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Expensive Feasts at Taxpayers Expense

The state and entity agencies have spent at least 19 million KM in discretionary funds in the past three years. Civil servants bought meals, party colleagues’ books, drank alcohol and left tips in bars with the taxpayers’ money.
Expensive dinners and other discretionary spending cost taxpyers millions every year. Some bills offer no explanation. (Graphic: CIN)

Zvonimir Zubac, a former government driver bought his morning coffees at the expense of Bosnia and Herzegovina’s (BiH) taxpayers for more than a month. Instead of buying them with his own money, he submitted coffee receipts as discretionary spending, i.e the costs incurred in the course of business with the goal of establishing good relations with clients.

His receipts of 1.5 KM each are the part of 19 million KM which the state and entity government agencies spent between the beginning of 2010 and the end of 2012.

The records on spending have come from the supreme audit agencies’ publishing of the agencies’ year-end reports.

Reporters from the Center for Investigative Reporting (CIN) in Sarajevo have requested discretionary spending records from 51 government agency as well as their rulebooks that regulate how the funds are supposed to be spent. These account for nearly half of the state and entity agencies whose spending the auditors have reviewed. Of these 21 institutions answered in full, ten answered partially while the rest refused to share their records or failed to respond.

Civil servants bought meals, party colleagues’ books, drank alcohol and left tips in bars under the guise of discretionary spending, the investigation found. The receipts often lacked description of the event and the beneficiaries of the spending.

Morning coffee at budget’s expense

BiH State Regulatory Agency for Radiation and Nuclear Safety (DARNS) has spent more than 33,000 KM in discretionary funds over three years. Among the receipts that CIN reporters pored over were 26 morning coffees of 1.5 KM each.

The receipts originate from Calamus Mo café located in the same building as the Agency. Zubac would sign the receipts in the café and the Agency would pay for them after receiving an invoice.

 Miro Galić
The state auditor Miro Galić said that every government spending should be accounted for. (Photo: CIN)

The agency officials explained that Zubac had a right to discretionary spending because of the nature of his job. He worked at the Mostar-based office as a driver—he also dealt with mail and took care of the guests between Sept. 2011 and Sept. 2012.

Zubac told CIN that his superiors never contested his receipts. He said that sometimes he had a coffee before work with his superior Krunoslav Šaravanja, an inspector for the radiation and nuclear safety.

“We had a perk to drink coffee, juice or treat ourselves with something else”, said Zubac.

CIN reporters found that the inspector also submitted his coffee bills under discretionary spending.

“If you are investigating 1.5 marks and not investigating millions of marks, then you should not have talked to me at all. It’s ridiculous what you’re investigating”, said the inspector.

Miro Galić of the Supreme Auditing Office of BiH Institutions said that such spending should not be filed under discretionary spending. “There can be more than one coffee. Little is an issue here – it’s not a big financial amount, but it speaks more about the use of public money”, said Galić.

The auditors found that other government agencies also used discretionary funds to pay for their employees’ meals. For example, the BiH Parliament spent around 360,000 KM and the Secretary General’s Office of the BiH Council of Ministers spent around 250,000 KM over three years; the Office of the President of the Federation of BiH spent over 130,000 KM during 2011 and 2012. These institutions refused to give reporters access to their bills.

The FBiH President Živko Budimir admitted to CIN reporters that his office used discretionary money to pay for the employees’ meals. Budimir said that this was “a common practice in the institutions” which he rescinded this year.

There is no law governing the spending of discretionary funds. Instead, every government agency draws its own rulebooks. These are not consistent in terms of the right to use discretionary funds, the amount of money at their disposal and other things. The funds can be used internally for meetings within the institution or externally for restaurants outside of the institution.

A monthly amount disposable for discretionary spending depends on rank. For example, the heads of departments at the BiH Ministry of Communication and Traffic have 40 KM, while the director of the BiH border police has 5,000 KM a month at his disposal. The director of the State Investigation and Protection Agency can use discretionary funds as they wish.

