The Muslim-Croat Federation

Dead Souls on the Payroll

The political leadership of the Croatian Democratic Union has at least 54 million reasons to establish "Croat self-government" in Bosnia and Herzegovina. A single account in the Mostar-based Hercegovacka Banka, which a select group of top party officials, holds 54 million marks. According to international officials these funds were meant to finance the Croats' quasi government structures.

AIM Sarajevo, March 27, 2001

The winner in the dispute between the Croatian Democratic Union on the one side and legal institutions of the Muslim-Croat Federation and the international community on the other will be he who manages to establish control of the flow of money in parts of the Federation where Croats are a majority. Since the redrawing of Bosnia's boundaries by force of arms can be ruled out as long as NATO, under the guise of SFOR, is the biggest and strongest dog in the yard, the battle is waged not by soldiers but by financial experts and institutions. The decision to proclaim Bosnia's Croat community autonomous with the right to assume legislative, judiciary and executive power in the Croat-dominated parts of the entity was made at the beginning of March by the "Croat National Assembly," an informal body under the mantle of the Croatian Democratic Union.

Every day brings to light new scandals involving millions of marks disappearing without a trace in recent years, while the Union was sharing power with the party of Democratic Action in the federation. This only confirms the belief that behind its purported "protection of vital national interests of the Croat people in Bosnia and Herzegovina" there are indeed endangered interests, but financial in nature and of a narrow circle of politicians turned tycoons represented by the Croatian Democratic Union of Bosnia-Herzegovina. The attempt at separation from the Federation is the latest desperate venture that the Union simply had to try. When it became clear that the post-election Alliance for Change coalition would be able to form a government at the state and federation level without the participation of the Croatian Democratic Union and the Party of Democratic Action, some individuals realized that financial scams with money from the budget and income of public companies controlled by the national parties would surface together with other cases of fraud. As this does not involve petty procedural mistakes, but the funneling of millions of marks into party coffers and private pockets, it is clear that the culprits will end up behind bars, after due process in the courts.

For the time being, revenue from customs duties and taxes are pouring into the federal budget in accordance with the law. Meanwhile, 460 employees of the Federation Customs Administration, together with its director, Filip Andric, have expressed support for the decisions of the "Croat National Assembly." New Federation Finance Minister Dr. Nikola Grabovac responded by sacking the disobedient Customs director and warned other employees that there are 400 "redundant" workers among them any way. Simultaneously, Minister Grabovac announced countermeasures in the event of attempts to divert public revenues to some other accounts. As opposed to the finance minister, who for the time being, has managed to keep his sector under control, the Federation defense minister, Mijo Anic, is having difficulties. Only after taking office did he discover the incredible fact that no one actually knows with any degree of accuracy how many Croats were on the Defense Ministry's payroll, because all lists and salary sheets were somewhere else, probably in Mostar. At the end of February, the Croats numbered about 9,130, both soldiers and office staff. At the same time, salaries were issued to 11,000 people. Elementary school math shows that that almost 2,000 unidentified people are receiving regular monthly pay checks. Since the average salary is close to 1,000 marks per month, this means that about two million marks each month and 24 million annually ended up in some unknown location. If income belonging to public companies is added to the sum, as well as money from the pension insurance fund in Mostar, funds from canton and the Federation budgets where the Union was in power, and financial aid arriving over the past several years from Croatia, it becomes clear that the millions of missing marks revealed so far are only the tip of the iceberg.

In the chaos that currently reigns in Croat units of the Federation army, and the ongoing struggle for the "souls" of its members, those of them stationed in central Bosnia and the Sava River Basin fared the best. In addition to their regular monthly income they each received a gift of 500 marks from the "Croat bodies of self-government." According to what is known so far, the center through which most of the financial transactions controlled by the Croatian Democratic Union were carried out was in the Mostar-based Hercegovacka Banka. At the same time, this is one of the banks authorized to gather public revenue, and it will be interesting to monitor the attitude of the bank management in the future. If they touch money belonging to the state, that is if they divert it to accounts belonging to the "Croat government" instead of to the budget, the Federation Banking Agency will revoke their license. Among the great ideas proposed by the new "autonomous Croat bodies" was reactivating in "their" territory the Payment Transfer Authority. At the beginning of this year, all branches of this institution were closed because all internal payment transfers was diverted to commercial banks in accordance with practice in all normal countries. The announcements that this institution will be re-activated confirmed what its opponents claimed all along: that it primarily served to enable political parties in power to control the economy. The forming and operation of institutions, legal or quasi state, costs money. The Croatian Democratic Union knows that quite well, and this is why they have been gathering funds to finance them. However, the survival of these "self government" institutions will depend on their continuous financing, because regardless of how big the Union's "savings" are, sooner or later they will melt away. Money coming from public companies and the budget, of course, was never the only source of income for "businessmen" from the party temporarily working in politics. Trafficking of cigarettes, alcoholic beverages, coffee and people is one of the currently most lucrative businesses in Bosnia and Herzegovina, and particularly in western Herzegovina where its blooming. This would not have been possible had it not been blessed by the people in power. In a subsequent report the International Crisis Group says that profit from trafficking could be one of the major sources of financing for "the Croat self-government bodies."

The discovery and blocking of the funds the Croatian Democratic Union illegally seized in the past years is one of the priorities of the new Federation authorities and the international community as well, most of all in public and other companies, banks, and the pension fund controlled by the party. This task is not an easy one given that the destruction of compromising documents is obviously well under way, and it is unrealistic to expect that independent auditors will be able to enter suspicious companies and banks without being escorted by SFOR. It is also clear that the people who exchanged their "struggle for Croatian national interests" for millions of marks they put in their own pockets, will not give up such funds and power willingly, because it would mean they would have to satisfy themselves with being lodged, fed, and clothed at the expense of the state for quite some time.

Given all this, it seems that the most appropriate question is not about the origin of the 54 million marks stashed at the Croatian Democratic Union, but the location and size of the remainder.

Drazen Simic

(AIM Sarajevo)