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