Winners and Losers Who benefits from high-level corruption in the - - PowerPoint PPT Presentation

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Winners and Losers

Who benefits from high-level corruption in the South East Europe energy sector?

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Introduction

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The report highlights high-level corruption in the energy sector of South East Europe countries

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11 cases from Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro and Serbia

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Case studies drawn from publicly available material, and with the help of extensive media coverage on both alleged and proven corruption in the region

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Lead author: Marko Prelec Case study editor: Pippa Gallop Editor for SEE Change Net: Garret Tankosić-Kelly

Preface by Ulrike Lunacek, MEP and Vice-President of European Parliament “Corruption must be fought in earnest by EU member states and candidate countries.”

EU Sustainable Energy Week 2014 High Level Policy Conference

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Report launched at panel discussion Impact of weak institutions and corruption on energy investment in South East Europe

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Discussion opened by MEP Claude Turmes, Vice-President of the Green Group in the European Parliament

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Panelists: Leila Bičakčić (Center for Investigative Journalism, BiH) Irena Stević (Insajder B92, Serbia) Mislav Bago (Nova TV, Croatia) Patricia Gannon (Founder of Karanović-Nikolić law firm, Serbia) Dejan Milovac (deputy executive director of MANS,

Media impact

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Report received significant EU and regional media attention

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Reported by EurActiv, Energy Post, Equal Times, Energetika, Balkan Insight, SETimes, Slovenian Dnevnik…

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Press statement by Ulrike Lunacek reported by various media in the region

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Stimulated an increased interest in corruption issues by

Albania: The money laundering investigation

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Date: Transactions in June – October 2007; Investigation launched in October 2008. Ansar incident aired on TV in January 2013.

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Summary: Case covers Argita Berisha, lawyer and daughter of ex-Prime Minister Sali Berisha, who had close ties with Bosnian businessman Damir Fazlić (2007) and was accused for asking for a “success fee” from Pakistani businessman Zafar Ansar (2013).

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Status: Ms. Berisha’s wealth is being assessed, and in April 2014 the Socialist Party has asked for an investigation in the Zafar Ansar case. Damir Fazlić case was closed without any charge.

Albania: The hydro concession case

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Date: Alleged incident became known in January 2011.

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Summary: Former deputy Prime Minister Ilir Meta was charged based on hidden camera footage aired on Albanian TV, showing him trying to corrupt a hydropower concession with former Economy Minister Driftan Prifti. Footage was deemed to be falsified by Albanian experts. Meta was also accused of taking a 1 million EUR bribe for favoring a business in a tender of crude oil, while Prifti was later accused of bribery together with his deputy Leonard Beqiraj, based on a video found on his laptop.

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Status: In January 2012, the High Court in Tirana acquitted Meta due to insufficient evidence. In September 2012, prosecution withdrew the charges against Prifti and Beqiri, also due to insufficient evidence.

BiH: The EPBiH and EPHZHB energy trading case

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Date: Incidents came to light in 1998 and again in late 2011.

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Summary: State authorities of FBiH have on two

• ccasions, more than 10 years apart, decided to trade

EP BiH’s surplus electricity through traders, which made a significant profit for private trading companies involved, Debis International and Rudnap (represented by already mentioned Damir Fazlić).

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Status: Edhem Bičakčić was excluded from involvement with EPBiH in March 2003, but the ban was lifted in 2006. In 2009 a separate trial against Bičakčić and Čović resulted in an

• acquittal. No high level politician has ever been

Croatia: The HEP energy trading case

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Date: Sale of electricity was approved by HEP in 2007. Investigation began in 2010, and first indictment against Ivan Mravak was issued in January 2012.

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Summary: The case concerns the sale of electricity at below-market rates by Croatian provider HEP to two factories: TLM (Croatia) and Aluminij (BiH), which cost HEP about 85 million EUR. Connected to this case, state prosecutor alleges then-Prime Minister Ivo Sanader accepted more than 1.5 million EUR in bribes.

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Status: Former HEP board chair Ivan Mravak was indicted in 2012 for abusing his office on the orders

• f Sanader. Sanader was indicted in 2013. The

prosecution has withdrawn the indictment for amendments and is expected to re-issue it again

Croatia: The INA-MOL Affair

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Date: Indictement against Sanader was issued in November 2011, and trial was concluded in November 2012. Zsolt Hernádi was indicted in March 2014 and is pending trial.

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Summary: Court convicted then-Prime Minister Sanader for taking 10 million EUR in bribes from the Hungarian oil company MOL, to give them a dominant position in the Croatian oil company INA.

