STATE MONEY - ON PRIVATE ACCOUNTS

Scandal about the Money on Cyprus

Foreign Currency Reserves of Montenegro

Minister of Finance in Montenegrin Government, Predrag Goranovic, admitted that state money of Montenegro is in "safe-keeping" on his private account on Cyprus

AIM Podgorica, 27 December, 1996

The first session of the Assembly of Montenegro in its new post-election composition will be remembered by the Minister of finance, Predrag Goranovic. Just a few minutes of his statement were sufficient to give deputies of the opposition trump cards for new sharp criticism of the authorities. Goranovic incautiously dared speak out about an open secret - that he had a private account in a bank on Cyprus and that a part of foreign currency reserves of Montenegro taken out of the country were on that account. Of course, he was not aware that in this way he was also stating accusations against himself. He must have wished just to brag a little with his patriotism and honest concern for interests of Montenegro. "I responsibly claim, I swear to God", he said, "that for my personal interest I have not taken a single cent from that account, which can be controlled because orderly documentation about it exists". However, it is not so easy to establish truthfulness of his allegation, because the very next Minister's sentence pointed out to top secrecy of the affair. "You will never find out the amount of foreign currency reserves, because that is par excellence state secret", was the brief Minister's answer to the demand of opposition deputies to state the amount of foreign currency reserves. "You will never control flow of state money - because you shall never be in power", triumphantly concluded Minister of finance his short excursion in disclosing the carefully kept secrets of the ruling Democratic Party of Socialists (DPS). In the end he added that management of state-owned money in this way was a legal business and that his extraordinary authorization was based on decisions of the Government of Montenegro.

Such dose of Minister's suddent sincerity was a sufficient reason for an urgent session of the Government which was convened by Prime Minister Djukanovic, who was, as well-informed sources claim, so angry that he did not even wish to greet his ministers. Goranovic's ignominious excursion into the freshly redecorated building of the parliament quickly ended. During the further course of assembly session he was not seen in the hall among the deputies any more. But, numerous questions remained behind him, the answers to which Montenegrin public will most probably wait for in vain.

Indeed, what the Montenegrin Minister of finance has said, the public and the opposition have known for a long time now. Foreign currency reserves of Montenegro exist, they have been taken out of the country and stored on secret, private accounts of ministers and confidential people of the political establishment. Management of that money is directly controlled by the top of the Democratic Party of Socialists, and citizens of Montenegro have no possibility to learn how their money is controlled. The main problem for the heads of the DPS is that Goranovic has publicly admitted and thus given an opportunity to the opposition to prove that the Government is operating contrary to the Constitution and the law.

The most important question is, therefore, whether opening of private accounts on which foreign currency reserves belonging to the state are kept is a legal business. The Minister's thesis that everything is pursuant the law, was even more precisely repeated by the Montenegrin Prime Minister: "Nobody from the Government of Montenegro has violated either laws or the Constitution. The Government of Montenegro, during sanctions imposed against the FRY adopted a document that state resources can apparently be transferred to the account of the minister of finance. We had a right to do it, because it is stated in the Constitution that in emergency situations the Government of Montenegro has such competences".

However, there is no answer to the question to which document, to which decision of the Government, Goranovic and Djukanovic were referring to. To be perfectly honest, the Constitution does not mention emergency situations. Article 94 speaks of the right of the Government to adopt decrees with the strength of law during emergency situations, direct danger of war or war itself, only if the Assembly cannot meet. Emergency situation has never been proclaimed in either Montenegro or the FRY, there has been no declaration of war, and sessions of Montenegrin parliament were regularly convened. Therefore, even if there had been the phanthom decree (official statement or decision - there are different versions in declarations of state officials), there was no constitutional foundation for its adoption.

That is why the conclusion of the opposition is logical and almost unanimous, that the Government has violated the Constitution and laws by transferring state money to private accounts of persons of confidence. Besides, there is of course the question whether state-owned money on private accounts in foreign banks is spent according to social interest or private interest of the people who are managing them. Suspicion exists, because Goranovic stressed that he did not wish to say what amount was in question nor what the money was spent for.

Predrag Popovic, head of the deputy club of the strongest opposition force - coalition National Harmony, believes that a scandal caused by the statement of the Minister of finance was sufficient reason for state prosecutor to instigate criminal proceedings against the Government and responsible people in it. But, since it not realistic to expect anything of the kind, Popovic says that National Harmony is already preparing criminal charges against the Government and Minister Goranovic. Popovic does not accept excuses of the leaders of the DPS that they were forced to open private accounts abroad by the sanctions, because as he says, "the sanctions have been suspended for more than a year, and accounts controlled by Goranovic alone and perhaps the Government still exist".

According to Popovic, after everything that has been said, there is the question which imposes itself: "Who is controlling these accounts and who is collecting extra profit from dubious business deals carried out with this money?" And Dr Slobodan Vujosevic, deputy of the National Party in the Federal parlaiment explains that Prime Minister Djukanovic, "instead of resignation, presents a new program of our economic and social prosperity in the Assembly! And the main mechanism of this program will, of course, be private accounts of his ministers which will be used for money laundry, earned by smuggling tobacco, alcohol and narcotics. This money will be used for the education budget, pension and health funds - and finance the campaign of the ruling party in next elections".

This game of hide-and-seek with Montenegrin foreign currency reserves is not played only between the authorities and the opposition. Its other, perhaps even more important aspect refers to the relation between Serbia and Montenegro. The fact that Montenegrin authorities have, far from the claws of the Serbia regime, stored away foreign currency reserves makes them economically independent in relation to the authorities in Belgrade. In longterm, this should reinforce the position of the ruling party in Montenegro in relation to Milosevic's regime. The problem of leaders of the DPS is that they should not dare publicly brag with this money, as Minister Goranovic has done: pursuant federal laws neither Montenegro nor Serbia, have the right to their own foreign currency reserves which should all be under patronage of the National Bank of Yugoslavia. Mladen Dinkic, assistant professor at the Faculty of Economy in Belgrade and the author of the famous book about hyperinflation in the country, warned about it. "According to the law, foreign currency reserves of the country are unique. In view of the fact that Montenegro has foreign currency reserves which are obviously on a private account, the Governor of the National Bank, or the deputy Governor currently at the post, should put the question of legality of such 'safe-keeping' of foreign currency reserves".

The public has already started to caricature the situation and posed the following question: what would happen if, God forbid, Minister Goranovic suddenly "fell into disfavour" of his party colleagues? Which legal mechanisms would force him to return the money? While ones believe that the business of "enforcement" of payment of state money would be taken over by the minister of police, the others think it more probable that minister of finance would personally hand the money over to the Prime Minister. The public is "amusing itself" by posing many other much more serious questions. What would happen if in the past elections, the DPS had by any chance lost power in Montenegro? Would the current minister of finance bring a plastic bag full of foreign currency back from Cyprus and count the money to the new authorities, with all "documentation" he masterfully has at his disposal? Answers to such questions will have to wait for at least until the next elections.

Dragan DJURIC (AIM Podgorica) y