RS ORGANIZED CRIME PROSECUTIONS CHALLENGE STATE

C O N F I D E N T I A L SARAJEVO 000022 SIPDIS SIPDIS COMERCE FOR 4232/ITA/MAC/EUR E.O. 12958: DECL: 01/05/2012 TAGS: KCRM KJUS EINV PGOV BK SUBJECT: RS ORGANIZED CRIME PROSECUTIONS CHALLENGE STATE INSTITUTIONS REF: 06 SARAJEVO 3250 Classified By: Charge d'Affaires Judith B. Cefkin. Reasons 1.4 (b) and (d) ¶1. (C) SUMMARY: Since returning to office in February 2006, RS Prime Minister Milorad Dodik has taken concrete steps to fulfill specific campaign promises, including his pledge to combat crimes that impair the local investment climate. As part of this effort, in April Dodik created the RS Special Prosecutor's Office, a unit dedicated to fighting organized and financial crime. Although a positive step in itself, the initiative was executed in a way that challenged the authority of State-level institutions over the RS justice sector. This, coupled with the RS Parliament's control over its budget, brings into question the Special Prosecutor's ability to operate independent of political influence. END SUMMARY. ¶2. (U) Following his confirmation in 2006, RS Prime Minister Milorad Dodik moved quickly to fulfill his campaign promise to reduce economic crime, including organized crime, as one element of his plan to improve the investment climate in the RS (REFTEL). In April, the RS Parliament passed a new "Law on Curbing Organized and (Other) Severe Forms of Economic Crime." The law established a new RS Office of the Special Prosecutor, consisting of seven prosecutors and a small team of investigators exclusively devoted to handling these cases. ¶3. (SBU) Two State-level institutions challenged the initiative: the State Prosecutor's Office, which is charged with exclusive jurisdiction over major economic crime cases; and the High Judicial and Prosecutorial Council (HJPC),which claimed sole authority to create new prosecutorial positions. These institutions accused the RS government of infringing on their legal powers. In a compromise solution reached in July, Dodik withdrew the direct appointments that had been made, and in return the HJPC formally authorized the new positions, thereby implicitly approving the creation of the office itself. The State Prosecutor and the RS Special Prosecutor reached an agreement to "consult" before the RS office took on a cases with inter-entity elements. ¶4. (U) In October the HJPC appointed then Banja Luka District prosecutor Miodrag Bajic to head the new RS Special Prosecutor's Office. Shortly thereafter, Dodik warned publicly that he would ask the RS Parliament to revoke its mandate if the new office failed to show results. Dodik made this statement despite State law provisions conferring on the HJPC the sole authority to abolish or alter judicial structures and prosecutorial positions. Shortly after Dodik's statement, Bajic opened investigations into alleged improprieties connected with privatization process revisions for "Kristal Bank" and "Banjalucka Bank" (REFTEL). In November, the Special Prosecutor's Office ordered 20 people, including three policemen, arrested for running a cigarette smuggling operation. Other cases are currently under investigation. ¶5. (C) COMMENT: The creation of the RS Special Prosecutor's Office, like Dodik's goal of reducing economic crime and improving the investment climate in the RS, is a positive development. However, the manner in which Dodik went about creating the office suggests motives beyond simply promoting of the rule of law. Dodik clearly sought to fulfill his campaign promise, mindful that the RS electorate could hold him accountable for a lack of progress in fighting organized crime in the RS. However, by taking unilateral action in the justice sector, Dodik also directly challenged the authority of two State-level justice institutions. By agreeing to a compromise arrangement, the HJPC and State Prosecutor demonstrated they were unwilling, or unable, to repudiate that action. Dodik's warning to Special Prosecutor, while undoubtably meant to motivate the office to take action, was simultaneously a possibe attempt to exert political control over it. CEFKIN