Bosnian Anti-corruption Law Falls Foul of Nationalists

Bosnian opposition parties are angry that the internationally appointed authority in the country has refused to support what they say is a crucial law aimed at cutting down corruption, tax evasion and money laundering.

They say the lack of legal provisions enabling courts to seize illegally acquired property and other assets is costing the state millions of euro in lost money.

Although they presented a draft law on the seizure of illegally obtained assets almost 18 months ago, the ruling nationalist parties have refused to adopt it and the office of the High Representative, OHR, under Lord Ashdown, has also held aloof.

The scale of the problem is not seriously disputed. Studies by international and legal experts over several years have shown that huge amounts of money are lost to the government every year through money laundering, embezzlement, tax evasion and the illegal acquisition of property and other assets.

Only this year, studies pointed to the extent to which organised and economic crime structures are damaging the country's coffers.

They pointed out that while Bosnia has received huge financial donations over the past decade, including more than 5 billion dollars in aid from 1995 to 2000, little of this investment is visible on the country’s shabby streets, or in the life-styles of the poverty stricken population.

The OHR has also admitted that several billion convertible marks, KM, the Bosnian currency, earmarked for social spending had ended up in private hands in the past few years.

In Bosnia’s reconstruction sector alone, about 74 million KM are embezzled every year, according to Transparency International, a respected anti-corruption watchdog.

The Customs and Fiscal Assistance Office, CAFAO, says another 1.2 billion KM, which is more than the annual budget of the Federation – Bosnia’s larger entity - is lost to the government each year through scams such as fake companies, or companies registered in the name of dead people.

This corruption has more than purely economic consequences. An efficient fight against organised crime and corruption is one of 16 conditions set by the European Commission if Bosnia is to get a green light for a Stabilization and Association Agreement, SAA, a key stage on the road to EU membership.

The establishment of a special legal department for tackling organised and economic crime and corruption marked a first step by the courts to bring the criminals to justice.

But this initiative has proved insufficient. While the department has launched many court cases, only a few people have been sentenced. Additionally, those who were convicted and sentenced have usually retained ownership of their illegally acquired assets through legal loopholes.

Legal experts say the courts have been unable to remedy this basic deficiency because they lack a specific law that would entitle them to requisition such assets.

"We sorely need a law that would allow the seizure of illegally acquired assets," Transparency International's spokesperson, Srdjan Blagovcanin, told IWPR. "It could be a very efficient way to combat organised crime and other acts of crime."

The existing regulations in Bosnia on the issue are either ignored, unexplored or are not used efficiently.

For example, the country is a signatory to the Council of Europe convention on money laundering, obliging the authorities to seek out and confiscate property acquired through crime. But the obligation is rarely implemented.

Similarly, the new Bosnian criminal code states, "No one can retain illegally acquired property." But, in the two years since that law has been in place, only 500,000 KM of such assets have been seized in a handful of cases.

Lawyers say the existing regulations are not sufficient and that the lack of a precise law on the matter is a hindrance.

"If we had the legal possibilities to act, we could seize 5 million euro of assets in real estate and cash from just one man now under investigation," a source close to the Bosnian judiciary told IWPR.

The source added, "We know that this man can't prove the origin of his property but it's hard for us to prove this under the current regulations."

Several European countries possess special guidelines or laws designed to ensure that illegally acquired assets do not remain in the hands of the people who have been found guilty of committing crimes.

With this in mind, opposition parties in the Bosnian state parliament put forward draft legislation based on an existing law in Ireland, which would have set up a special agency to receive assets acquired through criminal activities.

If the owner was found unable to establish a legal title to the property, the law would permit the agency to retain control and assess its value. It would then decide how to use the money or property and whether to sell it.

The Socialist Democratic Party, SDP, the Alliance of Independent Social Democrats, SNSD, and the National Croat Initiative, NHI, presented the draft law to the Bosnian parliament in late 2003.

"We wanted to secure a tool that would help the fight against one of the greatest evils facing [Bosnia] today - crime and corruption," Jozo Krizanovic, head of the SDP group in the Bosnian assembly, told IWPR.

"Before we proposed the law and the forming of the agency, we reviewed one of the annual reports on the work of the state prosecutor, which said the prosecution had processed some 30 acts of crime and seized just over 50,000 KM under the (current) rules.

"We noted that even when a crime was dealt with and the perpetrators sentenced, their property remained in their hands. It is in the interest of citizens for those assets not to remain in the hands of the people who acquired it in an illegal manner."

The proposed reform has got nowhere, though. It was rejected twice by deputies of the governing nationalist parties, namely, the Party of Democratic Action, SDA, the Serbian Democratic Party, SDS, and the Croatian Democratic Union, HDZ.

"The reaction in parliament from the ruling parties was very negative even before they looked at the law," Krizanovic said. They said this law was not needed because there were other laws that enabled the same thing. Some said it recalled the “dark days of the previous [communist] system”.

The SDA’s Mirsad Ceman, chair of the Constitutional Legal Commission of the Bosnian Parliamentary Assembly House of Representatives, said the failure to adopt the proposed law was "not a catastrophe".

Cerman rejected the need to adopt this or any similar law, insisting that the existing laws afforded ample possibilities for the courts to combat crime and corruption.

Even when reminded that the state prosecutor himself this year told parliament of the need to adopt such a law, Cerman remained adamant.

The state prosecutor, he said, had "voiced a political, not an expert, stand".

"Obviously, the people who made the proposal think they are the image of honesty while all the others are the image of thievery. I say that there are thieves…among both," he went on.

After the ruling parties refused to budge, the opposition sought support from the OHR. Their initial hopes were high. The previous High Representative, Wolfgang Petritsch, prior to leaving, had drafted a document entitled Work and Justice, which concluded that the authorities "have to draft and adopt a law which orders the seizure of assets acquired through acts of crime".

But the current High Representative, Paddy Ashdown, has refused to take the same stand. Sources close to the OHR say this is partly because the OHR prefers to have its own legal team drafting laws, which it then imposes.

However, a second reason may be that most of the existing laws, which the prosecution complains about, have been imposed or drafted by people that the OHR itself engaged.

When the OHR did voice an opinion on the draft law, it demanded major changes and amendments.

For example, the OHR wanted changes to the part of the law that stated that it would be enough for the state to keep illegally obtained assets if the owner could not prove their legality, rather than requiring the state prosecutor to prove their criminal origin.

When the initiators of the law declined to change this section of the wording, the OHR refused to give its support, saying that adoption of a law like this would be "premature".

This decision by the OHR went effectively in favour of the ruling parties and their refusal to adopt the law or give it another hearing.

To Cerman, a leading opponent, the arguments that many European countries have such laws and agencies is no reason for Bosnia to follow suit.

"Nothing can convince me that we need this law," he said. "All of this is aimed at creating political tension."

Nidzara Ahmetasevic is a freelance journalist based in Sarajevo and a regular IWPR contributor