Bosnian treasury being looted, European Union auditors say Muslim officials, criminals divert millions of dollars

November 30, 1997|By NEW YORK TIMES NEWS SERVICE

SARAJEVO, Bosnia-Herzegovina -- European Commission auditors say they have uncovered evidence that the Bosnian federal treasury is losing tens of millions of dollars a year to two fraud schemes -- one operated by Bosnian Muslim officials and the other by criminal gangs that are run by Croats and Serbs.

The gangs, diplomats say, operate in league with Bosnian Serb leaders.

The effect has been to channel funds away from the weak federal government and to the rival ethnic leaderships that are keeping Bosnia divided.

The descriptions of fraudulent schemes are made in two reports written by the Customs and Fiscal Assistance Office of the European Commission -- the executive body of the European Union -- and delivered confidentially to senior Bosnian leaders and top international officials.

Copies of the reports were obtained by the New York Times.

One report details a misappropriation by Muslim officials in Sarajevo in which funds meant for the central Bosnian government are diverted to Muslim-only programs.

The other details the workings of criminal rings within the trucking industry who pour vast quantities of goods onto the black market in Bosnia.

Western diplomats said the reported fraud could dissuade donor governments from contributing to the country.

The first report asserts that government officials who are Muslims have imported and sold hundreds of thousands of tons of duty-exempt fuel and other goods through an organization, the State Directorate of Stock, that was supposed to have been disbanded under the Dayton peace agreement.

The second report focuses on Bosnian Croat and Serbian criminal gangs in the trucking industry that move goods from Croatia through border posts controlled by Croatian officials and on into the Bosnian black market.

Pub Date: 11/30/97

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