ZAGREB QUARTERLY FRAUD SUMMARY - OCTOBER 2006 - JANUARY

UNCLAS SECTION 01 OF 02 ZAGREB 000143 SIPDIS DEPARTMENT FOR CA/FPP AND CA/VO/F/P DEPARTMENT ALSO PASS TO KCC VIENNA ALSO FOR DHS/BICE POSTS FOR FRAUD PREVENTION MANAGERS E.O. 12958: N/A TAGS: KFRD CVIS CPAS CMGT ASEC HR SUBJECT: ZAGREB QUARTERLY FRAUD SUMMARY - OCTOBER 2006 - JANUARY 2007) ¶A. COUNTRY CONDITIONS: Croatia lies on the so-called "Balkans route" and its geographic position between the European Union and the transition countries of Southeastern Europe makes it a natural transit point for organized crime gangs to smuggle people, drugs, arms, and money into Western Europe. Local press recently reported that Croatian police detained a Bosnian alien smuggler attempting to get 16 Albanians into Italy, while another 28 Albanians, including 12 children under the age of 18, were stopped trying to cross the border into Slovenia. Such incidents are being reported with increasing frequency in Croatia. Police and Customs authorities are beginning to show improvement in their ability to combat smuggling in contraband, arms, and persons. However, a lack of basic skills, particularly in Customs, and inadequate equipment and staffing along the border continue to hamper efforts. Croatia has developed a comprehensive strategic plan in partnership with German and Slovenian authorities in particular to train and equip border authorities, but much remains to be done. For example, access to computerized immigration databases is only available at Croatia's three largest border crossing points. Additional attention will be focused on Croatia's ability to control its borders as Slovenia completes preparations to comply with Schengen requirements. On December 1, 2007, Slovenia is scheduled to implement a new border regime to comply with Schengen standards. Along the roughly 670 kilometer Slovenian-Croatian land border are 60 border crossings: 25 international border crossings, 11 inter-state border crossings (for Slovenian and Croatian citizens only),and 24 crossings solely for use by locals holding border passes. At the same time, Slovenia will close border check points with Italy and Austria and cease immigration and customs control at these posts. To receive EU financial support, Slovenia must renovate or construct 16 new border posts, which it has promised to do by September 2007. Apart from the 60 official land border crossings are another 163 Slovenian -Croatian informal border crossing points (roads, paths, etc.) that the Slovenes are expected to close by late 2007. At some date soon but yet to be announced, Croatian citizens will be required to present a valid passport to enter Slovenia (national identification cards had previously been sufficient for entry) . As travelers who succeed in crossing the Croatian-Slovene border will be able to travel to all other EU counties without further immigration control, we expect to see the dramatic increase in illegal immigration through Croatia to continue. Croatia continues efforts to improve cooperation with the United States, Interpol and law enforcement authorities in neighboring countries to stem drug traffic into and through Croatia. These efforts have borne some success. The trans-Balkan nature of this drug traffic, and the need for close regional cooperation, is evident from recent reports of successful interdictions. For example, border officials report that their coastal forces operating off the Dalmatian coast, in coordination with Italian coastal patrols, regularly retrieve bales of Albanian-grown marijuana jettisoned from vessels bound for Italy. Serbian officials recently intercepted 50 pounds of heroin hidden in the car of a Slovenian trying to cross into Croatia. The drive to stop drug trafficking through Croatia has taken on new urgency as Croatia becomes increasingly a consumer country and no longer simply a transit country. Croatian authorities in 2006 noted a dramatic rise in the number of registered drug addicts, especially those addicted to harder drugs such as heroin (Of the 244 new addicts registered in one Zagreb hospital, 180 of them entered for heroin addiction.) and an attendant drop in the average age of addicts, at least in one region, from 27 years to 19. Croatia's economy has enjoyed steady growth over the last six years led by strong tourism receipts, a buoyant construction industry and increasing mortgage and consumer credit. Although Croatia has grown at a slower rate than other economies in Central and Eastern Europe, analysts expect a 2006 growth rate of 4.6%. Unemployment during the same period has trended steadily downward, dropping under 12% for the first time in 2006, surprising many observers who do not anticipate a large drop in Croatia's largely structural unemployment rate. Annual wage