On November 11, Balkanist received an exclusive leak of more than 300 internal emails sent between top officials at the Serbian Investment and Export Promotion Agency (SIEPA). If authentic, the leaks contain evidence of serious corruption within the agency. But the contents of the correspondence are only part of the story: In Serbia and elsewhere in the region, incriminating internal documents are often leaked to the media before a high-profile arrest to solidify public support for the elimination of the government’s political opponents. SIEPA offers an intriguing case study.
The Serbian Investment and Export Promotion Agency was established in February 2001, less than five months after opposition forces stormed the Serbian parliament building, forcing Slobodan Milosevic and his regime from power. The agency was set up to facilitate foreign direct investment (FDI) in post-revolutionary Serbia, and for 12 years, it seems to have done so with relative success. SIEPA established solid partnerships and joint-ventures with dozens of globally-recognized brands, including Fiat, Nestle, United Colors of Benetton, and Microsoft. Yet despite its many apparent successes, it seems some less savory activity was going on beneath the surface.
Balkanist began receiving leaks testifying to the scope of such activity at its main editorial address, editor@balkanist.net, in the early morning hours of November 11. After a close examination of over 300 emails, Balkanist approached SIEPA’s director, Bozidar Laganin, to ask about the massive leak. He explained that the agency’s emails had been hacked. Within an hour of Balkanist’s inquiry, he resigned. Laganin had worked at SIEPA for nine years.
Immediately prior to his resignation, Laganin told Balkanist that the emails had been obtained via an illegal attack on SIEPA’s information system earlier that week, and that he’d lodged a criminal complaint with the authorities. “All information seized under these circumstances is prone to manipulations prior to forwarding and are unlawful,” he said.
Laganin also denied any wrongdoing. “The agency has been working in accordance with the law, and the answers to all of your questions are negative,” he added
However, the Serbian Anti-Corruption Agency alleges that “the content of the electronic correspondence raises suspicions that criminal acts were committed and are to be processed ex officio.” When Balkanist asked a representative of the Anti-Corruption Agency what it planned to do with the leaks, he said that they had already forwarded the material to the public prosecutor’s office “for further action.”
The press office for Serbia’s Ministry of Economy also confirmed for Balkanist that the emails had been handed over to law enforcement.
In the meantime, Balkanist has conducted its own detailed analysis of the large volume of emails, which date from 2010 to this month. We’ve found little reason to doubt their authenticity, audacious as their content is. However, the circumstances surrounding the leak are equally as intriguing, and also raise many questions.
“Chopping off the traitors’ fingers”
Much of the electronic communication we received is comprised of back-and-forth discussions involving a large number of people both within and outside SIEPA. Replies to various emails contain duplicates of parts of the correspondence, all of which are entirely consistent with each other. This lends support to the idea that they are in fact legitimate.
Meanwhile, the scenario suggested by Laganin — that over 300 emails spanning three years were manipulated or completely forged within several hours — would be about as likely as scripting an entire soap opera in the same amount of time.
Though official authentication of the material is still pending, the emails strongly suggest SIEPA’s involvement in various types of criminal activity, including:
Contracting companies in violation of the Public Procurement Law,
Making predated contracts with companies and paying them from public funds for work that had already been done or was never done at all,
Awarding public grants to companies through an untransparent process and based on unfair criteria, including the personal or political preferences of SIEPA management and their associates
Providing SIEPA’s logistics and human resources to the United Regions of Serbia (URS), the political party that appointed the agency’s management,
Knowingly overspending SIEPA funds, contrary to the government’s cost cutting measures, and instructing employees not to talk about it outside the office.
With the exception of prominent politicians, Balkanist has omitted all names from the following leaks. We stress that these are just a few examples of potential misconduct, and that the entire correspondence contains many more cases worthy of the public’s attention.
1) Violating the Public Procurement Law
In one recent email, the winner of a public tender seems to have been selected before the tender procedure was finished — possibly before it even began. This is a bit like choosing the winner of a publicly-funded Miss America pageant months before the actual competition. Leaks obtained by Balkanist reveal that SIEPA officials apparently preselected a London-based company called GDP Global Development to organize a staff training session for a price of up to 23,000 euros.
“Sent: July 2, 2013 Subject: FW: Public Procurement. Email body: SIEPA staff training services will be provided by GDP Global, specialized for this type of training. We just need to set the dates, but it will probably take place in the first half of November. The expenses of GDP Global, with travel and accommodation costs, will be around 22-23K euros. Besides, we’d still have some expenses for renting a venue, and perhaps for lunch, but I don’t expect enormous expenses there.”
