Sugar export report (Part II)
On 20 November 2003 the Anti - Corruption Council handed in the sugar export report to the Government of Republic of Serbia, proposing measures for the overcoming of problems emerged in the sugar export and creating condition for the annulment of the sanctions imposed by the European Union.
Council’s report was received with skepticism and indignation. Council's disclosure, that over 100.000 tons of sugar entered the country illegally, was accepted with disapproval and allegations that neither smuggle nor sugar repacking took place, that it was not the reason for the imposing of the sanctions, for there was no mention of it in the European Union's documents, according to the Minister Mr. Pitic. The Anti - Corruption Council advised measures for the responsibility demonstration and export irregularity crack down but they never reached the agenda, for the Government considered them unnecessary, moreover, they were taking steps for the sanctions annulment.
The Council's report was supported by the Government's Vice-President Mr. Covic and Mr. Isakov, as well as the former Custom's chief executive Mr. Vladan Begovic, who confirmed that according to his documentation, quantity of legal sugar trade was exceeded by 100.000 tons of exported or consumed sugar.
Minister's Pitic, president of the Government's Commission for the sugar production and trade monitoring, reaction to the Anti - Corruption Council's report was as follows:
"So, they (European Commission, Verica Barac's remark) never made any report, at least I was in no position to read a similar one, nor did they mention that the suspension was imposed due to the existence of any actual re-export, but due to the suspicion based on the Custom's service incapability to determine the origin of the goods. No one ever mentioned the number of 4.000 or 12.000 trucks, whereas anyone familiar with the business understands that the numbers quoted in the Anti - Corruption Council's report are absurd: 12.000 trucks passing the border, without being noticed. Mr. Pitic also warned that unsound mathematical calculation concerning consumption, production and export data from the report mentioned above, only contribute to the ''significance of the case".
By the decision of the European Commission, in February 2004, sanctions on the sugar export on preferential terms were extended for further six months, and thus the suspension on the sugar export entered its second year. This decision, unfortunately, matches the sugar beet planting season, therefore, the land under the beet is drastically reduced. Our major and most productive sugar plants have lost their potential buyers from the European market, and have no funds to finance the planting and are, furthermore, falling into bankruptcy and liquidation. In the 2002 private sugar plants produced around 150.000 tons of sugar, which practically means that Serbia may again become a sugar importer.
The Anti - Corruption Council continued to investigate the matter. The result of that analysis is this report, which the Council submits to the Government.
Preferential sugar export's decree was suspended on three months by the decision of the European Commission, with possibility of extension if necessary, and this information was given in the letter of Mr. Christopher Paten, dated 22 May, 2003 to Mr. Jovanovic, the Vice-President of the Government of Republic of Serbia and Ministers Mr. Pitic and Mr. Veselinov.
The letter quotes that the suspension was introduced due to the misuse of the sugar export, and states as follows: "The fact that the commercial concessions, meant to benefit your economy and society, are being exposed to the risk of misuse is not in your best interest." The decision of the export suspension was extended on 23 July, 2003, for the period of six moths, and than on 7 February 2004 prolonged for further six months. Beta agency reported as follows:
European Commission extended the temporary suspension on the commercial preferential for the sugar imported to the European Union from Serbia and Montenegro for the additional six moths starting from 8 February, as it has been officially stated by the Delegation of the European Commission in Serbia and Montenegro.
As stated in the announcement given to the Beta agency such decision was reached because the governing system in Serbia and Montenegro, although currently improved, is in no condition to adequately implement the rules of the commercial preferential status and guarantee that the sugar exported to the European Union comes from Serbia and Montenegro. European Commission hopes, nevertheless, that further improvements will be introduced in the next six months, according to the announcement of the Delegation of the European Commission in Belgrade.
We quote, hereby, the complete report of the Beta agency from Brussels dated 2 February, 2004:
European Union's Office for the prevention of the embezzlement (OLAF) and Ministry of Internal Affairs of Serbia have, in the course of four mutual investigations, determined that the sugar plants in Pecinci, Kovacici, Sremskoj Mitrovici have been used for the repacking of the imported sugar.
