Former Serb leader accused of avoiding taxes Karadzic's monopoly on gasoline, goods angers international donors


BANJA LUKA, Bosnia-Herzegovina -- The former Bosnian Serb leader Radovan Karadzic, who has been indicted on charges of war crimes, oversees a monopoly on the sale of gasoline, cigarettes and other goods in Serbian-controlled Bosnia that earns him millions of dollars while depriving the government of tax revenues, Western diplomats and Bosnian Serb officials say.

These officials say that Karadzic controls the monopoly through two companies he runs behind the scenes with Momcilo Krajisnik, the Serbian member of the three-man Bosnian presidency.

The companies' documents do not list either man, and Krajisnik has denied any personal gain from business activities in the Serbian enclave. But Bosnian Serb officials insist that the two run the companies to enrich themselves and their loyalists in the security forces at the expense of Serbian-controlled Bosnia and Bosnia as a whole.

The monopoly has angered international donors, who say the enclave has become little more than the two men's private fief. And many diplomats are smoldering at Karadzic's continued defiance of calls for him to relinquish power, as required under the 1995 Dayton peace accord.

Shortly before the Bosnian elections last fall, Karadzic agreed under intense international pressure to step down from the leadership of the Bosnian Serb enclave and his Serbian Democratic Party. But his forced retirement from office apparently did little to diminish his actual grip on power or his influence within the party.

Bosnian Serb officials express resentment that the companies' income is taxed by neither the joint Muslim-Croat-Serb administration nor by the local Bosnian Serb government. This is money, they say, that should be used to finance schools, hospitals and government offices.

Especially upset is Karadzic's successor as president of the Bosnian Serb enclave, Biljana Plavsic, who has seen her authority undercut as revenue from these enterprises has gone to buy the loyalty of the Bosnian Serb police.

"The state has no control over the economy," Plavsic said in an interview in her office in Banja Luka. "Some private persons are making a lot of money behind the scenes and should be obliged to pay the state. I have given the order to investigate this, but unfortunately certain institutions, including the police, are involved.

"This monopoly does not just include cigarettes and gasoline, but extends to things such as building materials and cattle," she said. "Things are not being done correctly. If we can't raise taxes, we have no future. We can't hope to survive."

Karadzic and senior members of the police and Serbian Democratic Party have long used the conflict in Bosnia to make money. In 1993, Karadzic started a company called Centrex, which, with the protection of the police and the party, secured exclusive rights to import and sell a variety of goods -- from gasoline and cigarettes to livestock and construction materials -- in territory controlled by the Bosnian Serbs, senior Bosnian Serb officials say.

In 1996, along with the Ministry of the Interior in Serbian-held Bosnia, he formed a second company, Selkt-Impex, which maintains a branch office in Cyprus under another name. It also handles some gasoline and cigarette imports but was set up expressly to supplement the salaries of the Bosnian Serb police, whose basic wages are still paid by the Serbian-dominated Yugoslav government, these officials said.

"The bonuses paid to the Bosnian Serb police, all of whom work directly for Mr. Karadzic, come from the profits made by these two companies," a senior Bosnian Serb official said. "We have documents from the companies, and neither list the name of the owners. But we know Karadzic and Krajisnik run them. The police effectively block any other companies from doing business in Serb-held Bosnia. It's a big protection racket."

Plavsic has privately protested to Karadzic and Krajisnik and has threatened to make the deals public, those close to her say but, out of fear for her personal safety, has not done so. Her statements in a recent interview were her strongest public condemnation of these commercial arrangements, but even so she stopped short of attacking the two men by name.

Because of her opposition, Plavsic has effectively been isolated from public life and has little authority in the enclave she supposedly heads.

Cigarettes are imported from Cyprus, Albania and Montenegro to Serbia, Bosnian Serb officials said. From there, they are

trucked into Serbian-held Bosnia. Gasoline is also trucked in over the Serbian border.

Last year, the Bosnian Serb government obtained permission from the NATO-led peacekeeping force to fly in three cargo planes from Cyprus loaded with "humanitarian supplies." But when NATO peacekeepers carried out a routine inspection of the cargo, they found the holds crammed with cigarettes. The cigarettes were confiscated.

Karadzic is wanted on two counts of genocide by the international war crimes tribunal at the Hague, and the NATO-led peacekeeping force says it will arrest him if its troops can find him. But he reports almost every day to the Famos factory in the mountain town of Pale, where he has his office, his presence easily given away by the bodyguards who secure any building he frequents.

Meanwhile, as skilled workers abandon the Bosnian Serb enclave, unemployment runs at 90 percent, and international aid is denied because of violations of the Dayton peace agreement, Karadzic and his associates are salting away large sums of money, most in Cypriot offshore accounts, senior Bosnian Serb officials and Western diplomats said.

"We are unable to raise taxes on anything sold in the Serb Republic," Plavsic said. "The state gets nothing, while those that control this gray economy get everything. It's not right."

Pub Date: 4/06/97

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