The email naming GDP Global Development as the winner is suspect because it was sent in July, while the tender competition was supposed to be open until October. An official document announcing the British company as the winner of the bid is still available on the SIEPA website.
In addition, the eligibility criteria for the tender was narrowed to such an extent that it’s difficult to imagine that any company doing business in Serbia would have qualified. That may be the reason why only one bidder — GDP Global Development — bothered applying.
Of course, it’s important to note that GDP Global may have been entirely unaware that SIEPA officials selected them in what appears to have been a violation of the Public Procurement Law.
2) Paying companies/creating contracts for work that had already been completed
Even more disturbingly, the leaks seem to reveal that SIEPA officials may have created contracts for fake services. In this instance, a company appears to have been paid for “work” that apparently had already been done.
“Sent: November 30, 2011 Subject: One more contract 
Email body:
Please change this contract too We’re making the second backup option for the printing company, and the contract should encompass
Services of creating a concept for some event promotion (for example) — logo, banners, posters, etc. — Can I put inside [the contract] that it was some event that recently happened? So that we can set the date for the beginning of November? Share your thoughts…
Thaaaanks
Attachment: Contract____.doc”
“Sent: December 5, 2011 Subject: contract–addition Email body:
I’ve highlighted the changes in red, see if it’s ok, and if I should add anything.
Thaanks
Attachment: Contract___1.doc”
Screenshot of the document attached to the email sent on December 5, shown above:
“CONTRACT FOR CREATIVE CONCEPT DEVELOPMENT
Signed in Belgrade, on October 24, 2011 between the following parties:
1. SERBIAN INVESTMENT AND EXPORT PROMOTION AGENCY, Belgrade, Vlajkoviceva street 3/V, represented by Bozidar Laganin, director,
2. ____________________ Inc., Belgrade, _____________ represented by ___________, director
Article 1.
The subject of this contract is the creation of creative solution for the promotion of the event Meetings with Buyers (logo, internet banners, posters, roll-up banners, etc.) taking place on November 15, 2011.
Article 2.
The contracting parties agree to exchange all relevant information, as well as to jointly plan and consolidate the terms and conditions of their cooperation.
3) Non-transparent process for awarding public funds
a) Awarding the maximum-sized grants justified by an audit
In one of several questionable cases involving the awarding of grants, the state secretary of a ministry and a high-ranking SIEPA official seem to have used their access to public funds to assist an acquaintance’s company in obtaining the largest sum of money possible:
“Sent: December 29, 2010 Subject: Re: Nis Email body:
Are there any grounds for increasing this?
[In response to:] 2010/12/29
I informed them this morning (_______) that their funds are approved. We approved 2,000 euros per employee. I can instruct ________ to increase this (he was processing the application) or we can increase it when applications arrive to you.”
“Sent: December 29, 2010 Subject: Re: Nis Email body:
3,500 is enough. Can you justify this amount in case of an audit control?
[In response to:] 2010/12/29
We increased it to 3,500 euros. We possibly can go up to 4,000. I think that the maximum amount of 10,000 euros is unrealistic.
I’m sending you the textile company tomorrow.”
b) Denying grants based on personal prejudices and/or unfounded gossip
In another example, the same two individuals appear to have decided against giving a grant after exchanging gossip about the applicant.
“Sent: September 25, 2011 Subject: RE: Eligibility Check_23092011 Email body:
PENPHARM, Zrenjanin, mustn’t pass under any circumstances.
Jugoremedia is laundering money through that firm.
The rest is generally ok for another round of checking the technical deficiencies that could be easily corrected.”
Elsewhere, SIEPA officials insisted that an applicant be denied a grant for very vague reasons.
“Sent: April 1, 2012 Subject: Re: STOP Email body:
Company IMTEL Trstenik shouldn’t get a contract.
I have information that I don’t like and I have to check them.
Thanks!”
However, the SIEPA employee suggested that IMTEL be reconsidered because of their political inclinations: The company’s owner had allegedly expressed interested in joining United Regions of Serbia (URS) — the same political party as SIEPA’s top management.
[In response to:] 2012/4/1
Helping hand in background check.