growth during the same period has averaged between 5 and 6 percent. The average monthly gross salary during the first 3 quarters of 2006 was 6,560 kunas ($1,159). Although Croatia's per capita GDP of $9,000 is high by regional standards and is reflected in a relatively high standard of living, faster growth rates will be essential to closing the gap between Croatia and its wealthier European neighbors. The opening of Croatia's European Union accession talks in the fall of 2005 brought new confidence in Croatia's economic future, particularly as the Government has been forced to implement long-overdue reforms. Nevertheless, some significant problems still remain. The country's judicial system remains notoriously inefficient, with cases languishing unresolved for several years. Likewise, corruption, lack of transparency and an overly-large state role in the economy continue to hamper Croatia's growth. ¶B. NIV FRAUD: Zagreb is conducting a J-visa validation study to determine the rate of return for all J-visa recipients in the past three years. Post will provide the full results of its study by septel. However, initial results for the Au Pair Visa portion of the study indicate a dismal return rate of less than 50% of the 87 au pairs issued visas from December 2003 to November 2005. Additionally, post regularly receives applications for B1 in lieu of H visas for workers subcontracted by international companies, primarily German and Italian, which, after the succession of contracts and corporations are carefully scrutinized, are uncovered to be clever attempts to import cheap, and usually unskilled, labor into the U.S. ¶C. IV FRAUD: Post continues to see a number of marriages arranged solely for immigration purposes by family members in the U.S. This trend has been noted primarily in cases processed for Bosnian citizens (Zagreb is the IV processing post for the region). ¶D. DV FRAUD: Post has not encountered any significant DV fraud. ¶E. ACS AND PASSPORT FRAUD: Post did not encounter any significant ACS or Passport fraud during the reporting period. ¶F. ADOPTION FRAUD: Nothing to report. ¶G. ASYLUM AND OTHER DHS BENEFITS: Nothing to report. ¶H. COOPERATION WITH HOST GOVERNMENT AUTHORITIES: Post continues to enjoy successful and collaborative cooperation with Croatian authorities, albeit on an informal basis. Croatian law officially requires that all requests for law enforcement information be made by diplomatic note through Interpol channels. While the Embassy works on drafting a law enforcement MOU that would permit freer exchange of law enforcement information, the Consular Section is able to call on long-time police contacts willing to work with us on common anti-fraud concerns. Embassy Zagreb is currently working to expand its anti-fraud efforts into neighboring Montenegro, as we are now accepting visa applicants resident there in an effort to assist Embassy Podgorica. To date post has received only one such applicant, who was easily able to demonstrate strong ties and ample financial resources. ¶I. PASSPORTS: Currently issued Croatian passports are photo-digitized and difficult to alter. However, old-style passports, last issued in 2000, remain in circulation and will be valid until Dec 31, 2009. Fortunately, nearly 85% of Croatian citizens have replaced their old-style passports with the new, more secure ones. Croatian police report that an estimated two million new passports have been issued. Since issuance of the first new passports in 2000, only a hundred or so altered Croatian passports have been intercepted at the Croatian border, disclosed as forgeries by the machine readers. Croatian passports are not yet biometric. The Croatian government is only now developing a plan for eventual issuance of a biometric passport, but has not yet announced a timeline for its implementation. Current passports meet EU/ICAO standards. ¶J. AREAS OF PARTICULAR CONCERNS: Post would like to again express its appreciation for the ongoing support received from CA/ FPP point-of-contact Judy Carson. As noted in previous reporting, Post would like to see in the future a regional fraud conference with DHS participation to discuss, among others issues, fiance/spouse visas and the special difficulties posed in harmonizing cultural mores and U.S. visa law. ¶K. STAFFING AND TRAINING: Consul Ruta D Elvikis remained Fraud Prevention Manager during the reporting period. Vice Consul Brigid Reilly Weiller served as Fraud Prevention Officer and FPM back up. Ljubica Murphy remained the LES FPU Assistant. Ms. Murphy recently attended FSI's Fraud Prevention training and provided Consular colleagues, both at post and at a Regional Leadership Day conference hosted by Embassy Sarajevo, with a detailed overview of the training and CA/FPP highlights. BRADTKE