Scam of the century (part two)

Scam of the century (part two) The first episode revealed all the evidence about the scams in the state enterprise Kolubara, when Dragan Tomic, a party activist of Democratic Party of Serbia, was Kolubara CEO. Mayor of the Lazarevac municipality, where mining basin Kolubara is situated, is Branko Boric, another party activist of Democratic Party of Serbia. It is interesting the posters intended to communicate a message that the Insider serial was deliberately directed against Democratic Party of Serbia. This was, at the same time also a reaction to all the reported evidence about Kolubara strange business endeavors when its CEO was Dragan Tomic. The first episode revealed, for instance, that Kolubara rented a privately owned bulldozer for 74.000 per month, since the bulldozer allegedly worked 24 hours, 31 days in a row. In addition, the episode revealed that Dragan Tomic, during his directorship of Kolubara, engaged a machine of his co-owned company, while a worker operated the machine for 96 hours non stop. Today, Dragan Tomic is an advisor of director in Directorate for Investment of EPS. Dragomir Markovic, EPS CEO was appointed by Democratic Party, while Aca Markovic, EPS Board president was appointed by Socialist party of Serbia. In the meantime, EPS Board has rectified the Kolubara internal control report, which basically confirms all the allegations reported in the Insider show: in the period of several years certain privileged individuals have made tens of million euros at the expense of Kolubara, EPS, the state and citizens. The report, however, does not point the finger at private companies to which Kolubara made payments for years. In brief, Insider has reported that in a company, currently employed by Kolubara, one of the shareholders is Radosav Savatijevics closest family member. Savatijevic, a member of EPS Board, was involved with machinery business in Kolubara for years, either through several companies where he or his associates were shareholders, or through coal trading companies where he was a shareholder. He was appointed a member of EPS Board, the public enterprise whose integral part is also Kolubara, by the Mirko Cvetkovic Government, after a nomination from Socialist Party of Serbia, United Pensioners of Serbia Party and United Serbia Party coalition, in December 2008. And so the circle was completed. At the same time, an increase in electric power price is announced, justified by the claim the price is the lowest in the region. For now, nevertheless, representatives of the Government have not questioned how it was possible for Kolubara, in only a few years, to generate such extreme losses, which were eventually included into EPS aggregated loss. According to the Insider research, privileged individuals, in the absence of adequate business control, have used for years two main maneuvers to gain advantage at the expense of Kolubara and the state. Firstly, coal mining requires machinery and for this reason, Kolubara managers rented privately owned coal mining machinery, by means of an excuse the enterprise was short of machinery of its own. In this way, the largest sums of money were spent from 2004-2008. Another means to gain advantage at the Kolubara expense was also coal trading, purchase and sale of coal. Kolubara provides around 30 million tons of coal at the annual level. The majority, around 90% is aimed at thermo plants, state enterprises operating within the EPS joint system; Kolubara is also an integral part of this system. The rest, up to 10% of coal, is aimed for industrial and mass consumption. For privileged individuals, nonetheless, even this amount allowed a space for maneuver since Kolubara, for years, used to sell coal well bellow market price- to the privileged buyers. A stunning fact is that state institutions and enterprises purchase Kolubara coal though private commission agents, even though the direct, first hand purchase would be the least expensive. Momcilo Cebalovic, EPS PR director: Why is that thermo plants purchase coal through commission agents, why they do not come directly to Kolubara to make a purchase- that is a question for thermo plants. It would be much more logical if thermo plants purchase coal directly from Kolubara, as major buyers, and not through commission agents. That would be more logical. For instance, based on FOIL –obtained information, Insider found out that even today the Belgrade heating plant is not listed as a Kolubara direct coal buyer. Out of all heating plants in Serbia, only the heating plant in Bor purchases coal directly from Kolubara. This means that coal price paid by the Belgrade heating plant becomes increased at least for profit taken by private commission agent. Belgrade power plants CEO Zoran Predic refused an interview with Insider so it remaines unclear why is it