________ is the owner of Imtel and Karnevil. In addition, he owns silos near Pecinci, a chapter of an American company for helicopter production and sales, restaurants Vivo and a company Network. He was close to DS [Democratic Party] and was backing them financially. _______ from DS is his good friend. He also owns several other companies in Serbia and abroad. He is disappointed in DS and wants to join us [United Regions of Serbia]. He’s not any cleaner or dirtier than any of our entrepreneurs. I don’t know if someone’s behind these companies, but I’ll find out tomorrow. I asked for information about him at MUP [Serbian Ministry of Interior]. Besides, before becoming a businessman he was a military officer. We’ve sent him the contract for Imtel several days ago to apply for a bank guarantee, but I can ask him to give it back and stop him. He also applied with a third project, concerning his helicopter business, but it has been rejected.”
4) Using SIEPA’s public resources to promote a political party whose members run the agency
According to the leaks, it appears SIEPA officials may have used public resources to promote URS and its president, Mladjan Dinkic. At the time, Dinkic was not in the government, but was running a political campaign. The emails seem to indicate that SIEPA provided Dinkic and URS with logistical support, including help scouting “factory halls” for a party function and enlisting entrepreneurs to pretend that they had organized the event.
In addition, the emails show that Dinkic continued to make strategic decisions for SIEPA and a government ministry even after he’d left office.
“From: Mladjan Dinkic Sent: May 3, 2011 Subject: RE: Manzoni Email body:
Regarding Manzoni, we should instruct our advisor that will meet them, to practically offer them a brownfield project without any compensation, because through subsidies we’re giving him more money than he’ll have to pay for the buildings. Give them an example of Gorenje which got 3 million euros in subsidies, while the building cost was a little over 1 million. This system should be clearly explained to our economic advisors, and to SIEPA people, because we’re practically giving away all brownfield projects free of charge, and in addition another part for the equipment (Benetton, Jura, Leoni…).
Give the advisor a concrete cost estimation of the building they’re interested in (a rough estimation based on Gorenje’s estimation for the Porcelan, depending on the building’s surface area that Manzoni is interested in), the estimation of the amount of subsidies they can get (for example, at least 8,000-10,000 euros per employee). That will for sure be more than the factory hall costs.
Regards,
Mladjan”
5) Overspending taxpayers’ money
The emails also reveal that the agency has been very generous about awarding bonuses, even in the midst of a financial crisis. If the leaks are legitimate, SIEPA also appears to have successfully evaded the government’s savings policies. On at least one occasion, the management decided to “use its legal authority” to award bonuses to all agency employees. This decision was described in an email with the subject “Strictly Confidential.”
“Sent: December 2, 2011 Subject: Strictly Confidential Email body:
Dear all,
As the end of the calendar year is near, we’re traditionally summing up its results, and I’d like to inform you of the following:
I have decided to use my legal authority and award you a financial bonus, because I am truly satisfied with the results achieved, professional work and cooperation in this year. This bonus isn’t just an appraisal for a successful business year, but also an incentive for the future and for the tasks ahead of us.
Finally, this email is named Strictly Confidential, and I ask you to treat it as such. I especially have in mind negative the public opinion of the agencies, and the possibility that this decision gets shown as a wrong thing, which would prevent me from repeating it.”
To drive home the “strictly confidential” aspect of the email, one SIEPA manager cautioned that potential “traitors” would suffer by having their fingers chopped off.
“Sent: December 2, 2011 Subject: !!! RE: Strictly Confidential Email body:
A demonstration of chopping off the “traitors’” fingers, who will be played by ________, will take place today in the office room 147 at 3 pm.
Joke aside: the label “Strictly Confidential” should be taken extremely seriously. Meaning, you shouldn’t mention anything even during a pillow whisper at your home… In the crisis year, when everyone is hysterical about cutting the expenditure or hating the public agencies, this would be a point for Kurir [daily tabloid] or so. The last thing I’ll do if this happens, before I shut down my computer, will be to find out who leaked it… Belgrade is a village, and I’ve been able to find the source of information with 5-6 middlemen before..
Apart from that, happy New Year and all the best.
Sincerely yours, ____________
PS. Now delete both emails.”
SIEPA began booking expensive team-building trips to mountain resorts, paid for by the citizens of Serbia. The employees were again warned against discussing their taxpayer-funded mountain tours outside of the office.
The agency also grew fond of throwing parties. In addition to the New Year’s holiday everyone’s familiar with, Serbs also celebrate the Orthodox New Year, which starts on January 14. In 2011, SIEPA threw an “intimate” gathering at a Belgrade restaurant famous for its live music and prime location on the Danube. One senior SIEPA manager described the festivities in an email titled “Rolling on the River”.