As stated in the memo of the accord between the OLAF's investigation team and Serbian Ministry of Internal Affairs, i.e. its Agency in charge for the organized crime, signed in October last year in Belgrade, after repacking sugar was , with presentation of the false origin, exported from Serbia and Montenegro to the European Union (EU). The same document, reviewed by the Beta agency, quotes that it was hard to establish the connection between the final export business and actual operations of the sugar repacking with fraudulent purpose.
The mutual estimation of the OLAF and Agency of the Serbian Ministry of Internal Affairs, in charge of the organized crime is that it is very hard to determine the routes of the sugar trade in the Serbian territory due to the existence of shell companies network, which issue false documents within the fraud operation, and with the purpose of covering up the real users.
According to the European Commission, which suspended sugar export from Serbia to European Union on the preferential terms, import of the sugar from the European Union to Serbia and Montenegro at subvention prices, its repacking under fake declarations and re-exports to the European Union at the preferential duty free tariff facilitated double illegal profit.
The memo of the accord between OLAF and Serbian Ministry of Internal Affairs specifies that the police services now have to finish and coordinate their information and investigation on the basis of the firm political support and rigid will of the Serbian Government, with remark that the absence of the transparent cooperation does not encourage a successful battle against the organized crime, involved in this cases.
One of the quoted companies against which the charges have been raised was said to be ''Vocar Lutka" from Prijepolje. The Montenegrin company "Adriatic", as well as some others, are under suspicion that they issued false documentation in their business with the company "Vocar Lutka".
Document shows the connection between these two companies and other shell companies they have established in Prepolje and Podgorica, and one non existing company "USTRADE", and "one of the most important buyers", company "ISD" in Belgrade.
According to the findings of the investigation, "Adriatic" was the sugar importer from the EU countries and other European countries, trough customs services in Sabac, Subotica and Pancevo. Customs clearance for this import was, as it was determined, obtained trough "Trgosped" from Sabac and "Pervan" from Subotica. Imported sugar was then delivered to the sugar plants in Sremska Mitrovica and Zabalj. According to the findings of the investigation teams of OLAF and Foreign Affair Ministry of Serbia, the significan importer is, everything points to that, company "MK Komerc".
According to the same source trucks with sugar for the account of "MK Komerc" were arriving to Pancevo, transported to Kovacica, and than transferred to various sugar companies, for ''different purposes". Also some other ''operators'' imported large quantities of sugar as well. Sugar was than transported to sugar plants and simultaneously sold to the exporters.
"The same company deals with import and export operations. They are selling sugar among each others", shows the mutual document of OLAF and Administration of Foreign Affair Ministry of Serbia. Inspection of the Belgrade company ISD's import and export has lead the investigation to the check up of the sugar plant in Pecinci, which belongs to the "MK Komerc"group, and its books (accounts) have shown that there were no evidence that the sugar was sold on 23 and 24 July, 2002 from the sugar plant in Pecinci. Sugar plant warehouse was in that time, according to the official books, empty.
Therefore, the legal procedure against the ISD company was initiated due to the issue of the false documentation, show the expert's findings of OLAF and Administration of the Foreign Affair Ministry of Serbia experts, and quote one testimony which suggests that sugar plant in Pecinci has been used, more than once, for the sugar repacking and for the re-export to the EU. Among other things, it is stated that this was done with the sugar imported from Slovacka, and that sugar plants in Senta and Vrbas imported around two tons of sugar from the EU, and, simultaneously exported the same quantity of this product to that market.
According to the document, OLAF was informed about the fraud scenario and the entanglement of the company INTERFRIGO, which exported 896 tons of European and Serbian sugar, between December 2002 and April 2003. The connection between two companies "Adriatik" and "Oria intenational", whose owner resides in Montenegro has also been mentioned.
In conclusion of the memo of the accord between OLAF and Administration of the Serbian Ministry of Internal Affairs it was said that the absence of the specific laws on prevention of the financial crime, corruption and money laundry, as well as lack of cooperation in the international investigation operations with other respective countries (Montenegro), do not facilitate the use of the indispensable tools for the efficient struggle against the organized financial crime to the legislative and police bodies.
The mutual report of OLAF and Serbian Ministry of Internal Affairs reveal, in fact, the true reasons for the imposing of the sanctions, derived form the first report of OLAF in November 2002, and all the subsequent warnings Serbian officials received from EU.
