New arrests in Serbian corruption scandal

25/10/2012

Serbian police arrested three people Wednesday in the investigation into the Agrobanka embezzlement scandal, where about 300 million euros vanished.

By Igor Jovanovic for Southeast European Times in Belgrade -- 25/10/12

Receivership was introduced in Agrobanka in December 2011, and its license was revoked in May 2012. [Agrobanka]

Police in Serbia arrested and questioned three individuals on Wednesday (October 24th) who are suspected of involvement in the Agrobanka embezzlement scandal.

The people in question are the owner of Belgrade-based company Asprom, Stevan Alavanja; Bojan Simonovic, a member of the Agrobanka managing board; and Predrag Vuckovic, director of the company Agartrejd.

They are suspected of costing the bank 20 million euros through controversial loans. Those loans were allegedly never repaid and were used to settle previous debts, current operations and the purchase of real estate, Prime and Interior Minister Ivica Dacic told reporters.

Receivership was introduced in Agrobanka -- the majority of which is state owned -- in December 2011, and its license was revoked in May 2012 after it was found to have a debt of around 300 million euros. Its obligations and deposits were transferred to the newly founded Nova Agrobanka, which was formed by the previous government headed by the Democratic Party. The new government, however, claims that the scandal could not have passed without the knowledge of the then ruling Democrats.

The investigation currently includes 19 suspects. Agrobanka Executive Board Chairman Dusan Antonic was arrested in early August and is still in custody.

"This is not the end, since it is an octopus with many tentacles, which will show how systemic corruption functioned at the level of Serbia," Deputy Prime Minister Aleksandar Vucic told journalists in Belgrade.

The Serbian parliament held a session Wednesday to review a draft law on the takeover of property and obligations of certain banks for the sake of preserving the stability of Serbia's financial system.

The law will enable all who have deposits in Nova Agrobanka to become depositors of Postanska Stedionica (Postal Savings Bank), which is also state-owned. The new bank is also to take over about 300 Nova Agrobanka employees, while about 400 will be laid off with a severance program.

Vlajko Senic, finance ministry state secretary, told SETimes that the objective of the law is financial stability, because Nova Agrobanka was no longer able to service its obligations, which could jeopardise the banking system.

However, the opposition rejected the government's explanation that the law is being passed to "mitigate a major financial scandal and prevent its spreading to the rest of the banking system."

Liberal Democratic Party MP Zoran Ostojic told SETimes that the draft law was "a dangerous precedent," which introduced legal violence and insecurity, and would not incite foreign investment.

But, Mahmut Busatlija, Belgrade Economic Institute associate, told SETimes this was a legal procedure within the banking system. "It could have been also done within existing legal framework, there was no need to pass a new law," Busatlija said.

He added Agrobanka is a case with a clear "corruption background."

"Receivership was introduced only when it was obvious we would have a regular, not early election. Secondly, Agrobanka was disbarred few days before the election in May. And finally, [the] new bank was founded few days after the final election round, as if someone had tried to hide certain participants in the affair. So it would be good if the investigation comes to an end and reveal all those involved," Busatlija said.

This content was commissioned for SETimes.com.