“Sent: January 13, 2011 Subject: Rolling on the River Email body:
Dear colleagues,
I’d like to remind you that the SIEPA party is scheduled for tomorrow, January 14, 2011, at Restaurant Reka [River] (in Zemun, Key oslobodjenja street, 73 b) starting from 9 pm. Our older members should note that this isn’t a kind of party we’ve had so far but much more intimate, SIEPA staff only. Our funds are limited, so we’re not in position to invite our families, friends, cousins, and associates
Please let me know today if anyone changed their mind and can’t come.
Thanks.”
The management apparently felt that even this comparatively modest event might be difficult to justify to taxpayers, so SIEPA billed the “Rolling on the River” party as “a business meeting of the European Entrepreneurs’ Network.”
Invoice from Reka Restaurant, billed to SIEPA: Renting the space for organizing a business meeting for European Entrepreneurs Network; Amount – 1; Price – 83,010 RSD
These apparent misdeeds represent but a fraction of the leaks in our possession. However, it’s worth remembering that the SIEPA case is just one example of the corruption that cripples and corrodes much of the public sector in Serbia and Southeastern Europe. And while specific individuals and institutions have been targeted by some of the region’s new anti-corruption campaigns, the underlying structure that accommodates corruption has remained in tact.
“He’s not any cleaner or dirtier than any of our entrepreneurs”
Balkanist received the SIEPA leaks from an anonymous hacker sent directly from the Serbian government’s servers.
SIEPA’s former director, Bozidar Laganin, told Balkanist that there was no sign of forced entry at the agency’s offices. “Police and video surveillance show that the premises weren’t violated. Since Monday (November 11) was a state holiday, the email accounts were hacked online.” In fact, the entire bulk of the electronic communication appears to have been forwarded straight from the inboxes of SIEPA’s highest officials.
It’s important to describe the context in which the anonymous whistleblower decided to share the incriminating material. Less than a week before Balkanist began receiving the leaks, Laganin was interrogated by the police after the Economy Ministry pressed charges against him. Minister of the Economy Sasa Radulovic also announced that he would begin the process of eliminating SIEPA. The agency’s work would be absorbed by his ministry, which the government said would reduce public spending. The Anti-Corruption Agency refused Balkanist’s request for comment about the near simultaneity of these events.
A few days prior to the massive leak, Belgrade daily Politika reported that the police had initiated an investigation into alleged SIEPA mismanagement; specifically “public procurement, the organization and supply of trade fairs abroad, suspicious decisions on the awarding of subsidies to handpicked investors, and the management’s ‘grey funds.’”
Since the new government has established itself, it’s become common for major corruption cases in Serbia to be announced in the media, with sensational leaks from anonymous sources. These cases are tried before the court of public opinion in unsigned tabloid articles prior to the filing of official charges. Any subsequent police investigation is conducted in an atmosphere of intense media pressure. Prominent politicians announce a new “crusade against corruption” and their approval ratings rise.
This raises an important question: Is this why the anonymous whistleblower forwarded the potentially incriminating correspondence to the media, including Balkanist, rather than the authorities who were already investigating SIEPA?
Critics of the current government’s anti-corruption campaign have noted that all of the major targets have been close to the political opposition. The SIEPA case seems to fit this mold, since the agency has long worked under the political patronage of Mladjan Dinkic — the leader of United Regions of Serbia (URS), a “pro-business” opposition party.
“Those calling to shut down SIEPA draw their strongest arguments from allegations of corruption, bad management, suspicious subsidies, etc.,” said Dejan Restak, an IT entrepreneur who worked with SIEPA on several projects. “Even if all of that were true, the same thing can be found in a much more severe form in many other government institutions.”
Restak’s comments sparked a long discussion between supporters and opponents of SIEPA. “What I see here is an institution that is being attacked not so much for its wrongdoings, but because it doesn’t have a patron among politicians in power. No one will dare touch other institutions that are wasting taxpayers’ money, at least not until after some new elections,” he said.
But even if we acknowledge the selectivity of the Serbian government’s “corruption countdown”, does that mean the current investigations should simply be closed because they’re politically motivated — or should the popular request rather go towards expanding these investigations? As one SIEPA official wrote of a potential recipient of state funds, “He’s not any cleaner or dirtier than any of our entrepreneurs.” The same goes for Serbian public institutions as well.
If you have any information worthy of public attention anywhere else in Southeastern Europe — write to Balkanist, and we’ll investigate.
The post Hundreds of Leaked Emails Suggest Widespread Corruption at Serbia’s Foreign Investment Agency was first published on Balkanist.
