People vs. Milosevic; Part 4: Epic corruption
By CNN Chief International Correspondent Christiane Amanpour
BELGRADE, Yugoslavia (CNN) -- At the same time Serbia was celebrating the fall of Milosevic, his loyalists were caught red-handed trying one last time to loot the national bank.
"The intention was to withdraw some 50 million of German marks from the accounts of the central bank and to transfer abroad, so we stopped this operation," says Mladjan Dinkic, governor of the National Bank of Yugoslavia.
"They received the order from the federal government to empty totally the federal budget."
Dinkic blocked that as well, and the next morning he and his team started digging. They would uncover epic corruption during the Milosevic era, everything from money laundering to smuggling to banking schemes.
At the center of it all, says Dinkic, was Mihalj Kertes, the head of Milosevic's customs service. He is now under investigation and he refused to comment.
"Simply speaking, public funds were used in private purposes," says Dinkic.
"Customs revenues, instead to be put into the budget, were put into the special treasury in the Beogradska Banka and transferred abroad, mostly in Cyprus."
"In what, in bags of cash?" CNN asked Dinkic.
"In bags. In big bags of cash," he says.
During years of U.N. trade sanctions, the black market generated vast sums of money for the Milosevic regime.
"The market for the illegal cigarette operation was created in Yugoslavia, and he supported this because one of the main dealers of cigarettes was his son, Marko Milosevic," says Dinkic.
"How much money did this illegal cigarette smuggling bring in?" CNN asked Dinkic.
"Let's say that between 500 million and 1 billion of German marks was the income from this illegal trade in cigarettes, which was not paid into the budget," says Dinkic.
Toma Fila, Milosevic's attorney, says: "At no time have they said that he put a single mark of that money in his pocket. Not a single mark."
Profits from the black market went to a network of paramilitaries, many of whom Milosevic had enlisted in his wars against Croatia and Bosnia -- men like Arkan, a career criminal.
For Arkan's Tigers and other paramilitaries, murder and looting were part of the job.
And when the ethnic-cleansing campaigns were over, many returned to new careers in Milosevic's underworld.
"Once the decision regarding state smuggling was made, the job was given to them as people who could be trusted," says Dusan Mihajlovic, Serbia's new interior minister. "From there, ordinary criminals then grew into well-organized criminal groups."
By the time the U.N. trade sanctions were eased in 1995, a vast apparatus had developed that both supported Milosevic and depended upon him.
From top to bottom, from presidential palace to cigarette kiosk, the people running this state, says Mihajlovic, had turned it into a vast criminal enterprise.
Arkan the hitman became a businessman and started his own political party. But according to his former associate, Arkan took his orders from much higher up.
"I was the connection between the Serbian secret service and him," says Branka Sipka. "When, for example, secretary from Serbian secret service call us, she said: 'Please give me Arkan.'"
Arkan dealt in black-market cigarettes, alcohol and gasoline, among other things. Until he was shot dead in Belgrade's Intercontinental Hotel in January 2000, he was virtually untouchable -- for one reason.
"Arkan all the time was by control secret service," says Sipka.
"And therefore you think he was controlled by Milosevic as well?" CNN asked her.
"Yes of course."
"How was he paid? Who paid him?"
"They bring to us to headquarters here in Belgrade sacks of monies -- big sacks with money, a lot of money," says Sipka.
Like other smugglers, Arkan could rely on Milosevic's cronies when he ran into trouble.
"When he had some problems on customs with Macedonia, he used to call Mihalj Kertes, and he arranged all," says Branka Sipka.
Shady banking schemes
The black market and money laundering weren't the only ways the Milosevic machine amassed its fortune. Billions were taken directly from the people through shady banking schemes.
In the early 1990s, to get hold of individual personal savings of so-called hard currency, Milosevic licensed new state-approved "banks." These banks promised to pay depositors interest of about 15 percent a month.
As interest rates skyrocketed, the government printed more money and the value of the Yugoslav currency plummeted. As for the foreign currency that people had deposited with the banks -- it vanished overseas.
"We are talking about billions of dollars," says Dinkic. "According to my estimations, some 4 billion of U.S. dollars were transferred abroad."
"I tell you the foreign bankers and the foreign businessmen were very helpful to them, sympathizing, making the business," says Serbian businessman Milorad Savicevic.
"Are you saying that, at a time when Yugoslavia and Serbia were under sanctions ..."
"… that foreign banks, perhaps in London, in the United States …"
"Cyprus, Switzerland …"
"… were helping him launder his money, essentially?" CNN asked Savicevic.
"Moving the money. I am pessimistic that we would ever know exactly what happened. Money -- finished," says Savicevic.
Milosevic may be behind bars at The Hague, but the tribunal doesn't have the power to investigate local charges.
Milosevic has denied any personal connection to corruption, but the long-suffering Serbs want his regime held to account for the vast sums of money they say were stolen.
"What do people expect?" says Goran Svilanovic, Serbian foreign minister.
"They expect to see those who have got very rich during these 10 years, while sending the other people's kids to the wars, and all of us to poverty, behind the bars."
Case against Milosevic
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International Criminal Tribunal for the former Yugoslavia
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