Duško Šnjegota
Duško Šnjegota, the Chief RS auditor, said that a solution might be setting clear guideliness for discretionary spending. (Photo: CIN)

In some agencies only the top officials are entitled to discretionary spending, such as the director of Republic Administration for Geodetic and Property Affairs. Some other institutions would entitle two persons as is the case with the heads of the cabinets of two vice-presidents of the Federation of BiH, while at the Republika Srpska Presidential Service all employees are entitled to discretionary spending.

5,000 KM worth of Dodik—the Guardian of Srpska

The reporters found that government agencies bought their party colleagues’ books with discretionary funds. Some have never been given away.
The Republic Administration for Geodetic and Property Affairs has spent 5,000 KM on books titled “Dodik, the Guardian of Srpska“. The book chronicles the political career of Milorad Dodik, the president of Republika Srpska (RS) and one of the founders of the Alliance of Independent Social Democrats (SNSD). The Administration’s former director Tihomir Gligorić said that he did not buy the book because of Dodik, or the party to which he belonged as well, but because of its content.

He said that the book talks about the concept of a single database of real-property and this was the reason why he bought it. “There are the books about Milorad Dodik which I did not want to buy, but there where it says that, this one I bought”, said Gligorić. CIN reporters could not find “the single database of real-property” nowhere in the book.

Auditors of The Supreme Office for Republica Srpska Public Service Auding wrote in their report that they were not convinced that this was the literature relevant to the Geodesic Administration’s mission.

Svetozar Pudarić, the FBiH vice-president and a member of Social Democratic Party (SDP), approved the purchase of the books written by Mirko Pejanović, Ivan Cvitković and Tatjana Ljujić-Mijatović worth over 3,000 KM. They are members or advisors of the party.

Pudarić told reporters that he bought books for the FBiH universities’ libraries. However, CIN reporters could not find any records of the books being given away. Pudarić said that there was no record keeping on this.

Among the bills filed under discretionary spending at Pudarić’s office was a telephone paid 417 KM. The records have it as gift, but instead Pudarić uses it as his official phone. He told reporters that it was a bargain and that he had no money in the budget for procurement of equipment. This is why he had the words gift printed over the bill so he could account for it under discretionary spending. “It was bought and paid legally. Whether this is ethical or not is another matter”, said Pudarić.

The FBiH auditor Munib Ovčina said that during the audit his office came across bills that could not be filed under the discretionary spending. He said that this was the easiest way to justify expenses because discretionary spending is considered to be a perk that can be used without having to account for it.

Svetozar Pudarić
A vice-president of the Federation of Bosnia and Herzegovina Svetozar Pudarić signed off on the procurement of a book titled Garden Architecture of Bosnian Courtyards written by his party colleague Tatjana Ljujić-Mijatović. (Photo: CIN)

Snacks, dinners and alcohol

BiH taxpayers paid 850 KM for a private party that Milomir Amović, deputy president of the BiH Commission for Concessions, organized after receiving his Ph. D. honors from the University of Business Studies in Banja Luka in Oct. 2010. He had a snack at a Banja Luka restaurant My Way for his colleagues that had been present at his prospectus defense. The invoice was sent to the Commission.

Along with the invoice was an explanation that 32 persons from ministries, public companies, banking and non-government sector, as well as from the University in Banja Luka, attended the reception.

Asked by CIN reporters why he did not treat his colleagues with his own money Amović said: “Because I paid for the dissertation. This was not just for me, but it was a little broader”. He said that the dissertation about public and private partnership was a promotion of something new in this region.

