Belgrade Stung by Smuggling Claims

Spectacular allegations against the Belgrade authorities appear to have landed a Serbian investigator for a British firm in jail, and in fear of his life.

Vukasin "Wolf" Minic, an employee of a UK-based corporate investigative firm, has accused the Serbian authorities of complicity in lucrative cigarette smuggling, failure to track billions of dollars secreted away from state coffers by former president Slobodan Milosevic, and foot-dragging in investigating a series of high-profile murders as a result of mafia pressure.

Minic was arrested on July 24 in a dramatic operation by a special police unit for unlicensed possession of a firearm - a banal charge in a country rife with guns - and given bail of 250,000 euro, one of the largest pre-trial release fees ever set in the country.

Now set free, Minic has travelled to London but remains subject to a court case in Belgrade, and convinced that his arrest was directly linked to his tobacco investigations. He remains, too, at the centre of a growing web of intrigue that threatens to weaken a government already in crisis - pitted in a bitter power struggle between federal President Vojislav Kostunica and Serbian prime minister Zoran Djindjic, against whom his allegations are ultimately levelled.

HOWLIN' WOLF.

For a tobacco investigator, Minic is immediately distinguished by his arrogant and threatening manner and his nervous chain-smoking. Constantly fiddling with his lighter, and often dropping cigarettes on the floor, the 37-year-old is by turns boastful and secretive.

In a series of interviews this year with IWPR, and in recent public statements to the Belgrade media, Minic has related tantalising details of his investigations into issues that go to the core of the abuse of power that has marked Serbian authority over the past decade.

Claiming to IWPR reporters to be "the best paid cop in the world", and touting not credible salary figures, Minic worked from early last year on behalf of Forensic Investigative Associates, FIA, with the Serbian authorities investigating funds appropriated by Milosevic. He went on to represent the Geneva-based Japan Tobacco International, JTI, in an investigation into smuggling and counterfeiting in the Serbian market.

FIA is a London-based firm of private investigators, with sister companies in several countries. This spring, Minic was among a group of FIA staff who formed a separate company, Interro Limited, to focus on work in Eastern Europe and the Balkans, taking over the JTI work but retaining close collaboration with FIA.

One of the central charges made by the Belgrade press - firmly denied by Minic and FIA - is that the contracts with Belgrade and with JTI overlapped and thus represented a conflict of interest, which could have allowed Minic privileged access to government information which he allegedly exploited on behalf of his corporate client.

A Serb born in Gostivar, Macedonia, Minic has bragged widely to journalists that he lives in the same building as Kostunica - who is well-known for his down-at-heel personal style. He has also helped to establish an organisation in Belgrade called Treasure, led by representatives of the Orthodox Church and Prince Alexander Karadjordjevic - all close to the president - which seeks to find missing and stolen Serbian art and church relics.

While he is dismissed by some as an "amateur" in dark James Bond-style sunglasses, Minic has demonstrated a capacity to secure agreements with top Belgrade and international officials, and to ferret out key details of the real workings of business in Serbia. "Minic is a very enthusiastic and extremely brave investigator," said John Roberston, customs director for the UN Mission in Kosovo, UNMIK.

SLOBO'S STASH.

Amid the rash of problems facing the National Bank of Yugoslavia, the question of the missing Milosevic funds has been allocated only a small team of internal investigators. As vital as the issue may be - the amount is believed to be up to 10 billion US dollars secreted away through foreign accounts and was the formal reason for Milosevic's arrest a year ago - the investigation is not moving fast.

In a recent interview with IWPR, Minic claimed he approached Djindjic on October 10, 2000 - only five days after the fall of the Milosevic regime - and proposed drafting in the help of experts from FIA. The firm, which employs former senior western officials and law enforcement agents, claims past success in tracking secret accounts belonging to the former Romanian dictator Nicolae Ceausescu and the late Nigerian military leader Sani Abacha.

According to Minic, the contract ultimately signed with the National Bank February 2, 2001, envisaged a three-stage investigation. He told IWPR that FIA was paid £100,000 for the first stage, but that FIA investigators estimated that the entire operation would last up to five years.

