Montenegrin state prosecutors are in the hot seat in the wake of corruption scandal involving privatisation of the state telecom.
By Drazen Remikovic for Southeast European Times in Podgorica -- 16/01/12
Deutsche Telekom and Magyar Telekom came under scrutiny for actions nearly seven years ago. [Reuters]
As chairman of parliament's committee for monitoring the privatisation process, lawmaker Andrija Mandic is taking a lead role in determining just what happened in March 2005, when Montenegro sold its state owned telecom. He plans to hear from government officials when the panel meets on Friday (January 20th).
He's also seeking information and help from a handful of foreign ambassadors, because the sale had tentacles snaking to Hungary, Germany, and ultimately to the US.
And as it turns out, the transaction was corrupt.
In a stinging embarrassment to Montenegrin prosecutors, two foreign companies -- Deutsche Telekom and Magyar Telekom -- reached a settlement with the US Securities and Exchange Commission (SEC) on December 29th, agreeing to pay $95m to settle allegations that they violated regulations in their dealings not only in Montenegro, but in Macedonia too.
Magyar is Hungary's largest telecommunications provider, and Deutsche Telekom is its parent company.
The SEC jumped in because Magyar securities are publicly traded in the US. The company must therefore abide by US laws, in this case, the Foreign Corrupt Practices Act.
US investigators say Magyar executives bribed Montenegrin government officials in order to shut out competitors and facilitate Magyar's acquisition of the telecom at favourable terms, for 140.5m euros.
According to the SEC, the Hungarian company paid about $9m through bogus contracts to bribe "at least two government officials", as well as Ana Kolarevic, a lawyer whose brother is Milo Djukanovic, Montenegrin prime minister at the time.
Oleg Obradovic, Telekom's former chairman of the board, and Milan Perovic, its former general director, both deny accepting bribes. Kolarevic denies anything to do with the indictment.
Zeljko Buric, president of the Workers Union of Montenegro's Telekom, tells SETimes that US investigators confirmed what workers had said for years: that Montenegrin authorities were turning a blind eye to impropriety. After the privatisation, Buric says workers filed 37 claims alleging violations of their rights, but that the Labour Inspectorate responded to just one.
"They sold us with absolutely no rights and left us at the mercy of the new owner. Something will have to change after this affair. If the contract is signed under criminal circumstances, then this contract should be declared invalid," Buric stressed.
He added that more than 1,000 workers were fired after the March 2005 privatisation, leaving about 750 employees.
Mandic is blunt in his criticism of pervasive failures. "The work of domestic judiciary is catastrophic and it is questionable whether [any charges will be filed] in Montenegro. No one from the ruling structure has said anything since this scandal emerged," he told SETimes.
He added that the Telekom affair is just the latest example of corruption in Montenegro and that almost every state enterprise was sold under suspicious circumstances.
Political analyst Dritan Abazovic, a member of the NGO Forum 2010, says that the public needs to apply strong pressure to separate politics and state institutions, given the strong ties between those serving in each.
"It's enough to remember our officials who took all this time assuring us that the privatisation of Telekom is a success story. Now we can see how successful it is. All the scandals create awareness about the necessity of change in Montenegrin society, but still, that process is running very slow," Abazovic told SETimes.
Podgorica-based journalist Marko Milacic tells SETimes that it's not surprising that Djukanovic's sister is involved this time. He says she's participated as a lawyer and mediator in numerous privatisations that were harmful to the state.
He says "the most interesting part in the whole story" is the high profile role played by the US, including the publicly announced settlement late last month. "This largely leads to suspicion and indicates ... perhaps the beginning of Washington's turning [its] back on … Djukanovic."
Officials from Djukanovic's Democratic Party of Socialists did not comment on this case.