Mr. Pitic, discarded this report as well and gave the following statement for the newsmagazine "Economist":
''I am pleased with the work of the Commission in charge for the curb of the sugar trade. I am not in a position to evaluate the work of the Serbian Ministry of Internal Affairs, but the fact remains that EU is being critical towards the dynamic of the investigation. Should such critic prove to be substantial, personally, I have to be unsatisfied because it means that things needed speeding up. I believe that the connection with OLAF should be much closer, and that Memo of the accord did not contribute to the problem solving. The memo, moreover, shifted the EU attention to misuse in sugar trade. Personally, I believe that the mentioned document has been made rather clumsy, especially because it contains certain political qualifications, groundless data, and mistranslation. Parts of that document are very imprecise, and some contradictory to the later police findings.’’
Government’s data discrepancies
Reports of Government Commission for the sugar trade hide serious discrepancies. Data supplied by the Ministry of Commerce, quote that the total production, stock and sugar import in Serbia in 2001, 2002, and till May 2003 amounted to 652,184 tons, and total export for the same period 331, 024 tons. The difference, which has to refer to the consumption (Ministry of Consumption offers no data), is 321,160 tons. According to the evaluation on which the Governments authorities agree, the lowest sugar consumption in Serbia is app. 220,000 tons annually, which means that total sugar consumption for the given period was app. 520, 000 tons. Thus, the very data of the Government Commission show a ‘’surplus’’ of 198,840 tons of sugar, that was neither produced, nor present in the stocks, nor was it legally imported, neither consumed nor legally exported.
During the elaboration of the previous sugar export report, we have noticed discrepancies in the imported and customs cleared sugar quantities, and those with accompanying certificates proving they can be put into traffic in the domestic market. Such discrepancies might suggest that the quantity from the difference between the customs cleared and certified sugar was put into traffic without the necessary check up, usually strong ones because they refer to the food, or that it wasn’t intended to the domestic market, but imported to receive the preferential Serbian origin, and re- exported to EU. Minister Mr. Pitic responded as follows:
“Referring to your letter number 72/116 from 9 October, 2003, distributed by Ministry of Finance and Economic Affaiirs, and on behalf of the Commission for sugar production and trade tracking, we wish to point out as follows:
- During food import qualified labs always perform the sample analysis. Afterwards Market Inspectorate issues the certificate of quality for the export oriented goods. This declaration confirms that the goods whose sample was tested corresponds to the quality stipulated by the Regulations.
- Besides quality control, fitosanitary and vet control are being performed, upon which the inspectors issue the Certificate of fulfillment of the fitosanitary and vet conditions. On the basis of the issued certificates the customs officers carry out the customs clearance of the imported goods.
- Inspectorates of the Federal State have, during 2001 and 2002, issued mentioned Certificates. By enactment of the Low on Ministries in May 2003 (Official Gazette of the Republic of Serbia, number 47/03), food quality control as well as fitosanitary and vet check up, was switched to the Ministry of Agriculture of Republic of Serbia.
You asked for Decision on the trade of the imported sugar. Having this in mind, we inform you in advance, that prevailing regulations do not stipulate issue of the mentioned decision. In order to receive our adequate response, please define your request more precisely.
