Political Parties on Trial

The leading Bosnian political parties pay off bills neither to business partners nor to the state and no court verdict guarantees payment of debt.

Often only after suing the political parties would the private and public companies or government agencies receive what they were owed. Photo by CIN

Leading parties in Bosnia and Herzegovina (BiH) often avoid paying for utility bills, fees to the broadcasting corporation, printing and other services to private and public companies or government agencies. Even though they should be an example of the timely payers, they often pay only after being sued and subjected to court rulings. Even then, some companies receive just part of what they’re really owed.

Over the past 11 years, BiH courts have heard at least 158 proceeding against eight parties, according to data collected by The Center for Investigative Reporting in Sarajevo (CIN).

The most lawsuits, 33, have been filed against the Party of Democratic Action (SDA), followed by 25 against the Alliance of Independent Social Democrats (SNSD), 23 against the Serb Democratic Party (SDS), 17 against the Party of Democratic Progress (PDP), 16 against the Party for BiH, 15 against both the Socialist Party of Republika Srpska (SPRS) and the Croatian Democratic Union (HDZ) and 14 against the Social Democratic Party (SDP).

The proceedings represent at least 3.3 million KM in unpaid debt. More than two-thirds represents SDS debts (1.8 million KM), while among the biggest debtors are SDA (550,000 KM) and the Party for BiH (450,000 KM). With regard to 66 litigations the courts have not responded to CIN”s request.

Parties are often sued because of unpaid utility bills, printing of campaign materials or rent for business premises.

Party representatives who talked to CIN said parties do not have a centralized financial system, meaning little oversight over spending by their branch offices. Also, it happens that the parties do not have enough money to meet obligations.

“It is unacceptable and it is not good that the parties that are financed from the budget and have substantial revenue (…) create obligations that they cannot service,” said Salem Halilović, a member of the Presidency of the Party for BiH, third-ranked in terms of debt.

One fifth of the lawsuits filed have been to collect payments for bills under 500 KM.

In July 2005, BH Telecom sued the Municipal Board of SDA Cazin because of an 18 KM debt. The debt was paid only after the company’s lawsuit.

Indebted to the State

State agencies and companies have filed at least 105 lawsuits against the parties.

The value of the biggest of these lawsuits was 96,753 KM. In 2000, Hidrogradnja Pale filed a lawsuit against SDS because of unpaid rent on offices in Pale and for the costs of accommodation and food in a Jahorina hotel.

After the District Court of Eastern Sarajevo annulled the first-instance verdict of the Sokolac Basic Court–by which the party had to pay back its debt with interest—the case was returned to the lower court. The debt was settled in 2005.

The office of Attorney General of Federation BiH (FBiH) filed a lawsuit in March 2010 against SDA for unpaid bills to the tune of 54,280 KM for rent and utilities between August 2008 and December 2009. SDA rented 328 square meters from the Joint Service of the FBiH Offices and Bodies at Maršala Tita 9a in Sarajevo.

Amir Zukić, SDA secretary general, said that the party used less space than was specified by the contract and did not want to pay the full amount and also that the party did not know who owned the premises.

The case is ongoing.

SNSD, the leading party in the RS, was sued 18 times for failure to pay a fee to the entity broadcasting corporation.
Photo by CIN

Because of unpaid rent for premises at the same address, the Joint Service started proceedings against four minor parties as well. There has been a ruling so far only in the case of Liberal Democratic Party, who must pay a debt of nearly 50,000 KM.

Because of unpaid tax to the entity broadcasting corporations, the leading eight parties were sued 38 times. Most suits, 18, were against SNSD.

Campaign “Free of Charge”

Parties spent a lot in election years and it was not rare that they remained in debt to printing presses and other companies that had manufactured campaign material. Due to unpaid services during campaigns, SDA and Party for BiH were sued five times and SDS three times.

The Party for BiH owed the most– more than 420,000 KM—to printers. A Sarajevo company Birograf sued for unpaid bills related to 2002 campaign material among other things—asking for 376,000 KM. The case was settled in 2004 for 200,000 KM.

CIN tried to get in touch with the owners of Birograf. Even though it has never been deleted from the Register of Craft Businesses, it could not be found at any of its official addresses.

The Party for BiH owed nearly 30,000 KM to Dom Štampe, a state-owned company in Zenica, for the election materials provided between 1998 and 2006. The two sides settled for half that amount but meanwhile, the company went into receivership.
Photo by CIN

“In the hoopla of the election campaign people fall prey to the excitement in the expectation of the results, and probably the financial mind strays and people stretch themselves more. They think that they’ll have more success if they spend more on the advertising material”, says Halilović.

A state-owned company Dom Štampe from Zenica also sued the party in 2007 for 30,000 KM of debt for unpaid election materials provided between1998 and 2006.

They settled in 2009 for a little less than half.

According to Goran Bojanović, Dom Štampe’s lawyer, they could not get the rest because previous management failed to file a lawsuit on time.

“There was a symbiosis of politics and those who had managed those companies, including Dom Štampe. They did not dare, probably, to sue…” said Bojanović.

The company went bankrupt.

In December 2009, Sarajevo-based Europlakat sued SDA for 300,000 KM, because of the unpaid bills for renting advertising space and putting up advertising material during the campaign for the 2008 municipality elections.

Zukić said that the SDA has balanced a part of its debt, but for an amount that did not match Europlakat’s reckoning. He said payments had been delayed in the past but this time the company’s new management went to court.

Following the 2008 elections, SDA failed to pay 300,000 KM it owed to Sarajevo-based Europlakat. A portion of debt was settled after a lawsuit.
Photo by CIN

Nijaz Gracić, Europlakat’s director, did not want to talk about an ongoing case.

Sabiha Šaćirbegović, owner of the Bigraf company in Bihać, said that the parties make promises during campaigns difficult to cash in on later, especially if they lose. Bigraf was owed by the Party for BiH and SDA following the election campaign. The SDA paid its debt as a result of the lawsuit.

The Biggest Lawsuit

Although under liquidation, Commercial Bank of Eastern Sarajevo has been fighting SDS for six years now to get 400,000 KM plus 1.2 million KM of interest on a loan taken out on the eve of 1998 elections.

In November 2005, the basic court in Eastern Sarajevo found in its ruling that the bank gave a loan to DP Spekta company established by SDS. This company had no assets, employees or office. According to the ruling, the loan was to finance the party’s election campaign.

The verdict was upheld by the District Court in Eastern Sarajevo in February 2006.

The party later appealed to the RS Supreme Court which in November 2008 threw out the earlier rulings with the explanation that an earlier law was in force at the time, according to which those accountable for the company’s debts were the Board of Directors and the Supervisory Board, and not the company’s founder. In other words, SDS.

Currently, the case is before the Constitutional Court of BiH at the request of the bank.