FIA presented a ten-page report on the first stage of its investigation in July 2001, detailing its findings to date and outlining its plans for future investigation. The proposal for the second phase, seen by IWPR, estimated a cost of 750,000 to 1.5 million dollars.

The weekly newspaper Nedeljni Telegraf, which is close to Prime Minister Djindjic, claimed Belgrade officials were "not satisfied" with FIA's preliminary findings. According to Mladen Spasic, chief of the Bureau Against Organised Financial Crime in the internal affairs ministry, "At the end of the first phase of investigation, FIA submitted a report and all contact ceased".

The FIA report, which was leaked to the newspaper, did not appear to break new ground in the investigation. An unnamed source at the National Bank criticised the FIA findings as "little better than an average journalistic investigative report".

Mladjan Dinkic, governor of the National Bank of Yugoslavia, declined to respond to IWPR's requests for comment.

Minic has rejected criticism of the quality of the report. He subsequently claimed to IWPR that the authorities had iced the investigation because they actually do not want to find the Milosevic money. In other words, it was a political decision. Although, according to Minic, "foreign governments are simply pushing documents into their hands", Belgrade officials are less than eager to reveal the full extent of the former president's fraud - and perhaps the wider paper trail of culpability it would inevitably reveal.

Minic claims the government delayed six months in actually launching the investigation - claiming they were busy stabilising the country after the "revolution" - and only started when they were forced.

"A meeting in April took place because the Yugoslav and Serbian governments received an ultimatum from Brussels that they won't be able to count on any European Union support if they didn't start an investigation into Milosevic's international bank accounts and make a clear break with his government structures," he told IWPR. At the time, the US government also threatened to cut off all aid if the former president was not arrested. Without this pressure to find the missing funds, Minic said, "the Serbian authorities would be doing nothing".

Minic insists that the first phase was only intended to map out the investigation, and that the British government and the World Bank offered to provide funds to underwrite the research. However, he claims the Serbian authorities never responded to the offer. Indeed, he believes the secret police have all the information about Milosevic's secret bank accounts on file anyway, but did not make this available to FIA.

JAPANESE CONNECTION.

FIA's already cool relations with the authorities deteriorated further when the job of investigating Milosevic's money appeared to overlap with the search for Serbian tobacco smugglers.

Trade in illicit cigarettes runs to billions of dollars a year in Serbia and Montenegro, enriching business and mafia figures throughout the region. Allegations have already been made against Montenegrin president Milo Djukanovic for cigarette profiteering. (See: Milka Tadic-Mijovic, "Djukanovic Threatened by Alleged Mafia Links" Balkan Crisis Report No. 341, June 7, 2002)

"Montenegro has become one gigantic marketplace for smuggled cigarettes," Gunther Herrmann, a German customs investigator, told the Financial Times on August 9, 2002. He estimates that cigarette smuggling into the EU from Montenegro has cost the union 3.4 billion dollars in lost tax revenue in the past two years alone.

The trade has also raised controversial questions about the major international tobacco firms, which were strongly opposed to black-market trading on its brands. However, several American tobacco executives have since pleaded guilty in court to charges of supporting smuggling and other illegal means to expand markets.

In 2001, FIA was approached by JTI, the international division of Japan Tobacco, which was formed in 1999 with the purchase of the international operations of RJ Reynolds. A new company, JTI controls the international sales of such long-established brands as Camel, Winston and Salem and markets the Monte Carlo brand in the Balkans. It sought assistance from Minic and his fellow investigators to track down the production of counterfeit cigarettes being sold under that name in Serbia.

Controversy erupted over the timing of FIA's relationship with JTI, with Nedeljni Telegraf claiming that there was a conflict of interest. FIA, according to the paper, began talking with the Japanese tobacco firm while it was still in a relationship with the Serbian authorities to investigate the Milosevic funds.

Nedeljni Telegraf alleges that this position gave FIA access to information about connections between the illicit tobacco trade and Serbian state institutions. Indeed, this July the paper explicitly questioned whether Minic and FIA's pitch to investigate the Milosevic funds was "only a smoke screen for collecting the information to protect the business of one of the biggest tobacco companies in the world, Japan Tobacco International".