profitable for a heating plant to use services of commission agent in purchasing coal from Kolubara, since both enterprises are state enterprises. For years, Radosav Savatijjevic Kene, at present a member of EPS Board, was one of the commission agents in buying and selling coal between Kolubara and Belgrade heating plant. Slobodan Djeric, Kolubara CEO from 2001-2004:The Belgrade heating plants, as public enterprise, every year purchase from Kolubara a certain amount of coal for the so-called small heating plants outside gasification etc., and I think it’s around 25-30 000 tons a year. And this was done for years by only one coal trader…And that was a well elaborated system…to buy coal for 10 German marks, sell here for 100 marks, and so; According to our research, the companies, one way or the other affiliated with Radosav Savatijevic Kene, were long time coal suppliers for the Belgrade heating plants. They are: Pam-Ek Aleksandar and Beoogrev. The only owner of Pam-Ek since September 2008 is Savatijevic. In the past years, the company majority shareholding rotated between Savatijevic and Gordana Kokotovic, who holds a Dutch passport. In 2009, a foreign capital of 1 million euros entered the company, by means of certain Dusko Dragojevic from Austria. “Pam-Ek supplied coal to the Belgrade heating plants from 2004 until 2008, when Aleksandar company became the main supplier. The sole shareholder of Aleksandar was a member from Savatijevic closest family until capital increase in 2009. Then, the company changed its name into Aras Beton the Savatijevics kept a small part of the share while the majority shareholder, by means of capital increase, became Dusko Dragojevic, the same man who in 2009, had invested 1 million euros into Pam-Ek. Until 2008, the company Aleksandar was supplying coal for the Belgrade heating plants, and later on, this business was taken over by Beoogrev company. The owner of Beoogrev until August 11, 2009 was Radosav Savatijevic, already a member of EPS Board for considerable time. Savatijevic resigned from the ownership a month before a deal between Belgrade heating plants and “Beoogrev” was sealed on September 9, 2009. Beoogrev continued to supply coal for the heating plants in 2010, as the only participant in tender. From 2004 until this day, the heating plants tender offer participants are one and the same. Especially interesting is a tender from 2008, where four companies competed against each other, all affiliated with Savatijevic in one way or the other. At that time, the owner of the company “Aleksandar is Jasmina Savatijevic. The owner of Beoogrev, at the time of the tender offer, was Radosav Savatijevic. The sole owner of Pam-Ek until September that year was Radosav Savatijevic, later a co-owner, from September on, with Gordana Kokotovic. The fourth company is Beokran sistem, co-owned by Gordana Kokotvic, also the co-owner of “Pam-Ek, along with Savatijevic. From September on, the sole owner of Beokran sistem is Ivan Ivanovic, a director at the same time, of Savatijevic Beoogrev. All four companies also had, for years, coal mining machinery engaged in Kolubara. Also, Insider came to a very interesting contract between “Pam-Ek” company and mining basin Kolubara, regarding coal supplies for Belgrade heating plants. The contract dates from 2004. This contract binds Kolubara to supply “Pam-Ek” company with enough coal for Belgrade institutions and enterprises demands, but there are no names of directors, while the signatures of contract parties’ representatives are illegible. The contract also states: “Delivery of 19.860 tons of dried coal, approved by the tender, is to be increased to 22.000 tons due to the loss made through coal transport in trucks and wagons”. This implies that “Pam-Ek” company so received 2000 tons more then it was specified by the Belgrade heating plants’ tender, with an explanation that so much coal disappears through transport. Slobodan Djeric, Kolubara CEO from the end of 2001 until 2004, had tried to ban this practice, that is, he had tried to impose Kolubara as a direct supplier of Belgrade heating plants. In 2002, after public procurement law was passed, Belgrade Assembly, as a founder of Belgrade heating plants, announced a tender offer for coal supply. Djeric says the authorized city institutions insisted firmly on having a commission agent assisting in the purchase. Slobodan Djeric, Kolubara CEO from 2001-2004: We applied for the tender, but got disqualified. And they said- you did not deliver balance for the last year and you do not have enough experience in coal trading and you cannot, with your existing machinery, transport coal to small heating plants, for example, to Mechanical Engineering University, you would have to travel and retract into small street areas etc. And, then I tried, I won’t say through political connections and