CIN reporters noticed that there was often no explanation accompanying the bills that named the event and the beneficiaries of discretionary spending.
“I told you and I told the auditors that these things of who dined with whom will not be revealed – there was a dinner with somebody we think was worth it”, said Erdal Selmanović, the head of the Office of the FBiH Vice-president Mirsad Kebo, whose office has spent over 86,000 KM in the past two years.
Kebo’s office did not allow the CIN reporters to look into the bills, but the auditors found that the bills were often made on the weekends and that money was spent in a Sarajevo disco Basement and Coloseum Casino without an accompanying explanation.

Selmanović said that there were dinners in those buildings but he refused to reveal more details.

There is little explanation on a bill from the BiH Ministry of Traffic and Communication originating from the East Sarajevo restaurant Toplik last year. Of the bill amounting to 1,232 KM nearly 700 KM was spent on alcohol. The then minister Rudo Vidović had a lunch with the representatives of the Communications Regulatory Agency BiH. Even though it was written that eight persons were present, the bill indicates 11 main courses and 14 vine bottles as well as other alcohol drinks. The lunch ended at 22 hours.

In his letter to CIN, Vidović said that alcohol beverages where allowed on business dinners and that the minister or his deputy were entitled to invite persons who were not originally planned.

Živko Budimir
The office of the president of the Federation of BiH Živko Budimir spent more than 130,000 KM in discretinary funds over two years. (Photo: CIN)

When the RS Minister of Family, Youth and Sport Nada Tešanović organized a lunch worth 558 KM with youth from Doboj in Oct. 2011, the bill listed 26 beers, three bottles of vine and 20 glasses of spirits. The bill did not indicate how many people were present and the stated reason for the meeting was that the ministry wanted to find out how it can help youth.

Tešanović did not make time to speak with the reporters.

The auditors say that there are no special rules regarding alcohol. They say that alcohol is tolerated when it comes to meetings with foreign delegations, but that domestic guests should be served coffee or bottled water.

“It’s a far cry from discretionary spending”, said the Chief RS Auditor Duško Šnjegota.

The FBiH Ministry of Finances has a receipt for a 2010 lunch at a Sarajevo restaurant Fellini. There is no telling who took part in it and on what occasion. The bill amounted to 302.5 KM plus 27.5 KM worth of tip tallied to 330 KM.

Vjekoslav Bevanda, the chairman of the BIH Council of Ministers, was at the head of the ministry at the time.

Bevanda did not find time to meet with reporters, but his assistant Amela Mulavdić said that he did not believe that there was a tip and that he was not sure that it was his bill.

That year the ministry spent 40,511 KM in discretionary funds outside of the Office. A rulebook entitled the minister or a person he authorized to dispose of those funds.

Damir Mehmedbašić of the Center for Advocating Civil Interests (CPI), a non-governmental organization that analyzes public spending said that government should account for each and every bill because this money belongs to BiH taxpayers.
“Every day we contribute a mark or two here for this or that one (in need), while those we have elected live lavishly at our expense”, he said.

Parlament BiH
The BiH Parliament and the BiH Council of Ministers do not allow for an inspection of their discretionary records. They have spent more than 600,000 KM over three years. (Photo: CIN)

Humanist from the budget

The officials supported humanitarian causes with discretionary funds. The RS Ministry of Family, Youth and Sport has among other things bought 200 KM worth of tickets for a humanitarian match to help Kosovo Serbs. The match between the football clubs of Borac and Trepča took place in the Banja Luka sports hall of Borik on Dec. 2011. The ministry also supported Monastery of the Virgin with Three Hands in Donje Budačko near Karlovac in Croatia with a purchase of 750 KM worth of tickets for their humanitarian concert in 2011.

There is no explanation as to who used these tickets.

The FBiH Vice-president Kebo told the CIN reporters that he responded to a request a girl with special needs made during his visit to a psychiatric clinic Jakeš near Modriča. He bought her a make-up. When reporters asked him why he did not pay for it with his own money, Kebo replied:

“From my own pocket?! I beg your pardon. You are wrong. I went there in the role of the FBiH vice-president …Why would I deny my children for 1,600 KM?!”

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