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Status: Sanader was sentenced to 3,5 years in prison in a separate case connected to Hypo Alpe Adria Bank and for 7 years in the INA-MOL case. He was ordered to pay a fine of 5 million EUR in November 2012. In March 2014, Zsolt Hernádi was indicted on charges that he bribed Ivo Sanader. He has denied wrongdoing and Hungary has refused extradition.

Kosovo: The KEK contract libel case

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Date: 2012

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Summary: Arbana Xharra of the independent daily newspaper Zëri wrote an article commenting that businessman Bejtush Zhugolli and two of his brothers were financially supporting Prime Minister Thaçi’s election campaign and that in return they won lucrative contracts at the Kosovo Energy Corporation (KEK).

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Status: Zhugolli sued Xharra and Zëri, but Xharra was found not guilty. When Selvije Bajrami, another Zëri journalist, published a report on the first court session, Zhugolli also sued her, and she was also found not guilty.

Kosovo: The UNMIK/KEK affair

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Date: Investigation started in 2001 and finished in 2003.

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Summary: From 2000 to 2002 it was discovered that Jo Trutschler, manager of Kosovo Energy Corporation (KEK), acquired about 4.3 million USD and transferred the sum to fake companies in

• Gibraltar. UN investigators discovered that in

addition Trutschler had falsified his diploma and claimed greater experience in management than he really had.

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Status: Jo Trutschler was convicted by a German court on behalf of UNMIK of breach of trust and misusing an academic title and served a sentence of 3,5 years. Most of the money was recovered and

Macedonia: The electricity trading cartel and tax evasion cases

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Date: Electricity auction in question took place in January 2012.

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Summary: In 2012 the Antimonopoly Commission of Macedonia filed misdemeanor charges against 4 electricity trading firms on suspicion that they created a cartel so they could dictate the price for electricity imports through their bids in a January 2012 tender. Later in the year the customs office also charged 3 electricity trading companies additional customs duties, saying that they had used various methods to evade paying these fees.

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Status: Commission for Protection of Competition confirmed that they filed misdemeanor charges against the companies that allegedly created the cartel and that this process is still

• ngoing. In the tax evasion case it is not clear whether the

Montenegro: The KAP electricity theft affair

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Date: February – May 2013

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Summary: Between March and May 2013 the Montenegrin government allowed the Podgorica Aluminium Factory (KAP) to steal power from the European Energy Interconnection System after the Montenegrin electricity company cut them off for non-payment. The European Network of Transmission System Operators for Electricity (ENTSO-E) ordered Montenegro to return the stolen electricity or risk being excluded from the European network. The government agreed to do so, but the cost is being passed to taxpayers through the state budget and consumers through increased electricity bills.

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Status: The state prosecutors are still investigating this case, but so far no-one has been charged.

BiH/Montenegro: Electricity trading

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Date: Transactions took place in 1999 and 2000, investigation lasted until 2008.

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Summary: In 1999 USAID gave the Montenegrin government a donation of 11.9 million USD, part of which was to cover EPCG’s debt for electricity imports from EP RS in BiH. However, Serbian businessman Vuk Hamović, then a director of London-based GML, bought up EPCG’s debts shortly before the USAID donations, giving rise to suspicions that the USAID money was being purposely diverted to GML.

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Status: BiH prosecutor dropped its investigation in 2006 and the UK Serious Fraud Office dropped its investigation against Hamović in 2008 due to the low likelihood of being able to secure a prosecution. The results of the USAID investigation are unknown.

Serbia: The Kolubara mining scandal

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Date: 2004 – 2009; The issues came out in the media in 2011

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Summary: In 2011 Serbian police arrested the former director of the Kolubara mining company and 16 others

• n charges of unlawfully harming the company through

improper hire of equipment and falsification of hours of

• peration. The case has not yet been concluded.

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Status: On 31 August 2012 Radoslav Savatijević was released from detention and is awaiting the first court hearing for the case. On 21 September 2012 Dragan Tomić and Vladan Jovičić, the main suspects, were released from detention after 1 month in prison, after an appeal court decision. They await the first court hearing for the case.

Recommendations

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Close monitoring of privatization and tendering

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Hiring reputable and experienced international firms for privatization and making the process public

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Protection against corruption of directors

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Posting data online

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Strengthening rules and regulations of electricity import

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Strengthening institutions professionally and financially, and guaranteeing their independence

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Enhancing freedom of speech and encouraging pro-active publishing of information

Thank you for your attention!