FIA categorically denies this. In a letter to President Kostunica, published this July 17 by Nedeljni Telegraf, FIA stated that the company's contract with JTI was signed in November 2001 - four months after the termination of cooperation with the National Bank of Yugoslavia.

As Jessica de Grazia, Minic's direct boss at FIA and now a director of the new investigative firm Interro which took over the JTI work, insists, "There was absolutely no conflict of interest. The two investigations had nothing to do with each other."

Aside from a public statement explaining the relationship between FIA and the recently formed Interro, current FIA representatives declined to comment for this article.

For his part, Minic complained in the local press about how difficult the cigarette mafia made the conduct of legal tobacco trade. He finally discovered that the Monte Carlo trademark had been registered with the authorities on May 17, 2002, by a Belgrade company called JTI d.o.o., which has no connection to the Geneva-based and Japan-linked JTI.

Currently, kiosks in Belgrade mostly sell a counterfeit Monte Carlo with near identical packaging - as demonstrated to IWPR journalists by Minic - to the original Monte Carlo cigarettes on sale in other countries.

Minic was also able to obtain samples of counterfeit Monte Carlo brand cigarettes which FIA says were seized by Serbian police in Zajecar, eastern Serbia, on May 27 this year. Experts at JTI's Cologne laboratory concluded that these samples were linked to the contingent of 16 containers of fake Monte Carlo cigarettes seized by Slovenian police in Kopar, Slovenia, a week earlier. According to a letter to the Belgrade press from de Grazia, a former Manhattan public prosecutor, the containers were en route to Bar in Montenegro.

These cigarettes, according to Minic's findings, were produced at a factory in Greece - one of at least four tobacco factories in the Balkans believed to deal exclusively with counterfeit cigarettes.

Unravelling the details of the Serbian black-market tobacco trade put Minic in a very sensitive position, as he threatened powerful local interests. According to de Grazia's letter to the media, he started getting threatening telephone calls and receiving emails with the one-word message, "Quit".

Sources within the Serbian judiciary confirm the pressures Minic was facing. "The main cigarette smuggling bosses in Serbia wanted to eliminate Minic and JTI as dangerous competition and, at the same time, to take revenge against him for the things he had said publicly about them," this source told IWPR.

Yet Minic persisted, assisting international efforts to clamp down on Balkan cigarette smuggling. Following a major international conference on the issue held in Pristina this May, Minic worked as JTI's representative to establish cooperation with UNMIK's customs service.

Amid these efforts, at the request of JTI d.o.o., the Belgrade Civil Court, on July 2, granted an injunction against MPC Mercata and Sportcommerc, local distributors for the international JTI, prohibiting it from selling the real brand of Monte Carlo cigarettes on the Serbian market.

JTI wrote on July 19, 2002, to both Kostunica and Djindjic detailing the "deceitful registration" of the Monte Carlo brand name, allowing the Yugoslav market to be "flooded by false cigarettes". Confirming that JTI and JTI d.o.o. have no connection, he called for an investigation and said all relevant materials on the case held by his firm had been turned over to the prosecutor's office.

Through local attorneys Vladimir Bilanovic and Slobodan Ruzic, JTI countered with its own suit against JTI d.o.o. principals Nenad Vajzovic and Rusmir Kadragic, accusing them of unauthorised use of the Monte Carlo trademark to sell inferior quality cigarettes.

IWPR sought unsuccessfully to contact Vajzovic and Kadragic. There is no JTI d.o.o. office at the address listed in the company registration documents, and they could not otherwise be located. Three lawyers who have claimed in the press to represent JTI d.o.o. also could not be reached through their office.

DOWN BY LAW.

On July 18, Minic went public in Serbia's largest-selling newspaper accusing Serbian State Security, and indirectly Djindjic's government, of involvement in cigarette smuggling.

Speaking to Blic daily, he alleged that around two dozen murders committed over the last few years in Serbia remained unsolved as a direct result of struggles within the secret police, where many officers retain direct ties to mafia gangs.

"If it were truly to try to clarify these murders, the state security would expose itself," Minic told the paper. "The murder [in August 2001] of former state security officer Momir Gavrilovic is directly linked to cigarette smuggling, and FIA suspects that the same reasons lie behind the murder [in June 2002] of Bosko Buha, former head of the Belgrade police and head of the Serbian interior ministry's Public Security Sector."