Ministry of Internal Affairs, I tried to say “Wait here, something is truly fishy in here”, and our offered price was 365 dinars per ton. Our rival engaged in the business for years, had at that time, I think 903 dinars per ton, and they wanted him to supply coal to Belgrade heating plants. We had, for transport, our transport enterprises of course. We used railroad to Belgrade, this was less expensive and ecologically more justified transport. And then we also won the tender in the next year, to supply Belgrade heating plants, but of course, when I was sacked from my job, a trader or traders again got to supply coal for Belgrade heating plants, what can you do… B92: This is the second time you imply there’s one big time trader. Are you referring to a man who, at present, is a member of EPS Board, Radosav Savatijevic, known as Kene? Slobodan Djeric, Kolubara CEO from 2001-2004: Well, yes. He’s the one. Radosav Savatijevic refused an interview with Insider, and hence he lost an opportunity to comment on Djeric’s allegations regarding the price difference of coal purchasing from the state enterprise Kolubara and resell price paid by the state enterprise Belgrade heating plants. In effect, in the past 10 years, Kolubara was a direct supplier only in 2003. Despite that the state enterprises, Belgrade heating plants and mining basin Kolubara lose money because they use service of a private commission agent, not a one former or current Kolubara managers, except for Slobodan Djeric, see it as a problem. They actually claim it is impracticable for Kolubara to engage in commerce, and that also Belgrade heating plants did not demand to become a direct buyer. B92: Why it is that Kolubara didn’t directly sign a contract and supply the heating plants? Vladan Jovicic, Kolubara CEO from 2007-2009: Well, this probably is a question for the heating plants, obviously it wasn’t suitable for them, obviously it wasn’t suitable for them to work directly with Kolubara. B92: How it could be not suitable, when this is the lowest possible price? Vladan Jovicic, Kolubara CEO from 2007-2009: Probably because Kolubara didn’t apply to the tender offered by the heating plant. B92: And why you didn’t apply? Vladan Jovicic Kolubara CEO from 2007-2009: Well, there are possibilities, if something is feasible or not. B92: Wait, are you saying it wasn’t in Kolubara’s best interest to take over such a large buyer and supply coal directly? Vladan Jovicic, Kolubara CEO from 2007-2009: Yes, well, it wasn’t registered for such activity. B92: How it is not registered? Vladan Jovicic, Kolubara CEO from 2007-2009: Because, when a buyer makes a purchase, a buyer always buys but without transport costs…do you understand, and furthermore transport- whether it’s by railroad, or road transport-that’s up to the buyer. B92: But Kolubara has means to transport, by railroad, to Belgrade? Vladan Jovicic, Kolubara CEO from 2007-2009: No, it doesn’t. B92: A CEO, sitting here just before you, has tried to do that, and he used this option, that is, a coal transport to Belgrade by railroad. Vladan Jovicic, Kolubara CEO from 2007-2009: Well, did he do so? B92: Yes. Vladan Jovicic, Kolubara CEO from 2007-2009: Well, what did he do? B92: One year, he supplied coal to Belgrade heating plants. Vladan Jovicic, Kolubara CEO from 2007-2009: One year, he supplied coal to Belgrade heating plants… B92: The first year he tried, in the third year he was sacked out from his job, the second year he managed to supply coal to Belgrade heating plants. Vladan Jovicic, Kolubara CEO from 2007-2009: And why he didn’t do so in the first year? B92: He didn’t stay in the game. Vladan Jovicic, Kolubara CEO from 2007-2009: He didn’t break the contract, or what? B92: No, but he got an explanation that Kolubara has no experience in coal trading. Vladan Jovicic, Kolubara CEO from 2007-2009: He got an explanation that Kolubara has no experience in coal trading. Well, OK, it is possible that Kolubara has no experience, if he got that explanation, and Kolubara sells coal for decades, he was the only one who didn’t know how it is done. B92: But, you just said a while ago that Kolubara has no possibilities to sell. Vladan Jovicic, Kolubara CEO from 2007-2009: Maybe, I said that as a possibility, not as a claim. B92: But you were CEO, and now I’m asking you: have you had the opportunity or not? Vladan Jovicic, Kolubara CEO from 2007-2009: It wasn’t in my best interest to apply for the tender, from the very simple reason- I didn’t have enough of trucks for transport to Belgrade heating plants. B92: Why Kolubara doesn’t apply for a tender to supply coal for Belgrade heating plants? Nebojsa Ceran Kolubara CEO since 2009: Kolubara does not apply to tenders for coal supply, so it doesn’t apply for this one either. This is the situation I found, and I have no intentions of changing it. B92: