7750,
namely the stability of democratic institutions and U.S. foreign
assistance goals. The Embassy thus strongly recommends he be entered
into CLASS as P212f until he can be found permanently ineligible for
a US NIV under INA section 212(f) (PP 7750). End summary.



2. C) Serbia is a country in transition to a market-driven economy
and a fully developed democracy. Many of its institutions in the
economy and in all three branches of the government are
underdeveloped and subject to political pressure. Serbia also labors
under the unique burden of the consequences of over a decade of
state-sponsored corruption and deliberate mismanagement of the state
and the economy under Slobodan Milosevic.



3. (C) The fragility of Serbia's democratic institutions, in
particular its judiciary, combine with a small political elite, a
sensationalistic press, and strong political party structures to
create an environment ripe for manipulation of the legal process for
political gain or to settle personal scores. Government officials
have routinely begun politically-motivated investigations of alleged
corrupt practices to sully political opponents, only to drop the
pursuit of legal action once an opponent had been discredited. At
the same time, those in power protect their own, failing to follow up
on accusations of corruption when doing so would hurt them
politically.



4. (C) It is widely accepted in the press, the analytical
community, the general public, and among political and economic
powerbrokers and senior Mission sources that a small handful of
extremely rich men control a disproportionate share of key economic
interests in Serbia. These "oligarchs" all either had direct ties to
the Milosevic regime (and some to Milosevic personally), served in
the Milosevic governments, were active members of Milosevic's
Socialist Party (SPS) or the Party of the Yugoslav Left (JUL) (run by
Milosevic's wife, Mira Markovic), or were key players in
sanctions-busting and other smuggling activity during the Milosevic
regime. Documentation on the illegal activities of these men, or the

circumstances under which they obtained their wealth or control of
key economic interests (including in energy, retail, commodities,
banking, media, and telecoms), is unlikely ever to come to light, not
least because most of them - according to well-placed Mission
contacts - provide financial support to one or more of the main
political parties in Serbia, and most of them have stayed out of
politics. (Note: By way of example, the press reported in late
February that all documents indicating misuse of customs revenues
were destroyed the day after Milosevic was forced from power.) The
exception is Bogoljub Karic, whose foray into politics to protect his
business interests against other oligarchs led to the extralegal
seizure of his TV station by the government, his flight from the
country under corruption charges (see para 3, above), and the seizure
of his mobile telecoms assets by the government for later
privatization.



5. (C) Recent questionable decisions by the government with regard
to the issuance of broadcast licenses and the mishandled
privatizations of some assets, along with decisions not to privatize
other key assets, all point to influence by the oligarch class on
government policy - to the detriment of the stability of democratic
institutions in Serbia and to our economic and investment interests
in this country. However, since the oligarchs are tied into the
political elite, it is nearly impossible to produce hard evidence of
tampering, and less likely still that any Serbian government in the
foreseeable future would initiate extensive investigations into these
irregularities. The government has to date contented itself largely
with going after "small fish" corruption, with the local press
sensationalizing cases of the "privatization mafia," the "toll
mafia," the "customs mafia," and other minor causes celebre.



6. (C) Although endemic corruption is characteristic of most
transitional societies, the decisive influence wielded by a small
group of wealthy Serbian businessmen is dangerous for a country where
democratic institutions are weak and rule of law is incomplete. With
Serbia's EU accession talks frozen, tycoons could have enough leeway
to entrench their control over the Serbian economy and increase their
influence over political decision-making. This trend could undermine
our goal of creating a democratic Serbia that enhances stability in
the Balkans. The 212(f) mechanism provides us with a tool to ensure
the people of Serbia that this handful of unscrupulous oligarchs who
stole their fortunes from the Serbian people with the help of

Slobodon Milosevic will not be rewarded for their theft in the form
of the USG glossing over their past misdeeds when they apply to
travel to the U.S.



--------------------------


MIROSLAV MISKOVIC


--------------------------






7. (s) In recent months, we have obtained proof positive of
Miroslav Miskovic's direct benefit from official corruption on the
part of then-Customs Director Mihalj Kertes. The evidence first came
to light as a result of an investigative report on a local television
station that showed pictures of letters of permission given to
Miskovic and his companies during the Milosevic regime that allowed
his companies to evade and/or manipulate payment of customs duties to
the tune of millions of dollars. We subsequently obtained a copy of
the letter itself from Brankica Stankovic (strictly protect), the
reporter who broke the story. She told us she obtained the document
from ICTY chief prosecutor Carla del Ponte, who has amassed literally
tons of documentation highlighting official corruption during the
Milosevic regime as part of her (now defunct) case against the former
dictator.