Kind regards,
Minister
Mr. Goran Pitic
Minister did not respond to the new request of the Council dated 17 November, 2003. Obviously the basic problem was not the inaccuracy, but the data we asked for. We quote our letter form 17 November, 2003:
With respect to your letter dated 22 October, 2003 explaining the inaccuracy of our request, please provide data whether market inspector issued the Certificate of the quality of the export – oriented goods for the imported sugar in 2001 and 2002, according to the mentioned list:
Year 2001
Customs cleared Certified
(in tons) with STI(in tons)
- MK COMMERCE, Novi Sad 22.000 0
- Beograd, Zemun 4.998 0
- Voćarlutka, V. Župa 5.920 275
- Međ.dist.šeć.isd, Beograd 5.042 4.350
- Swisslion, Novi Sad 3.997 0
- Tehnotron, Valjevo 2.419 200
- SI&SI comp. Subotica 1.995 0
- Pistolato, Valjevo 1.750 0
- Jugošećer, Beograd 1.597 2.000
- Agraxtraiding, Beograd 1.314 724
- Furta, Osečina 1.400 0
- Banat, Vršac 1.400 0
- BIP, Beograd 1.150 0
- Šećerana, S. Mitrovica 1.000 0
- Stork, Kula 1.000 0
- Delišes, V. Han 1.160 0
- Starproduct, Čačak 1.030 0
- Mediteraninv, Pirot 968 0
- Subotičanka, Subotica 810 0
- Stevanović CO, Novi Sad 858 0
- Suvoće, Subotica 750 0
- Nectar, B. Palanka 800 0
- PNAGROEKONOMIK, Beograd 596 0
- Kogokom. Zemun 534 0
- Foodline, Vršac 650 0
- Ravanica, Ćuprija 550 0
- Jenex, Beograd 500 750
- Takovo, Gornji Milanovac 522 0
- Zaječarka, Beograd 500 0
- Jobson, Beograd 600 800
- Vitaminkaprod. Niš 547 0
- PKBVOĆ. Plant. Boleč 500 0
- Pivara, Niš 500 0
- Monteprom, Valjevo 400 0
- Banini, Kikinda 407 0
- Paraćinka, Paraćin 400 0
- Coloseum, Kraljevo 480 0
- Interflex, Čačak 300 100
- Polimark, Beograd 300 50
- Šebex, Čačak 320 230
- Interdil, Nova Varoš 292 0
- Beofruto, Beograd 261 0
- Centroproizvod, Beograd 250 0
- Kondivik, Vršac 300 0
- Jaffa, Crvenka 200 0
- Euroagent, Vrbas 241 0
- Kvele, Novi Pazar 280 0
- Miloduh, Kragujevac 200 0
- Voćar, Koceljeva 174 0
- Clascom. Čepure 195 0
- Acikokom. Kraljevo 192 0
- Mladostpro, Grocka 176 0
- Gakprom, Futog 200 0
- Milleniumtrade, Zemun 100 0
- Fabrika šećera, Kovin 145 0
- Atanasijavić, B. Jarak 128 0
- Oriontrade, Novi Sad 117 0
- Novasloga, Trstenik 100 0
- ITH, Novi Beograd 1 2.650
- IBP Beograd 0 1.000
- NB Aplex 0 100
- Nova pet 0 200
Year 2002
Customs cleared Certified
(in tons) with STI (in tons)
- MK COMMERCE, Novi Sad 22.255 9.516
- Voćarlutka, V. Župa 9.067 0
- Beograd, Zemun 8.000 0
- Swisslion, Novi Sad 3.133 0
- Banini, Kikinda 472 0
- Bolvesani, Novi Beograd 1.134 1.605
- Medela, Vrbas 1.000 500
- Oztrade, Novi Sad 1.255 0
- Jobson, Beograd 800 1.502
- Žitokomerc, Bobište 678 4.946
- SI&SI comp. Subotica 548 1.639
- Ind. hra. Dunja, Beograd 460 115
- Jaffa, Crvenka 398 199
- Fruta, Osečina 500 800
- Koran, Priboj 442 0
- Wunder, Niš 240 0
- Polimark, Beograd 226 66
- International CG, Beograd 216 48
- Selekcija, Aleksinac 137 0
- Brazdacoop, Inđija 212 0
- Pionir, Subotica 99 1.045
- DELYUG, Novi Beograd 49 200
- Adriaticcorporation 0 112
- Centrožitarice 0 137
- IBP Beograd 0 6.000
- IPB 0 1.000
- Subotičanka 0 450
- Yucom 0 229
Report of the EU, upon which in February 2004 sancitons on the sugar export to Serbia were extended, quote this problem as well: «Documentation shows that all the sugar imported and customs cleared during years 2001 and 2002 was not registered in the Ministry of Finance, and Commercial Inspection, which proves that the end buyer did not report the significant quantites of the sugar imported to Serbia.«
Few basic facts
By EU's Decree, number 2007/00 from 18 September, 2000, and EC appendix 2563/00 from 20 November, 2000 the market for the import of the sugar produced in Yugoslavia and other Balkan countres, without any restrictive measures and customs burden, was opened.
