Bosnian corruption cost as much as $1 billion

Investigation shows losses of public, international aid funds for rebuilding

August 17, 1999|By NEW YORK TIMES NEWS SERVICE

SARAJEVO, Bosnia-Herzegovina -- As much as $1 billion dollars has disappeared from public funds or been stolen from international aid projects through fraud carried out by the Muslim, Croatian and Serbian nationalist leaders who keep Bosnia rigidly partitioned into three ethnic enclaves, according to an exhaustive investigation by an American-led anti-fraud unit.

The anti-fraud unit, set up by the Office of the High Representative, the international agency responsible for carrying out the civilian aspects of the Dayton peace agreement, has exposed so much corruption that relief agencies and embassies are reluctant to publicize the thefts for fear of frightening away international donors.

The report names several officials linked to the governing nationalist parties as profiting from the fraud. Even though the Office of the High Representative has dismissed 15 officials or prevented them from holding office, most retain their authority.

In one incident mentioned in the report, 10 foreign embassies and international aid agencies lost more than $20 million deposited in a Bosnian bank, but only the Swiss Embassy has publicly acknowledged its losses.

The anti-fraud unit, which requires special security measures and does not make public who is working for the organization in Bosnia, is investigating 220 cases of fraud and corruption. It documents the current cases in a 4,000-page report that has not been released to the public. Its contents were made available to the New York Times.

Organizations as diverse at the Office of the High Representative, the United Nations and the U.S. Agency for International Development, all dedicated to rebuilding the country, have lost tens of millions of dollars, the report says.

The widespread corruption is viewed by many here as a severe blow in the long, frustrating struggle to build a democratic Bosnia, a country that has received $5.1 billion in international aid since the end of the war in 1995. The corruption has also played a pivotal role in driving away foreign investment, seen as the only way to free Bosnia from dependence on foreign assistance.

The missing funds were supposed to have been used to rebuild Bosnia's roads, buildings and schools, as well as to provide municipal services in towns throughout Bosnia.

Alija Izetbegovic, the Bosnian president, along with other senior nationalist leaders, has dismissed the allegations of official corruption made by the international investigators. While conceding that corruption takes place, the president disputes the scale of the charges, denying that as much as $1 billion dollars has been misappropriated.

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