Scandals in the RS Development Bank

AIM Banja Luka, May 17, 2001

Some 600 employees of the Development Bank of the Republika Srpska (RS) have been placed on the dismissal list. Until recently, the Development Bank (RB), the successor of the former Social Accounting Service (SDK), i.e. Payment Auditing Office, was thought to have the best prospects. But, after the long list of redundant labour came out trade union organisation of this house protested, as well as groups of workers from this dismissal list who knew about numerous scandals in this banking house.

The dissatisfied workers claim that until 1998 the Bank had no surplus labour. That year, Ranko Travar, cadre of the Democratic National Alliance (formerly a member of the SDS and then of Biljana Plavsic's Serbian National Alliance) was appointed the Bank Director General. According to a group of the Development Bank employees "the number of workers which are today considered surplus is exactly equal to the number of new staff he had hired". The newly admitted workers were either relatives, friends, party comrades or with some other connections and, according to the letter, were mostly secondary schools graduates (of transport, chemical or textile profession) while there were even hairdressers among them.

Nevertheless, when it turned out that the RS Development Bank was burdened by excess labour, these "new bankers" were not the ones placed on this dismissal list, but rather the old workers with years of experience and necessary education, which the Bank inherited from the former Payment Auditing Office. When back in 1996 the Serbian State Bank was established (today the Development Bank), under the Founding Act it assumed the obligations towards the employees. This Act even envisaged that the SPP workers would become shareholders of the newly founded bank.

The Serbian State Bank was established by the Payment Auditing Office (SPP) and the National Bank of RS. As its founding capital, the SPP contributed the real estate and equipment in the value of nearly USD 19 million. It was agreed that the workers would get shares and thus become owners of one fifth of the invested capital. The National Bank of RS secured the resources in the amount of USD 1.5 million. When in 1998 the Serbian State Bank was transformed into the Development Bank, it took over the obligations towards the employed workers, at least formally.

Apart from admitting workers according to rather peculiar criteria, the trade unions and workers of the Development Bank accuse their Director for investing enormous funds in "providing housing for the most loyal workers". According to the data the trade union got hold of, during his three years as Director of the Development Bank, Ranko Travar allocated about DM 3 million for housing credits. Credits were mostly approved according to friendly-party connections and under very favourable terms: with 2 percent interest rate and 5 to 30 years repayment period.

One such credit was granted to former Finance Minister Novak Kondic, naturally while he was still in that position. During his term of office as Minister, Kondic regularly received his 2,000 DM as wages from the Development Bank, as well as food allowance and free coffee tickets. Until last March he received DM 1 thousand a month as President of this Bank's Governing Board. Incidentally, Kondic is a party comrade of RB Director Ranko Travar.

The Development Bank bought some thirty flats and allocated them to its personnel. Djordje Mikes, Director of the Payment Transactions Agency got a house in the centre of Banja Luka. In contrast to cadres, refugees were not considered priority as regards housing problems. Quite contrary, the Development Bank management even tried to sell its building on Pale with 20 flats built for this Bank's employees who had fled from Sarajevo. The construction of this building of some 4,200 square meters started in 1997, when the headquarters of the then Serbian State Bank were in Serbian Sarajevo. According to the plan the Bank's business offices would be on the ground floor and flats for workers-refugees on the upper floors. For this project the Bank took advantage of all facilities envisaged for the housing construction for displaced persons. The city of Serbian Sarajevo allocated the land to the Serbian State Bank, while 60 percent of construction material was obtained on interest-free credit with seven-year repayment period and three-year grace period.

However, in December 1999, Director Travar decided to sell this building at a price of some DM 1 thousand per square meter or housing or office space. The trade unions sent a letter of protest to state authorities, the media and the Development Bank's Governing Board. That same month the Directorate for the Reconstruction and Development of Serbian Sarajevo informed the Development Bank management that in case the building at Pale was built for commercial purposes and not for housing needs of the refugees, the Bank would have to pay almost DM 1 million to this Directorate. For the time being, the building has not been sold, but the refugees have not moved into the flats either.

Although, there is every indication that the Development Bank has not only excess labour, but also excess office space, this Bank's management nevertheless decided to buy an entire floor in the famous Equator Palace in Banja Luka. Namely, on December 5, last year, the Development Bank concluded a contract with the Equator Company on the purchase of 1,500 square meters in its unfinished office building. Equator was paid DM 5 million for that purpose, which is not the full price but only 60 percent advance payment. In other words, the Development Bank bought the mentioned business premises for DM 8 million, i.e. for DM 5,333 per square meter. Judging by this transaction, Banja Luka is the most expensive city in the world.

However, as workers claim, this sales contract was actually a cover-up for a DM 5 million loan, which the Development Bank had granted two years ago to the chronically illiquid Equator Bank. Allegedly, with that money Djordje Davidovic, owner of the Equator Bank and Equator Company, incidentally close friend of Prime Minister Milorad Dodik, started the construction of the large office building in the centre of Banja Luka. Since Davidovic's bank was unable to repay the loan it was agreed that Equator would repay the debt to the Development Bank in kind. It thus happened that DM 2 million from the Development Bank's severance pay fund for workers, who would lose their jobs as redundant labour, was used for the construction of Equator Palace.

And while "big fish" played for high stakes, lower grade employees also took care of themselves. Thus, as the letter of a group of dissatisfied workers states, one controller honoured his own cheque and cashed DM 90 thousand on account of missing foreign exchange savings, although that was prohibited. Nevertheless, he was not punished because he had previously honoured other people's cheques on Director's orders. Another resourceful client managed to withdraw DM 180 thousand in cash from the Development Bank with a bad cheque. The controllers did not see or did not want to see that the cheque was faulty.

All in all, while thanks to the business inherited from the SPP, the Development Bank had a monopoly over the payment transactions on which it charged a rather high fee, there was money for everyone. However, after the transformation of payment transactions, when all banks in the RS got the opportunity to engage in these activities, it turned out that the Development Bank was overstaffed. At one time, the RS Finance Ministry promised to take over as many as 200 redundant employees of this Bank, although no one has a clue what would the Ministry do with that staff. Although a year or two ago they probably knew what was going on in their house, neither the workers nor the trade unions of the Development Bank raised their voice in protest. Only when they realised that they might lose their jobs and good wages they started to openly talk about flats, credits, nepotism and influence of party affiliation on business arrangements.

The dissatisfied bankers even announced general strike, which could provoke a financial chaos in RS because the Development Bank is still in charge of payment transactions for major enterprises and the RS budget is also deposited in this Bank. A month ago, the Bijeljina branch office of the Development Bank briefly suspended work, but it seems that there will be no general strike. Workers from the dismissal list claim that this is a result of a deal their trade union leadership has made with the Bank's management. Allegedly, trade union leaders have been promised that they could keep their jobs if they behave reasonably.

Tijana Tadic

(AIM)