Significant sugar export to the EU countries began on 1 August, 2001, upon the approval of the first quotes for the sugar export. Untill the imposement of the sanctions on 22 May, 2003, the quantity of 352,063 tons of sugar, at average price of 600 euros per ton, were exported to the EU countries.
Serbia gained the possibility for the preferential sugar export in 2000 year, when, in fact, it was an actual sugar importer, because the production in that year amounted 119, 178 tons, which was less than the annual consumption in the domestic market, starting from 220,000 tons (Government's officials data) to 280,000 tons (according to the analogous sugar plants data, company ''Jugosecer«, and former Minister Mr. Veselinov. Vojvodina represents the most favourable region of the Central Europe for the sugar cane production, where only 7 % of the arable land covers the production of the 750, 000 tons of sugar, and existing procesing capacities, i.e. 15 sugar plants.
EU's decision represents a gesture of readiness to help our country and Govrenment in overcoming of economic difficulties from the past period, and contribution to the economic rehabilitation of the country. Intention was to use the positive financial outcome from the export to the protected European market on the sugar plant functioning, their financial comeback, impoved production of the sugar cane, i.e. creating of the conditions for the sugar production we had in the nineties, when our industry was equal to the production of the Western countries. Production in 1990 amounted to 600,000 tons.
Sanctiones were imposed due to the enormous export increase which did not originate from the domestic production. In 2002, when serious warrnings from the EU already started, 159,617 tons were exported, and in first five months in 2003 another 115,260 tons, which totals 274,877 tons of sugar exported from the production campagne in 2002. We state that the total campagne production in 2002 amounted 270, 517 tons, which means that we exported more than the actual total sugar production of that year. Let's review the facts again:
Production in 2000 119.178 tons
Production in 2001 211.873 tons
Production in 2002 270.517 tons
Import in 2001 76.663 tons
Import in 2002 63.956 tons
Import in 2003 (till 7. 5.) 40.884 tons
Export in 2001 77.184 tons
Export in 2002 159.617 tons
Export in 2003 (till 7. 5.) 115.260 tons
Trough very simple procedure, of suming up the total production and import in a specific year, and than subtracting total consumption and export, indisputable circumstantial quantity of smuggle apperars, which can not be discredeted. Taking into consideration the period from preferential status to its suspension, we see that total production in this period amounts to 601,568 tons, total import 181,504 tons, which means that the total available sugar quantity amounted 783, 072 tons and total consumption and export for that period was 862, 061 tons, meaning that within the consumption of 220, 000 tons annually in the domestic market, accepted by the Government's officials (and probably less than the actual consumption), the produced and legaly imported sugar quantity was exceeded by more than 109,990 tons of exported or consumed sugar.
Once the stocks are added, which on 15 May, 2003 amounted 86, 330 tons, and which should be subtracted from the available sugar quantity, the amount of 196, 320 tons of sugar, exported from Serbia during 2001, 2002, till May 2003, without being produced in Serbia or legaly imported, appear.
The proof that the Ministry for the Foreign Economic Relations and Ministry of Commerce knew that large quantities of sugar are being smuggled, is that they have tried to conceal those quantites in their reports, by not stating data of annual sugar consumption in Serbia, which enabled them to accurately quote all the rest information (production, import, and export), and to leave the smuggle problem blured.
We have already stated that the sugar export suspension was extended for six months in February, which opened way to complete disaster of this economic field in Serbia.
Sugar export analysis is not complete without, at least, partial analysis of the sugar plant privatisation.
Financial impact of the preferential sugar export did not contribute the walfare of the sugar plants and their preparation for the privatization, for which major European sugar producers have shown great interest. The most obvious consequences of the sancitons are visible in the sugar plant fiasco, and withdrawal of the producers like AGRANA, SFIR, ST. LOUISE SUCRE, SHAFFER AND ASSOCIATES, from the particiapation in the privatizaton process.
Analysis of the Privatization Agency's report on sugar plant privatization
Agency's report quote that sugar plants »Backa« in Vrbas, »Zrenjanin« in Zrenjanin, and »TE-TO« in Senta were privatised in compliance with the previous Law; while sugar plants in Bac, Kovacica, Crvenka, Pecinci, and Zabalj were privatized according to the new one, i.e. trough public tenders; that sugar plants in Kovin and Sremska Mitrovica are in the proces of privatization trough public auction, and sugar plants in Cuprija, Belgrade and Sabac are in the proces of reconstruction. It also quotes that the sugar plants in Pozarevac and Srpska Crnja can not be privatised, because thay falled into bankruptcy.
