Bosnia opposition urges anti-corruption laws

ISN, 18 April 2005

By Nidzara Ahmetasevic in Sarajevo for IWPR

Bosnian opposition parties are angry that the internationally appointed authority
in the country has refused to support what they say is a crucial law aimed at cutting
down corruption, tax evasion and money laundering.

They say the lack of legal provisions enabling courts to seize illegally acquired
property and other assets is costing the state millions of euro in lost money. Although
they presented a draft law on the seizure of illegally obtained assets almost 18
months ago, the ruling nationalist parties have refused to adopt it and the office
of the High Representative (OHR) under Paddy Ashdown, has also held aloof.

The scale of the problem is not seriously disputed. Studies by international and
legal experts over several years have shown that huge amounts of money are lost
to the government every year through money laundering, embezzlement, tax evasion
and the illegal acquisition of property and other assets. Only this year, studies
pointed to the extent to which organized and economic crime structures are damaging
the country’s coffers. They pointed out that while Bosnia has received huge financial
donations over the past decade, including more than US$5 billion in aid from 1995
to 2000, little of this investment is visible on the country’s shabby streets, or
in the life-styles of the poverty stricken population. The OHR has also admitted
that several billion convertible marks (KM), the Bosnian currency, earmarked for
social spending had ended up in private hands in the past few years.

Losing billions to corruption

In Bosnia’s reconstruction sector alone, about 74 million KM are embezzled every
year, according to Transparency International, a respected anti-corruption watchdog.
The Customs and Fiscal Assistance Office, CAFAO, says another 1.2 billion KM, which
is more than the annual budget of the Federation – Bosnia’s larger entity – is lost
to the government each year through scams such as fake companies, or companies registered
in the name of dead people.

This corruption has more than purely economic consequences. An efficient fight against
organized crime and corruption is one of 16 conditions set by the European Commission
if Bosnia is to get a green light for a Stabilization and Association Agreement
(SAA), a key stage on the road to EU membership. The establishment of a special
legal department for tackling organized and economic crime and corruption marked
a first step by the courts to bring the criminals to justice. But this initiative
has proved insufficient. While the department has launched many court cases, only
a few people have been sentenced. Additionally, those who were convicted and sentenced
have usually retained ownership of their illegally acquired assets through legal
loopholes.

Legislation lacking

Legal experts say the courts have been unable to remedy this basic deficiency because
they lack a specific law that would entitle them to requisition such assets. “We
sorely need a law that would allow the seizure of illegally acquired assets,” Transparency
International's spokesperson, Srdjan Blagovcanin, told IWPR. “It could be a very
efficient way to combat organized crime and other acts of crime.” The existing regulations
in Bosnia on the issue are either ignored, unexplored or are not used efficiently.
For example, the country is a signatory to the Council of Europe convention on money
laundering, obliging the authorities to seek out and confiscate property acquired
through crime. But the obligation is rarely implemented. Similarly, the new Bosnian
criminal code states, “No one can retain illegally acquired property.” But, in the
two years since that law has been in place, only 500’000 KM of such assets have
been seized in a handful of cases. Lawyers say the existing regulations are not
sufficient and that the lack of a precise law on the matter is a hindrance. “If
we had the legal possibilities to act, we could seize €5 million of assets in real
estate and cash from just one man now under investigation,” a source close to the
Bosnian judiciary told IWPR. The source added, “We know that this man can’t prove
the origin of his property but it’s hard for us to prove this under the current
regulations.”

Targeting assets

Several European countries possess special guidelines or laws designed to ensure
that illegally acquired assets do not remain in the hands of the people who have
been found guilty of committing crimes. With this in mind, opposition parties in
the Bosnian state parliament put forward draft legislation based on an existing
law in Ireland, which would have set up a special agency to receive assets acquired
through criminal activities. If the owner was found unable to establish a legal
title to the property, the law would permit the agency to retain control and assess
its value. It would then decide how to use the money or property and whether to
sell it. The Socialist Democratic Party (SDP), the Alliance of Independent Social
Democrats (SNSD), and the National Croat Initiative (NHI), presented the draft law
to the Bosnian parliament in late 2003. “We wanted to secure a tool that would help
the fight against one of the greatest evils facing [Bosnia] today – crime and corruption,”
Jozo Krizanovic, head of the SDP group in the Bosnian assembly, told IWPR. “Before
we proposed the law and the forming of the agency, we reviewed one of the annual
reports on the work of the state prosecutor, which said the prosecution had processed
some 30 acts of crime and seized just over 50’000 KM under the [current] rules.
We noted that even when a crime was dealt with and the perpetrators sentenced, their
property remained in their hands. It is in the interest of citizens for those assets
not to remain in the hands of the people who acquired it in an illegal manner.”

Reform gets nowhere

The proposed reform has got nowhere, though. It was rejected twice by deputies of
the governing nationalist parties, namely, the Party of Democratic Action (SDA),
the Serbian Democratic Party (SDS), and the Croatian Democratic Union (HDZ). “The
reaction in parliament from the ruling parties was very negative even before they
looked at the law,” Krizanovic said. They said this law was not needed because there
were other laws that enabled the same thing. Some said it recalled the “dark days
of the previous [communist] system”. The SDA’s Mirsad Ceman, chair of the Constitutional
Legal Commission of the Bosnian Parliamentary Assembly House of Representatives,
said the failure to adopt the proposed law was “not a catastrophe”. Cerman rejected
the need to adopt this or any similar law, insisting that the existing laws afforded
ample possibilities for the courts to combat crime and corruption. Even when reminded
that the state prosecutor himself this year told parliament of the need to adopt
such a law, Cerman remained adamant. The state prosecutor, he said, had “voiced
a political, not an expert, stand”. “Obviously, the people who made the proposal
think they are the image of honesty while all the others are the image of thievery.
I say that there are thieves…among both,” he went on.

Opposition seeks OHR support

After the ruling parties refused to budge, the opposition sought support from the
OHR. Their initial hopes were high. The previous High Representative, Wolfgang Petritsch,
prior to leaving, had drafted a document entitled Work and Justice, which concluded
that the authorities “have to draft and adopt a law which orders the seizure of
assets acquired through acts of crime”. But the current High Representative, Paddy
Ashdown, has refused to take the same stand. Sources close to the OHR say this is
partly because the OHR prefers to have its own legal team drafting laws, which it
then imposes. However, a second reason may be that most of the existing laws, which
the prosecution complains about, have been imposed or drafted by people that the
OHR itself engaged. When the OHR did voice an opinion on the draft law, it demanded
major changes and amendments. For example, the OHR wanted changes to the part of
the law that stated that it would be enough for the state to keep illegally obtained
assets if the owner could not prove their legality, rather than requiring the state
prosecutor to prove their criminal origin. When the initiators of the law declined
to change this section of the wording, the OHR refused to give its support, saying
that adoption of a law like this would be “premature”. This decision by the OHR
went effectively in favor of the ruling parties and their refusal to adopt the law
or give it another hearing. To Cerman, a leading opponent, the arguments that many
European countries have such laws and agencies is no reason for Bosnia to follow
suit. “Nothing can convince me that we need this law,” he said. “All of this is
aimed at creating political tension.”

Nidzara Ahmetasevic is a freelance journalist based in Sarajevo and a regular IWPR
contributor

This article originally appeared in Iraqi Crisis Report, produced by the Institute
for War and Peace Reporting (IWPR). Iraqi Crisis Report is supported by the UK Foreign
Office and the US State Department.