Belgrade heating plants, it’s state enterprise, belongs to the state, that is to the city of Belgrade. Kolubara is also the state’s. Wouldn’t it be more favorable for the state itself, to do the business directly? Nebojsa Ceran Kolubara CEO since 2009: If Belgrade heating plants would contact us with a request to directly make a coal deal without a tender, we would, probably, that is, I’m positive we would have a positive attitude to discuss this and try to find ways, technical conditions to do the good job. B92: They didn’t contact you? Nebojsa Ceran Kolubara CEO since 2009: If Kolubara could supply coal directly to Belgrade heating plants, we could probably solve this, if we would, say, sit down, discuss and make some kind of a plan. No, I don’t know, we never tried it. B92: But Kolubara supplies heating plant in Bor. Nebojsa Ceran Kolubara CEO since 2009: Yes, the heating plant in Bor, it does buy coal directly from us, probably because it’s not paying. Let me make some…Since we mentioned Bor, I have to praise Bor since they started paying this new coal, that is, after several years they finally started paying us for the coal. This is important to note: mining basin Kolubara has to engage in coal production for thermo plants. You’re now asking me why Kolubara does not have a network of trade sales, implying that is a good concept for Kolubara development. No, that’s not a good concept for Kolubara development. B92: I’ve asked you about the state enterprise and supplying of a state, that is, city enterprise? Nebojsa Ceran Kolubara CEO since 2009: There are probably some other enterprises worth discussing further. In order to, perhaps, with some deals and discussions, in due time, organize direct supplies. More than 90% of Kolubara coal production is used by thermal- power plants to generate electricity, while the rest, 10%, is being sold for mass consumption. Kolubara sells coal to direct buyers for a lot lower prices than the market value, and this has created a large room for maneuver. Last year, a rulebook was introduced regulating buyer’s eligibility to trade directly with Kolubara, but until that time, privileged individuals had a good opportunity to access direct trading. The new rulebook, ratified in 2010, only partially regulates coal sales. According to this document, Kolubara coal is first supplied to syndicates, retirement associations, associations of disabled, industry and then afterwards, to private warehouses, that is, traders. However, even this new rulebook didn’t solve the problem of eligibility, since a decision about which trader can conduct business directly with Kolubara, along with quantities of coal, is still made by the Kolubara commercial affairs director. From 2006, Radosav Rankovic, a long time member of Socialist party of Serbia, is Kolubara commercial affairs director. B92: Before 2009, the rulebook didn’t exist? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: But there were unwritten rules and those rules were mostly handed over and regulated by conditions and means of sales, in this rulebook, ratified in 2010. B92: So, what are the eligibility requirements, according to the new rulebook today, does a buyer have to have a warehouse or what? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: Traders have to fulfill certain requirements, the first one being to file a certain request, a written request showing he is capable of doing this job, the second requirement is a confirmation of Serbian Business Registers Agency that a particular company is registered for coal trading sales, and also this requirement has to be fulfilled: that a company is not under an injunction, a permanent court order forbidding business activities.. These are the conditions that every buyer has to fulfill, in order to conduct business with Kolubara; in addition, a buyer should file a request well in advance, not in the peak of heating season, so that Kolubara can adequately respond, and offer also some quantities to new buyers. B92: So, you claim that a company has to be registered in Serbian Business Registers Agency for coal trading in order to conduct this business? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: That’s right. B92: And what if it turns a company is not registered? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: Then we will admit to our mistake. I have asked several times from the authorized services, information, to watch over who buys coal from Kolubara, and if a buyer fulfills every condition regulated by the rulebook since the rulebook is a Bible for Kolubara and commercial affairs. Insider obtained, based on FOIL-obtained information, a list of Kolubara direct coal buyers. This list contains a number of companies not registered officially in Serbian Business Registers Agency for coal trading or anything similar. For instance, “Devix” company is registered in Serbian Business Registers Agency for production of metal constructions. “Janko Stajcic”, another direct company buyer, is officially registered for education. “Plan Projekt” company, officially registered for building homes and other buildings, then “Autocentar Pavlovic”, registered for maintenance and repair of vehicles, owned by Marica Pavlovic. “Luneja Kolor”, a company registered for production of plastic parts for construction, the owner is Ljiljana Mrkic. Another direct coal buyer is a company “Klik group”, owned by Igor Dramicanin, registered for sales of office machinery and equipment. Radosav Rankovic, assistant to Kolubara general director for commercial affairs: I have official data, but I don’t claim this is not true, I have official data within commercial affairs department, there are other managers too, people who know this job well, I am not aware that these mentioned companies are from the territory of Lazarevac, what I know is that those companies are long term privately owned companies, since 1970’s and I’m not sure that they are not registered for coal trading. For coal mining, the state enterprise Kolubara uses heavy duty coal mining machinery. So called auxiliary machinery, Kolubara is renting for years from privately owned companies. From 2004-2008, for this purpose solely, Kolubara spent more money than it was planned for. For all those years, EPS, whose integral part Kolubara is, never reacted. It seems that no one found it peculiar that the very same companies renting machinery to Kolubara were also listed as Kolubara coal direct buyers. This can be explained in twofold possible ways: firstly, it is possible that individuals who rented machinery to Kolubara had a connection in the state enterprise, which allowed them to acquire less expensive price for coal, in order to resell it later under much higher prices. Secondly, also related to the engagement of privately owned machinery in Kolubara, is that perhaps Kolubara paid for rental machinery in coal, in the goods hard to get and always in demand. Hence, it is precisely those individuals who rent privately owned machinery to Kolubara and trade with coal at the same time, who have the greatest possibility to make money through this state enterprise. Radosav Rankovic, assistant to Kolubara general director for commercial affairs: I am positive that the coal quantities these people received were real, and they were not favored, not one or the other, or third, at the expense of other buyers. As far as machinery goes- well, that is hardy a question for commercial affairs. B92: Explain this now, according to our research, the whole system is set in the following way: certain people rent machinery to Kolubara, those same people also buy coal from Kolubara, and we think that they must have a connection inside Kolubara. Who is the connection? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: That I don’t know. B92: Would you, if you were in my shoes, believe these people operate in totally legal way, without malversations happening far from the public eye? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: I really would not go into how much money individuals make. B92: No, I’m asking if you would believe in such story? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: I have a right to believe or not. In contrast with mining basin Kolubara, open pit mining Kostolac, another dependence company of EPS, sells coal through tenders. In order to satisfy the greatest number of buyers, and to avoid domination of major buyers at the market, Kostolac has limited coal quantities per buyer. Hence, in Kolubara, there are a few buyers separating from the others by the coal quantities they get, while in Kostolac these differences are much smaller and almost everybody gets the same share of the cake. Radosav Rankovic, assistant to Kolubara general director for commercial affairs: I think that a tender offer by Kostolac, I think it’s not suitable and I don’t think it can be applied to Kolubara, it cannot be applied in Kolubara. B92: Why? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: I told you why, what are our basic aims, basic aims are industry and self production, that’s inevitable, we have to fulfill those aims, for schools, hospitals, kindergarten, syndicates, retired, disables, associations… B92: There is a limit, an upper level of coal quantities for sale. Kostolac did it. So, a buyer can purchase a maximum of 3000 tons or 5000 tons. Wouldn’t this also solve a dilemma in Kolubara? Nebojsa Ceran, Kolubara CEO since 2009: That’s an idea, but I’m afraid we would not get a considerable quality. I really don’t know what did Kostolac get by this restriction. I appreciate the effort – tender offer- and we will take their experience into consideration, really. We cannot be compared, Kolubara