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Politicians Neighbors at Other People’s Expense

Connections with political parties in some cases guaranteed a way to solve housing issues. Such examples can be found in Banjaluka, Sarajevo and Mostar. Real property is bought with money from public revenue. While some cases ended up in court, others are waiting for prosecutors to act on them.
Akademika Ivana Zovke building Photo by CIN

Several of the former and current members of the party Croatian Democratic Alliance of Bosnia and Herzegovina (HDZ BiH), apart from the professional are also connected with good neighborly connections. They have occupied three buildings on a block in Mostar at the addresses of Academic Ivan Zovko, Bishop Buconjić and Anto Starčević. Their apartments were partly or entirely bought by taxpayers’ money. We are talking about at least 21 apartments paid with at least 3.5 million KM.

The controversial real properties in this Herzegovina city were paid for at the end of the 90s or in the beginning of 2000s when the Federation government was led by Edhem Bičakčić and Dragan Čović. There is an ongoing trial against the two of them before the Court of BiH under charges for giving away apartments in Sarajevo paid by taxpayers to their cronies. The prosecutor’s opinion is that this is against the law.

Unlike in Sarajevo, where the apartments were paid from the Federation budget, in Mostar the money came from the accounts of the Federation and Cantonal agencies and public companies. It was mainly the Bosniak politicians who got apartments in Sarajevo while Croats got apartments in Mostar. However, unlike in Sarajevo, no one has been charged yet in Mostar.

Several years ago, the financial police of the Federation of Bosnia and Herzegovina (FBiH) submitted some 200 pages of report with the Prosecutor’s office of Hercegovina-Neretva canton in which a suspicion was raised that the buyout of apartments had no legal ground. In a brief conversation with CIN, the first man of the Prosecutor’s Office, Nijaz Mehmbedbašić, said that he was not aware what happened with the said document.

‘I recall that there was something. I recall because of those names’ says Mehmedbašić. Mehmedbašić has not given us more specific information on what has been done with regard to this, even after seven months of waiting, and repeated written requests and numerous phone calls.

While auditing financial statements of the Tempo Vranica company from Mostar, which had built the controversial apartment buildings, the Federal Financial police tracked down some dubious transactions of money from one account to another in 2003. There was no paper trail to show who ordered the payments. This is why it was hard for the police to follow the money trail.

For example, a public company Urbing from Mostar paid a sum of 350,000 KM to its account at Vranica’s. The money was booked on 15 accounts which some agencies had open with Vranice, among which was the Croatian part of the Federation Ministry of Defense, the Croatian Defense Council (HVO). A part of the money that was entered into the books of the Ministry of Defense was moved to other open accounts, one of which was the now dissolved company Mondo which was in the ownership of HDZ BiH. From Mondo’s accounts the money was taken off the books and wired to other accounts, one of which belongs to Ignjacije Dodik, a judge of the FBiH Supreme Court .

In a telephone conversation with CIN, the judge Dodik said that he had no idea who provided money for his apartment. ‘This was given to me at the time that I held the post of the FBIH Minister of Justice, and not only to me, but to others as well. The apartments were given and what, I’m really not able to tell you’ says Dodik.

The judge claimed that solving his housing issues was a part of his deal with HDZ BiH, the party that has recommended him for the Federal Minister of Justice. Asked whether HDZ BiH expected a quid pro quo, he answered: ‘I don’t know if they expected that. I was not asked for it.’

Dodik held the office of the FBIH Minister of Justice during the mandates of Edhem Bičakčić and Dragan Čović, the heads of the FBIH government. Dodik did not remain at this post until the end of his mandate, but had already left the government on September 15th 1999 and joined the FBiH Supreme Court. According to the Financial police investigaton, a down payment contract for Dodik’s apartment was signed nine days after he left the post of minister, when he had already become a judge. According to the down payment agreement Dodik’s apartment was worth around 120,414 DEM. Dodik paid one part of the sum and the rest was paid by Mondo, HZ HB Power Authority, HVO Ministry of Defence , the FBIH Ministry of Traffic and Communications.

The codex of judicial ethics demands that judges have to cut off all political activities in a party or connection with them, fully and unambiguously, upon taking office. The company HZ HB Power Authority and the FBIH Ministry of Traffic and Communications have sent a memo to CIN in which they assert that they had nothing to do with the purchases of apartments for individuals and that money for the procurement of apartments was not granted from their budgets.

Dodik’s neighbor and a one-time party colleague Vlado Majstorović, who is now holding a post of the president of the (Croatian University of Mostar), also said that he didn’t know who else and to what extent had paid for his apartment.

‘These were probably companies who wanted and wished to…not pay to me…but to the University to make a financial construction that would see Vranica paid for the apartment’ Majstorović told CIN.

At the time when his apartment was bought, which was worth some 135,000 KM, Majstorović was the minister of education, culture and sport in HNK and a professor at the School of Mechanical Engineering in Mostar. According to the Financial police findings, the money for the procurement of his apartment came from the account of the HNK government, the privately-owned company Financ Mostar, the University of Mostar, HZ HB Power Authority, HVO Ministry of Defense and ‘Sokol’ in Mostar.

Majstorović said that at the time there was a decision from the University’s management that all professors who didn’t have their housing issues solved should address this issue with the government agencies and companies pleading for financial assistance for the procurement of apartments, because the University had no money to permanently solve the housing issues of their staff.