8. (s) The document, on official Customs Administration letterhead
and under seal, signed by Kertes (who is currently under indictment
for corruption and has existing Consular system hits), provides
Miskovic's umbrella company, Delta Holding, and its subsidiaries with
allowances for special treatment for the importation of its goods.
Specifically, it allows Delta to clear all its goods through the main
customs house in Belgrade (at the time, importers of consumer goods
were required to clear customs at the border), and it allows Delta a
45 day grace period after clearance to pay customs and other fees
that are due (at the time, all fees had to be paid on the spot and in
cash at the time of clearance). Text of document at end of cable,
copy of original Serbian language document faxed to EUR/SCE.



9. (s) Subsequent to receiving this document, we spoke with Predrag
Arsenijevic (strictly protect), currently chief of staff to the
Director of Customs and former Customs chief at the Belgrade customs
house during the period in question. Arsenijevic confirmed that the
document was widely used and that it violated at least three
provisions of existing customs laws and regulations in either spirit
or letter. First, by allowing Miskovic to unload in Belgrade, the
document gave the tycoon an unfair market advantage over potential
competitors who had to unload at the border and truck their good sin
themselves. Second, in practice the document allowed Miskovic to
keep his goods in storage in customs, clearing them piecemeal only
when market demand was right. This also gave him an unfair
advantage, and in addition allowed him to benefit from hyperinflation
as goods sold much later on were valued at their invoice amount from
the date of entry.



10. (s) Finally, and most damning, Miskovic was allowed to clear
goods through customs simply on the "promise" that the company would
pay duties within the allotted 45 days. Arsenijevic said these were
days of "cash and carry" - most traders had to pay all fees for whole
shipments up front to avoid devaluation and to ensure payments were
made - he said bank guarantees were worthless by then. So whatever
customs fees paid by Delta were paid after 45 days of hyperinflation
had cut into the bill. And that, said Arsenijevic, was only if Delta
paid at all! Since Delta was allowed to clear goods with just this
document, many customs bills went unpaid. He said customs had to
create a special log just to try to keep track of Delta's clearances,
and then had to try to collect on past-due bills on their own.
Arsenijevic commented that customs revenues are currently at twelve
times their levels of the mid-1990's. Wryly correcting himself, he
added that this was reported revenues that were transferred to the
budget - the actual revenues may well be in line with the numbers
from the past, with Miskovic, Kertes, and others pocketing the
difference.



11. (s) In his Forbes citation, Miskovic lists his fortune as
"self-made" in the banking and insurance industries. More
appropriately, it was made on the backs of the Serbian people as they
struggled through crippling sanctions and hyperinflation while he
collected on their misery. Miskovic's partner in crime, Mihalj
Kertes, is already a confirmed purveyor of corruption and is once
again under indictment in Serbia specifically on the basis of this
report. We think it only fitting that Miskovic, at the very least,
be treated similarly by our consular system, so that he does not
derive the further benefit of access to the U.S. from his pillaging
of Serbia. We strongly recommend he be entered as a P212f (PP7750)
until he applies for a visa and can be found permanently ineligible
under INA section 212(f).



12. (u) Begin Text of Customs Document:

(SEAL)
Federal Republic of Yugoslavia
Federal Customs Administration
06/1 number D-14837/1
22 November 1996
Belgrade

TO ALL CUSTOMS HOUSES
By hand to all managers

The Federal Customs Administration (SUC) hereby approves that all
consumer goods imported by DELTA HOLDING company from Belgrade, and
specifically its subsidiaries DELTA M, DELHEM and DELTICO, all three
from Belgrade, be directed, under customs supervision, to the main
Customs House in Belgrade for customs clearance on imports, with the
provision that the amount owed for customs duties and other import
levies will be paid within 45 days from the date of customs
clearance.

Copies:
-- Office of computer and automatic data processing of the Federal
Customs Administration
-- DELTA HOLDING, Belgrade

This Directive to be sent by facsimile to number 222-3912, the IPC of
the SUC, and customs houses

(SEAL of the SUC)
Director General
Mihalj Kertes
(signature)

End text.

POLT