Government representatives have dismissed Minic's allegations. Zoran Zivkovic, federal minister of police and vice-president of Djindjic's Democratic Party, told IWPR, "I don't have any comment and I don't care what he said." The government's official spokeswoman also refused to comment on the allegations.

Yet the authorities have responded to the allegations in another way. On July 24, Minic attended a meeting at Hotel Moskva, in central Belgrade, during which a memorandum of understanding to combat smuggling was signed. Although a Yugoslav customs official who was expected did not show, UNMIK customs official Roberston and JTI representative Denis Mylonas signed the document, which Robertson describes as "a vital weapon" in the effort to bring uncollected customs under control of the state authorities.

Only ten minutes later, however, Minic was arrested. He was travelling with four bodyguards when several special police units swooped upon his car. His bodyguards were members of the Tigers protection agency, founded by the notorious paramilitary leader Zeljko "Arkan" Raznatovic - himself gunned down by unknown assailants in January 2000.

The bodyguards were subsequently released, while Minic's detention was extended on August 1 for another month, though he denied ownership of the pistol that had been the cause of his detention. While Yugoslav law stipulates a penalty of between three months and three years imprisonment for possession of an unlicensed firearm, Serbia's gun culture is infamous and courts usually only pass suspended sentences.

Rejecting any link between Minic and the firearm, and noting the dramatic style of the arrest, Interro is in no doubt as to why its representative was arrested. "We believe individuals who where threatened by the counterfeiting investigation orchestrated the arrest through their official contacts," said de Grazia.

Even when JTI put up the extraordinary 250,000 euro bail, Minic was not released automatically. Despite Municipal Court Judge Zoran Ganic's August 9 decision to accept the bail offer, sources close to the prosecutor told IWPR that they believe associates of the Serbian prime minister Djindjic exerted strong pressure on the prosecutor to appeal against the bail and keep Minic in prison. The Serbian government press office did not respond to IWPR's enquiries on the issue.

IWPR sources close to the state prosecutor's office say that while in detention, Minic was interrogated by the secret police - the same forces against whom he has made allegations of an effective cover-up. Questions were asked about relations with Kostunica and his political party, but there was apparently no evidence of any connection or handover of information against Djindjic to the president's camp.

Minic was finally released on August 14, on condition that he remains available for the completion of the judicial process. "The prosecutor's office behaved strangely but the court made the correct decision," Minic's lawyer, Mihajlo Bakrac, told IWPR.

Minic has since stopped speaking to the Serbian press. Sources at the court confirm to IWPR that, with consent of the court, he has travelled to London. He is due back in Belgrade by September 25 for his trial on charges of possession of a firearm. The defence appears to hope that, lacking evidence to link him to the weapon, charges may be dropped.

Meantime, the local press have continued to stir the controversy, led by the pro-Djindjic Nedeljni Telegraph and, in Montenegro, by the pro-Djukanovic newspaper Publika. They have hit back against Minic with allegations that JTI is in fact the biggest cigarette smuggler in the Balkans, pointing to connections in Macedonia and Kosovo.

In a case not yet highlighted by the hostile Belgrade press, the EU has accused Japan Tobacco Inc., JTI's parent company, of smuggling. When the Japanese company acquired RJ Reynolds' international interests in 1999, it also became a defendant in a lawsuit filed against RJ Reynolds and Philip Morris by the EU, alleging lost customs revenue due to cigarettes smuggled into the union from the Balkans. The case, before the US District Court in New York, was dismissed this March. But a month ago, just five days before Minic's arrest in Belgrade, the EU appealed.

Through a spokesperson, JTI expressed confidence about prevailing in the courts. A source close to the tobacco company said, "When the company was formed it took responsibility for the past, but it is also trying to make a new future. JTI has an active stance against smuggling and a desire to move forward, which is why it has hired private investigators and is also providing support to governments."

All these cases then - of smuggled cigarettes, spirited funds and murdered cops, of a former president, British investigators and a Serbian wolf - continue.

The IWPR research and writing team for this report was led by Gordana Igric, Momir Ilic and Milorad Ivanovic, with Anthony Borden, Alan Davis and Dragana Nikolic Solomon.