‘We sent memos to numerous addresses…only in the desire to close the financial construction’ says Majstorović. He told CIN that he couldn’t recall the names of the university’s management nor other professors who got hold of an apartment in this way.

Apart from Majstorović, the HNK government gave money for the procurement of an apartment to Željko Obradović, the current director f the FBiH Authority for Geodesics. This HDZ member was the president of the HNK canton at the time. His office paid over 37,000 KM of the collective sum of 167,674 DEM.

‘We had in the president’s office some funds to be used for the solution of housing issues…I mean… it was all legal,” Obradović told CIN. He added that the money didn’t go only to his apartment. ‘I think that all ministers had a certain amount of funds at their disposal to solve housing issues. They did, they did’ says Obradović.

According to reports from the FBIH Chief Auditor’s Office from that period, some two to three years after the payment of 186,000 KM was used to subsidy the procurement of apartments, Hercegovina-Neretva canton found itself in deficit of 6.6 million KM. This is why the canton’s government ended up borrowing 2 million KM from the FBiH budget.

Mostar cantonal Tax Agency was not thrifty in co-financing the purchase of apartments, as they invested 85 000 KM in an apartment for their then director Augustin Mišić. The former HDZ member, who is now the director of Firkon company from Mostar said ‘The tax office had its own finances at disposal at that point.’

Ramiz Džaferović, the director of the Federation Tax Office at that time, now director of the FBiH Development Bank, confirmed his statement. He said he was familiar with the situation, that the money in question did not come from the budget and that the Tax Ofiice had acquired it partly by collecting compulsory compensations.

‘This is the purpose of these funds to solve personnel, technological and other issues’ said Džaferović.

According to information from the FBiH Financial Police, the HVO (Croatian Defense Council) Ministry of Defense spent most money for purchasing apartments in Mostar. They spent nearly a million KM to purchase or co-finance 6 apartments among which was the apartment of Bariša Čolak, BiH’s Minister of Defense. The value of his apartment, according to the down payment agreement, amounted to more than 200 000 KM. They also financed the purchase of an apartment for Nevenko Herceg, FBiH Minister of Tourism at the time, the value of which amounted to more than 350 000 KM.

Čolak refused to talk to CIN sending a message via his chief of staff that he saw nothing problematic in their purchasing property for him and if there had been any irregularities there were relevant institutions to investigate that. In a telephone conversation minister Herceg also claimed there were no irregularities in purchasing his apartment.

Various companies invested in Hercog’s 330 000 KM plus apartment, among which was a private company Inter Invest from Mostar owned by Dinko Slezak, as well as JP Elektroprivreda HZ HB (public electric-power supply company), HPT Mostar (the postal service), Urbing Mostar, JP Ceste HR HZ (Roads) Mostar. Herceg said that Ceste invested money because he sat on the company’s Board of Directors,and Interinvest Mostar only lent him the money which he reimbursed. Regarding the other investments, he refused to comment. ‘There were no irregularities’ repeated Herceg.

The FBiH Financial Police report lists the following among the people who have benefitted from HVO money: Mariofil Ljubić, a former member of the FBiH Parliament and a state ombudsman and Martin Raguž, a member of the state Parliament.

Mariofil Ljubić’s name also appears on the list of people who were given an apartment in Sarajevo. In an interview with CIN Ljubić said he was given the apartment in Sarajevo as an employee of the parliament of the republic, but he did not take an apartment in Mostar.

‘It is true, I did negotiate, but I could not accept their conditions.’ said Ljubić who hung up on the reporters after they asked him again to comment on the situation.

Martin Raguž claims he bought his apartment himself: ‘Officials were then given apartments and a part of it was done by the Ministry of Defense…I mean, I don’t know all the details, I was Jelavić’s chief of staff and then I de facto returned the apartment and took another one and paid for it and renovated it all by myself. I’m clean when it comes to that.’ Said Raguž.

During that period Ante Jelavić was the head of the Croat component of the FBiH Ministry of Defense HVO, and after him Miroslav Prce was appointed to this post. Between 1997 and 2001 HVO received money from the Republic of Croatia’s budget. Billions of kuna worth of aid was allotted specifically for wages of members of the HVO component of the army but it was not spent on that. Jelavić and Prce were tried before the BiH Court because of this.

It is interesting that one of the investors in these apartments was the company Željeznica HB (Railroads) which has held a reputation of a poor company subsisting off entity budget money.

Željeznice invested money in an apartment for their director, Ivan Knezović. He is now a director of the public corporation BiH Željeznica. When asked to explain to the public why around 200 000 KM of budget money was invested in his apartment Knezović hung up on the reporters and would not pick up after we called him again.

The current director of Tempo Vranica,Dragan Vrljić, said all of this happened before he came to that post so he was not familiar with the details. The director of Vranica at the time, Jozo Čutuk, told the police that records show that the down payments were paid by the state institution and part of it were payments individuals made given that ‘for the other payments, the donors would not issue booking orders, but the individuals who took the apartments knew payments were made for their apartments’

‘There were some sort of, tentatively speaking, employees’ apartments.’ said Raguž pointing out that, at that point, Croat employees were mostly members of the HDZ BiH as they had no other political alternatives.

These days the neighbors belong to different parties, but there are still good neighborly relations. ‘We say hello. As neighbors I don’t think we’ve lost that aspect, none of us. ‘ said Raguž for CIN.

The president of the RS government Milorad Dodik and the then minister of finance Novak Kondić were found not guilty in a 2006 Banja Luka trial for allotting apartments along party lines.

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