A foreign financial partner did not save Elektrobosna

Photo: CIN

The Board of Directors of Elektrobosna unanimously accepted New East Co Limited as their future foreign partner on May 14, 1998, because, they said, it was a successful London company with which they had a long and positive experience. New East was to help rebuild Elektrobosna to its prewar glory.

However, British company registration records show that New East, in fact, was set up only six days before that meeting.

Federation of Bosnia-Herzegovina financial police investigations found that while the firm promised to put 21 million KM into the financially ailing Elektrobosna, it actually put in only about 4 million.

It got even that 4 million out of Elektrobosna sales revenue, investigators have charged.

Financial police, MUP FBiH and prosecutors in Srednjebosanski Canton have all opened investigations into Elektrobosna including the relationship with New East. No charges have resulted to date.

The Center for Investigative Reporting in Sarajevo (CIN) tried to find out who actually owns New East, but instead found a series of holding companies that effectively hide owners.

New East Co Limited is owned by the almost identically named New East Group Limited located in St. Vincent and the Grenadines, according to documents obtained from the UK register of companies. It shares the same suite as another company that registers companies — a Liechtenstein firm specializing in trusts. As in many Caribbean countries, company owners in St. Vincent are not identified.

Zvonko Matijaš, a Split economist who knew top officials in Elektrobosna even before he became a major shareholder in it himself, said he represents New East. Asked about the owners, Matijaš referred CIN reporters to Karen Milliner.

Milliner is listed in corporate records in London as the only director for New East Co Limited. She also appears on the board of Glassmill Limited, a company in the business of registering companies, which shares the same address as New East. She is a director as well of some 67 other companies, all registered by Glassmill Limited.

When called, Milliner said she knew nothing about the New East or its owners and referred CIN reporters to Matijaš.

“I’m literally just someone in the UK to comply with the Companies Act. We have to have a director over here and they appointed us to act as the director,” Milliner said. “There is nobody in charge in the UK. I have no idea. You have to ask him; he knows.”

The search for foreign investment for Elektrobosna started in November 1997 when a tender was published in Slobodna Dalmacija in Split asking for a foreign partner interested in ferrosilicon production facilities.

However, investigators discovered that company records show the board of Elektrobosna didn’t even discuss issuing a tender until December, a month after it appeared in the newspaper. Financial police are investigating whether company documents were forged or doctored.

New East was selected in May of 1998 and in June Elektrobosna and New East formed a joint company called Elektrobosna-N. New East was to get 30 percent of the joint venture in exchange for an infusion of cash. Since then, New East has come to control 60 percent of the firm. This has happened because courts have confirmed its contribution to the partnership even though financial police say payments were never made.

Matijaš said New East was set up by Newco AG, a large Swiss mining company, but offered no proof. Milorad Škrbić, another major shareholder of Elektrobosna, said he was unaware of Newco’s role. Škrbić was involved in sales to Newco, a major pre-war buyer for Elektrobosna. After the war, Newco continued buying and gave money to help restart production — until it went out of business. Swiss corporate records show that Newco AG was in liquidation during much of the time New East has been operating.

While legal authorities sort out the story of New East and Elektrobosna, the Ministry of Foreign Affairs and Economic Relations continues to give good publicity to the firm.

The ministry’s website lists New East as one of the most successful foreign investors doing business in BiH.