BOSNIA - PROSECUTOR TO OPEN INVESTIGATION OF

C O N F I D E N T I A L SARAJEVO 000230

SIPDIS

NOFORN
SIPDIS

DEPT FOR EUR (DICARLO),D (SMITH),P (BAME),EUR/SCE (HOH,
SAINZ, FOOKS),EUR/ACE, EUR/NCE,EUR/RPM (BROTZEN),F,
L/LEI, OIG, AND PM, NSC FOR BRAUN, USNIC FOR WIGHTMAN, OSD
FOR MARK JONES, USNATO FOR SHAFFER

E.O. 12958: DECL: 01/31/2017
TAGS: MASS PREL MOPS PGOV KCRM BK SI
SUBJECT: BOSNIA - PROSECUTOR TO OPEN INVESTIGATION OF
USG-FUNDED DEMINING PROGRAMS

REF: A. STATE 495


B. 06 SARAJEVO 2907

C. 06 SARAJEVO 2706


1. (C/NF) SUMMARY: On January 31, we formally requested that
the State Prosecutor and State Investigation and Protection
Agency (SIPA) open a full investigation of USG-funded
humanitarian demining programs (Ref A). Both organizations
pledged to conduct a thorough investigation separate from the
ongoing Radomir Kojic case. Separately, prosecutors again
raised their request for USG documents in support of the
Kojic prosecution, noting they would be necessary to
establish the extent of Kojic's criminal activities. On
January 25, Embassy Ljubljana and Sarajevo officials met with
the former director of ITF Bosnia, Robert Strazisar
(protect),who raised further allegations against about
corruption and fraud in the demining sector. END SUMMARY

Embassy Requests Thorough Investigation
--------------


2. (SBU) On January 31, we presented State Prosecutor Marinko
Jurcevic a letter requesting that SIPA conduct a formal
investigation into USG- funded demining programs per Ref A
instructions. The letter, required under Bosnian law to
initiate an investigation, listed allegations of fraud
brought to our attention about demining programs, including:

-- illegal accreditation of demining organizations;
-- illegal collusion in the demining tendering process;
-- willful false marking of mined areas to establish phony
projects;
-- false certification of mined areas as cleared;
-- the existence of shell demining companies serving money
laundering purposes;
-- conflict of interest concerns between demining officials
and demining companies;
-- continued involvement in demining activities by persons
previously barred from such work; and,
-- kickbacks provided by demining companies in return for
tenders.

The letter listed only those allegations made by multiple
sources within the demining community, including senior
Bosnian government officials, Bosnia-Herzegovina Mine Action
Center (BHMAC) inspectors and employees, and demining company
officials. We stressed the importance the USG attaches to
investigating these allegations and to determining if any USG
monies were misappropriated and misused.


3. (SBU) Jurcevic noted the severity of the allegations and
confirmed that the ongoing Kojic case had already raised some
these concerns. He said that he is ordering a "full,
separate, and exclusive" investigation into the demining
programs, and would immediately stand- up a taskforce
comprised of a state prosecutor, head of SIPA's criminal
investigative division, and SIPA investigators to fully probe
the allegations. He requested that we meet next week with
the taskforce and share our information to assist the
investigation. He pledged his full cooperation and assiatnce
in the matter.

Prosecutors Continue to Seek Kojic Records
--------------


4. (SBU) In a separate meeting with a prosecutor involved in
the Kojic case, we were again asked for USG assistance in the
provision of documents requested by the State Prosecutor (Ref
C). The prosecutor stressed USG records of financial and
equipment transfers to Kojic's demining operations would be
crucial to building their case of money laundering and
embezzlement. The prosecutor noted that a review of the
documentation already in the prosecution's possession
indicated that humanitarian demining in the last decade "had
been a paradise for some people," and the USG information was
necessary to flesh out the scope and depth of the fraud. In
all, prosecutors belief that KM 10 million (approximately USD
6.5 million) of demining assistance provided to Kojic remains
unaccounted for. Kojic was recently released from custody

pending trial, and prosecutors are looking to shortly issue a
formal indictment which would seal all charges.

Another Source Comes Forward With Allegations of Fraud
-------------- --------------


5. (C/NF) Separately, a former director of the International
Trust Fund (ITF) office in Sarajevo, Robert Strazisar
(protect),contacted us and offered to provide evidence of
alleged ITF complicity in demining fraud and malfeasance in
Bosnia. Strazisar met with Embassy Sarajevo LEGATT and
Embassy Ljubljana POLCOUNS in Ljubljana on January 25, and
shared information reinforcing previous allegations shared
with us. Strazisar said he had direct knowledge, from his
tenure with the organization, of senior ITF leadership
engagement in criminal and fraudulent practices in the
demining tender in Bosnia. Strazisar stated that some of the
money of donor demining funds was done through a series of
"annexes" to award tenders between ITF and demining
companies. Strazisar said that prior to his arrival at ITF
Bosnia, a practice of approving annexes to contracts long
after the work was completed existed. These annexes often
resulted in thousands more dollars being given to the
contractor without due diligence being performed on services
provided. He said he changed this practice with the approval
of ITF Headquarters and said firms were required to bid the
job and build the cost of changing vegetation etc...into
their initial bids.


6. (C/NF) Strazisar asserted that the work cited in the
annexes was bogus, and usually involved adding thousands of
dollars to an already completed contract. As evidence,
Strazisar produced one such annex granting additional funds
to Radomir Kojic signed by the General Director of ITF, after
Strazisar had refused to do so without express instructions
from headquarters. Strazisar stressed that the General
Director's involvement in this process violated ITF rules of
procedure, and was indicative of actions to circumvent normal
rules of oversight and transparency. Though he only
possessed direct knowledge of activities occurring during his
tenure at ITF, Strazisar stated he had no reason to believe
that such practices had been discontinued.


7. (C/NF) Strazisar repeated allegations of high-level
collusion between ITF Sarajevo and demining companies. He
claimed that in reality only a few truly legitimate demining
companies exist in Bosnia, and that they provide kickbacks in
return for the awarding of contracts. Strazisar also said
that ITF has continued to award tenders to Kojic front
companies, and said he knew that some of these shell
companies were still receiving tenders for demining work in
Serbia. Strazisar expressed hesitancy to provide his
information directly to Bosnian law enforcement
representatives, citing what he said were realistic fears of
retaliation from his former colleagues. He did agree to meet
with USG representatives at any point in the future to
further discuss his information.
MCELHANEY