Milosevic and his cronies stand accused of plundering
Serbia's wealth - both pecuniary and natural. Yet, the
media tends to confuse three modes of action with two
diametrically opposed goals. There was state sanctioned
capital flight. Gold and foreign exchange were smuggled
out of Yugoslavia and deposited in other countries. This
was meant to provide a cushion against embargo and
sanctions imposed on Yugoslavia by the West.
The scale of these operations has been wildly over-
estimated at 4 billion US dollars. A figure half as big is
more reasonable. Most of the money was used
legitimately, to finance the purchase of food, medicines,
and energy products. Yugoslavia would have frozen to
death had its leaders not have the foresight to act as they
did.
This had nothing to do with party officials, cronies, and
their family members enriching themselves by "diverting"
export proceeds and commodities into private accounts in
foreign lands. The culprits often disguised these acts of
plunder as sanctions-busting operations. Hence the
confusion.
Thirdly, members of the establishment and their relatives
were allowed to run lucrative smuggling and black market
operations fuelled by cheap credits coerced out of the
dilapidated and politicised "banking" system.
As early as 1987, a network of off-shore bank accounts
and holding companies was established by Serbia's
Communist party and, later, by Yugoslavia. This frantic
groping for alternatives reached a peak during 1989 and
1991 and after 1992 when accounts were opened in
Cyprus, Israel, Greece, and Switzerland and virtually all
major Yugoslav firms opened Cypriot subsidiaries or
holding structures. Starting in 1991, the Central Bank's
gold (and a small part of the foreign exchange reserves)
were deposited in Switzerland (mainly in Zurich). A
company by the name of "Metalurski Kombinat
Smederevo - MKS" (renamed "Sartid" after its bogus
privatisation) was instrumental in this through its MKS
Zurich subsidiary. MKS was a giant complex of metal
processing factories, headed by a former Minister of
Industry and a Milosevic loyalist, Dusko Matkovic. The
latter also served as deputy chairman of Milosevic's party.
The lines between party, state and personal fortunes
blurred fast. Small banking institutions were established
everywhere, even in London (the AY Bank) and
conducted operations throughout the world. They were
owned by bogus shareholders, out of the reach of the
international sanctions regime.
When UN sanctions were imposed in stages (1992-5), the
state made sure its export proceeds were out of harm's
way and never in sanctions-bound UK and USA banks.
The main financial agent was "Beogradska Banka" and its
branch in Novi Sad. In a series of complex transactions
involving foreign exchange trades, smuggled privatisation
proceeds, and inflated import invoices, it was able to stash
away hundreds of millions of dollars. This money was
used to finance imports and defray the exorbitant
commissions, fees, and costs charged by numerous
intermediaries. Yugoslavia (and the regime) had no choice
- it was either that or starvation, freezing and explosive
social discontent.
Concurrently, a massive and deeply criminalized web of
smuggling, illegal (customs-exempt) imports, bribe and
corruption has stifled all legal manufacturing and
commerce activities. Cigarettes through Montenegro,
alcohol and oil through Romania, petrol, other goods
(finished and semi-finished) and raw materials from
Greece through the Vardar river (Macedonia), absolutely
everything through Croatia, drugs from Turkey (and
Afghanistan). UN personnel happily colluded and
collaborated - for a fee, of course. The export of
commodities - such as grain or precious metals (gold,
even Uranium) - was granted in monopoly to Milosevic
stalwarts. These were vast fiefdoms controlled by a few
prominent "families" and Milosevic favourites. It was also
immensely lucrative. Even minor figures were able to
deposit millions of US dollars in their Russian, Cypriot,
Lebanese, Greek, Austrian, Swiss, and South African
accounts. The regime leaned heavily on Yugoslav banks
to finance these new rich with cheap, soft, and often non-
returnable, credits. These were often used to speculate in
the frenetic informal foreign exchange markets for
immediate windfalls.
The new Yugoslav authorities are likely to be deeply
frustrated and disappointed. Most of the money was
expended on essentials for the population. The personal
fortunes made are tiny by comparison and well-shielded
in off-shore banking havens. Milosevic himself has almost
nothing to his name. His son and daughter may constitute
richer pickings but not by much. The hunt for the
Milosevic treasure is bound to be an expensive, futile
undertaking.