Agency's review of the sugar plants privatized in compliance with the new Law and trough tenders, gives only schematical insight of the privatization procedure, underlining that the emphasis was to ensure neccessary investments due to the reconstruction of the outdate production capacities, and improvement of the sugar plant operation.
It states that privatization insures significant funds for the investment and social work of this enterprises. According to the analisys that was the main reason for the sale of the three sugar plants to MK Komerce at the price of 183 dinars, but without any data on how the mentioned contracts were performed, taking into account that they were signed in October 2002.
Important data of how much was it invested till now are missing.
Sugar plants in Sremska Mitrovica and Kovin are said to be the two least atractive sugar plants, which led to the public auctions, acctualy four usuccessful attempts in last 14 months, to be more precise. These two sugar plants have not been operative for some years, and the Agency's starting price was 86 to 152 milion dinars, and total bid value from 238 to 194 milion of dinars. These sugar plants have not been given the opportunity to privatize themselves trough tenders for, let's say, a price of 183 dinars, where future investments and social programs would represent the main value of the bid.
Major American sugar producer SHAFFER AND ASSOCIATES from Louisiana, showed considerable interest in the sugar plant in Kovin, considering it very atractive, both from the technology as from the strategic position (vicinity of the river Danube), but he wasn't willing to purchase it for the starting price of 2,500, 000 euros, with obligation of accrued debts settlement and equipment investments. SHAFFER AND ASSOCIATES' representative said that his firm suggested all sugar plants should undergo tender privatization, because it is not a custom to sell large factories on auctions, but their suggestion was refused, and SHAFFER AND ASSOCIATES withdraw from the purchase.
Regarding the three sugar plants already in a process of restructurization, only scarce data have been given, and, hereby, we quote, basic data for the oldest sugar plant in Serbia, ''Dimitrije Tucovic'' in Belgrade:
Our oldest sugar plant was established in 1898 and the founder was the joint-stock company from Regenzburg and Kingdom of Serbia. Today it is a socialy-owned company with 105 years of tradition in sugar production. Sugar plant in Padinska Skela represent a newly constructed sugar plant with operating capacity of 10,000 tons of sugar cane per day (border capacitiy in EU). It is situated within the limits of Belgrade market, and represents one of the most cost-effective economic subject in Belgrade, and in the conditions of full operational capacity it employs around 30, 000 workers. The plant has not been working since 1998, therefore, due to the insufficiency of the working capital and on the basis of the public advertisement Italian company SFIR was chosen to be the most favourable bidder for the lease of the plant.
During the negotiatons with this company, the investment for the production revitalization and debts return of 36,500,000 DM was agreed upon, but foreign partner asked for certain warranties from the Ministry of Privatization and preferential status, i.e. priority in purchase proces during the proces of privatization. On suggestion of the Ministry of Privatization this potential business cooperation was stopped. In September 2002 Agency for privatization decided to iniciate proces of sugar plant restucturization.
The procedure was ended in October 2003, by submitting the proposal of the sugar plant restucturization concept to the Privatization Agency. The plant, however, was not privatized, the Agency did not undertake any other steps, the company is still out of work; 182 workers out of 359 volonteered as redundant staff, and 177 of them, sceduled to continue the production, are still out of work and do not receive any remuneration. These workers have protested in front of the Government's offices, and their only concern was a potential bankrupcy, for they hoped that privatization would compensate for, at least, part of their lost earnings.
Agency's report does not reveal why the partnership between the Italian SFIR with the sugar plant in Padinska Skela was not accepted, considering that they accepted to pay out the debts and restore plant production in 2002. Instead the procedure for debt desrease restructurazation were introduced, and after its completition no strategic partner was found, nor was any sale attempt made.
