Ethnic Privatisation of the Metallurgical Combine "Aluminij"

AIM Zagreb, September 9, 2001

When in mid 1991 individual Croatian firms lost several shops and hotels in Serbia and Montenegro, which had been taken from them according to the law of the stronger, those damaged righteously screamed blue murder. The wealth, which took years to make, remained on the other side of the border without any possibility of settling accounts and dividing the property, which the Croats interpreted as the symbol of their position and fate in SFRY. And then came the war, which swept the country from Slovenia to Bosnia & Herzegovina. Soon after that a small group of Croatian politicians and economists met to see what could be done in order to restart the production of onetime metallurgical giant - "The Aluminium Combine" ("Aluminij") in Mostar. True, Mostar is in Bosnia & Herzegovina - its annexation to Croatia by force was unsuccessful - but that did not stop Franjo Tudjman's regime from taking possession of the enormous value of "Aluminij" in 1996.

Five years later (i.e. nowadays) a scandal broke after the auditing of the then privatisation of "Aluminij". The audit was conducted by a commission of Wolfgang Petritsch, High Representative of the international community in Bosnia and Herzegovina, in a way that caused considerable furore in the country because it verified that a plunder had been committed back in the mentioned 1996. However, before we see how was this plunder carried out and what kind of solution the abstract miracle called the international community came up with, it wouldn't hurt to remind of better days of the Mostar "Aluminij" when football players of the club "Velez" played under Mt.Bijeli brijeg and the Neretva was running under the old bridge. This prestigious metallurgical combine was built in the 70's and 80's by a French firm "Pechiney" and its rich father from Sarajevo "Energoinvest" had to mortgage the value of the entire firm for such enormous investment. In mid 80's this work organisation employed about five thousand people in its aluminium and alumina plants and bauxite mines. Soon after that it started to break into a number of independent and more mobile enterprises. In the 90's, just before the war, "Aluminij" got the international certificate verifying the top purity of its metal, while the value of its exports reached around USD 250 million annually. Some 60 thousand people in Herzegovina and Dalmatia were directly or indirectly living off the Combine and its value was estimated at DM 1,4 billion. According to the French firm "Pechiney" it did not suffer significant war damages. Some roofs had to be patched up, installations dusted, the world market had to be won again and the production could start again. And then Mijo Brajkovic, the Director of "Aluminij", and Croatian President Franjo Tudjman did their shameless villainous dance.

Another metallurgical combine was used for the formal inter-state bypass - "The Light Metals Factory" (TLM) from Sibenik, which was destroyed in the war. A smaller part of its production was restarted - its capacities could not be utilised without Mostar anyway - and the factory itself formally invested DM 16 million in additional capitalisation of the dormant Mostar "Aluminij". On the other hand, the imposed Croatian management in Mostar reassessed the Combine's value at a ridiculous amount of DM 190 million, which was DM 1,2 billion below its pre-war value! It would seem that the war has directly or indirectly reduced the enterprise's real value, which might have been true for a part of its production, and only by several hundred million and not DM 1,2 million. Incidentally, after relatively small investments in the renewal of production already in the first year "Aluminij" exports reached DM 200 million. Then how was it possible that an enterprise that exported products in the value of DM 200 million just in the first year of its production was worth mere DM 190 million and was not in debts? Easily, because everything was possible in this story.

Let's have a look at the complex ownership structure of "Aluminij" after Brajkovic's privatisation: for those several invested million from the Croatian state budget TLM from Sibenik got shares for 12 percent of the enterprise; about 35 percent of shares remained state-owned and the so called small shareholder got something over one half. The role of the latter was particularly interesting since those were mostly workers of the former work organisation "The Aluminium Combine Mostar", which were given shares even for the period in which the enterprises did not work as a compensation for unpaid wages. In this way, Mijo Brajkovic alone got hold of shares worth some DM 250 thousand. The cherry on the top of this crime story was the fact that practically all workers-shareholders were Croats.

Until the war, the entire "Aluminij"(including Herzegovinian bauxite mines in which only Croats worked) employed 35 percent of Bosniacs and Croats, 23 percent of Serbs and 7 percent of other nationalities. Apart from Croats, several Bosniacs also got ownership rights, while Serbs were short-changed. Unlawful or not, this privatisation was carried out under the contradictory legislation of the so-called "Herzeg Bosnia". According to it, the longer the factory remained closed the better for the workers as in that way they would get more shares. This transformed absurdity surpassed all ideal theoretical workers' rights from the times of self-management socialism, except that in Mostar, in addition to socialism, ethnic motives were also used for criminal purposes. For the last eight decades this phenomena is called and recognised simply as National Socialism or briefly Nazism.

In mid 90's, after a relatively successful occupation and ethnic cleansing of Bosniacs and Serbs from parts of Bosnia and Herzegovina, the Croatian state politics carried out successful (for the time being) economic occupation of a part of the neighbouring state through "Aluminij". It is a fact that contemporary politics prefers "peaceful" colonisation of inferior states, precisely by means of richer capitalist states usurping their national economies. What the "Aluminij" case was all about could be best explained by the fact that in this part of the Balkans, starting from Croatia to FR Yugoslavia and from Macedonia and Albania to, allegedly, Slovenia and Bulgaria and Rumania - there was no manufacturer more successful and larger than the Mostar enterprise! Franjo Tudjman knew exactly how deep and big pocket he was digging into when at the formal commissioning of Mostar plant he thanked the Herzegovinians and made fun of the denizens of Sibenik because they would have to depend on "Aluminij" and its success in the future.

However, it is not clear what was the international auditing commission doing. In several working versions of its report it presented so many contradictions that it lost all credibility long before it recently submitted a conclusion of the privatisation of "Aluminij". Although its task was to determine legal facts, the commission gave its assessment of political opportuneness of this move as, according to it some things should not be rushed.

Naturally, rumours started spreading that auditors were bribed and that some world companies expressed their interest in "Aluminij". Petritsch had problems because of this and the ruling Alliance in the B&H Federation was put on the hardest test ever. That is why the inevitable solution for the problems of Mostar "Aluminij" would undoubtedly be one of two-three key issues for the fate of post-Dayton Bosnia and Herzegovina. As far as the current Croatian authorities are concerned even a fair silence would be enough.

Igor Lasic

(AIM)