Sugar plant in Zrenjanin was privatized in compliance with the previous law, and this year it ceased its production for the first time since 1911. On 12 February the Government of Serbia reached the conclusion by which Programe of revitalization of the production of the sugar plant AD«Zrenjanin« was adopted, advising Ministry of Privatization to grant the use of the subvention funds to the sugar plant, which amount 20 million dinars in order to animate the production of this company. The mentioned report of the Privatization Agency quote that this sugar plant, and others privatized in compliance with previous law, are no longer in the responsibillity of the Agency. Considering this, we asked for the report from the Ministry, and we expected it to contain as follows:
- What did the Government do for the revitalizaton of this sugar plant since the implementation of the governmental measures in June 2003?
- Why wasn't the procedure for the damage indemnity iniciated, when the report delivered to the government states that the damage was more then 100,000 dinars?
- If and when did the sale of 60% of shares transfered to Share fund take place?
Press release reveil other sugar plants data which do not occur in the report of the Ministry. Aritcle in daily newspaper »Politika« dated 26 January, 2004 quote, that after the tender sale of three sugar plants to MK Komerc at the price of 3 euros, American company Sheford turned to the Republic Government suggesting the purchase of six sugar plants, currently closed, at 10 USD, but with obligation to pay out their debts and re-invest in their production, but were turned down.
Ministry's report on sugar plant privatization does not show the conceptual approach to the sugar plant privatization, nor privatization plan, though elaboration of the rehabilitation study was pending. Capital value data are not precise, because they do not contain many other data, stock, goods and material for the reproduction, unfinished production, ownership over other objects not connected to the sugar production, and whose sale could facilite debt payment, or at least part of them (hotels, stadiums, special warehouses, old sugar plant in Cukarica, etc.).
Moreover, analogous analisys of the tender and auction conditions is missing, because the impression is that tenders are far more favourable and are given in period when they had actual production. Furthermore, auctions start with mindless sums of money, followed by big debts and productionless for long number of years, aming to decrease the interest, and thus becoming a lesser threat for the already sold sugar plants.
The question is, why the auctions were not swaped with tenders, when they gave expected results and when interested buyers insisted upon them.
Tender privatization have been performed in five sugar plants which did not stop its production and which, in the autumn when they were sold, produced 156,472.6 tons of sugar, sold at 600 euros per ton. Three sugar plants bought by MK Komerc for 549 dinars, produced in that autumn 62,057.1 tons of sugar.
Recommendations to the Government
Sugar export analisys to the countries of the EU and privatization of the sugar plant gives a complete insight of devastating power of the corruption in this country. Even such transparent data of sugar smuggle, which led to the sanctions two months after the admission to the Councel of Europe, did not provoke the reaction of the state institutions in charge. Ministry for the Economic relations with abroad, in cooperation with other bodies of the executive authorities, enforced the action of covering up and concealing the real causes. It was the case of the obvious corruption, where public interest was completely annuled, and the authorities acted in the interest of a very narrow group of people.
Our suggestions to the Government of Serbia, are as follows:
- Deciding set of measures with aim to determine the faults which led to the sancitons for sugar export, and ruin of almoust entire industrial field of sugar production.
- Determining, according to the list of importers and exporters, the exact flow of the exported sugar, and financial effects of the export at the preferential prices, as well as potential profiteers.
- Engaging an independent auditing agency, which did not participate in the privatization proces till now, to perform the complete analisys of the sugar plant privatization so far, especially from the aspect of the existing sugar stocks of the privatized sugar plants exported at the preferential regime, and if and in what way did it affect the sugar plant sale stated to have business loss.
- Paying particular interest in determining the assets of the sugar plants, together with the ones not connected with the production, the potential impact from their sale in the market independently from the sugar plant sale, for instance, how would the sale of the old sugar plant in Cukarica affect the reduction of the financial loss of the oldest sugar plant.
- According to Mr. Radovanovic from the Institute for the criminological investigation, police may, in the course of two months, determine the path of the smuggle, and the responsable ones, but until now no political will was expressed. We belive that the sugar smuggle, EU's sancitons, and the sugar plant ruin, may be a strong foundation to form and show the political will, reasuring this country's citizens that the hidden power centres can not invalidate the public interest by corruption, and that the state bodies in charge are willing and able to protect them.
The Anti-Corruption Council
President
Ms Verica Barac
Belgrade,
March, 9th 2004