is a much bigger source, much more important producer than Kostolac and a mistake in this could cause a strong domination of individuals in the market. B92: But, therefore, it is much more important to put things in order? Nebojsa Ceran, Kolubara CEO since 2009: I agree. I agreed openly. There are two mains issues here, payment is solved, but managing the third part is not solved. It’s not solved, there is still a possibility of individual assessment. This was the situation for 40 years, and this was also the same in 2010. We will try, in cooperation with the Ministry, to offer a tender. I am positive it’s in Kolubara best interest to offer a tender. If you are asking me, if Kolubara would make more money- yes. We could set up a starting price of 50 euros and surely we would, on tender, gain. B92: It’s not only one man that decides on coal quantities? Nebojsa Ceran, Kolubara CEO since 2009: If you are referring to particular companies, that’s decided by the commercial department. According to our best knowledge, two companies renting machinery to Kolubara also have a privilege of being a direct coal buyer. The companies are registered to the son and daughter in law of Dragan Markovic Palma. “ATP Palma”, owned by Palma’s son is listed as a Kolubara direct coal buyer but also as a coal buyer of Kostolac, an integral part of EPS. Dragan Markovic, according to his words, trades with coal for the past 30 years. Besides Dragan Markovic Palma and Radosav Savatijevic Kene, there is a long list of individuals renting machinery and reselling coal at the same time. Party and municipality officials of Lazarevac are also on this list. For example, Nenad Zivojinovic, a member of Lazarevac municipality council and party activist of Socialist party of Serbia, through his company “Neol gradnja”, is working with the state enterprise Kolubara for many years. Zivojinovic, the sole owner of “Neol gradnja” refused an interview with Insider. A member of municipality council and party activist of New Serbia, Vladimir Jevtic known as Jefta, is an owner of “Nukleus” company, listed as a direct coal buyer from Kolubara. An interesting fact is that another company, “Plan project”, also renting machinery to Kolubara, has the same address as “Nukleus” but a formally different owner. Slavoljub Pavlovic Kolubarac also refused an interview, hence we don’t have an answer to the question if he represented “Eurotem” company. Pavlovic is the president of Lazarevac Socialist party of Serbia and director of “Kolubara Gradjevinar” company that used to rent machinery to Kolubara for many years; his is a daughter company of mining basin Kolubara holding. Formally, the owner of “Eurotem” is Ljubica Bjelicic, a secretary of the local Socialist party of Serbia. However, in daily journal “Press”, in a recent article, Pavlovic was associated with this company which used to be a direct coal buyer and at the same time, had privately owned machinery engaged in Kolubara. For years, a company “Janko Stajcic” is making profit in business deals with Kolubara. A long time manager of this once state enterprise was Mileta Radojevic, a party activist of Socialist party of Serbia. As a co-owner of another company, Radojevic has become a co-owner of “Janko Stajcic” enterprise. Still after privatization, the enterprise continues to work with Kolubara, hence Janko Stajcic even at present has machinery in Kolubara , and at the same time is listed as a coal direct buyer. In the meantime, Mileta Radojevic became appointed as an acting director of Belgrade Public Transport Enterprise. “Kalca”, another company from Lazarevac, is also simultaneously involved in rental machinery business and coal trading. The owner of the company is Marija Pavlovic, daughter in law of Nenad Pavlovic Neks, the driver of the former Kolubara CEO, Dragan Tomic. Nenad and his brother, Predrag Pavlovic, a member of Police Antiterrorist Unit, maintain a close association with Democratic Party of Serbia. As B92 reported earlier, Predrag Pavlovic was hired in the police forces by the former Minister Dragan Jocic, despite Pavlovic had a criminal record. B92: Were there privileged coal buyers, from Kolubara, since we know now that at one time, coal bought directly from Kolubara had a lot lower purchase price than sale price on the market? Were there privileged buyers? Radosav Rankovic, assistant to Kolubara general director for commercial affairs: A very straight answer- no, no privileged buyers. If you consider a privileged buyer to be the one who engages in organized coal sales, and who is a constant buyer in an industrial society, which can all be seen from the data, if the person is engaged in coal acquisition from Kolubara during the whole year, from January to December, if such a person, regardless of the heating season, buys constant quantities of coal and if we respect the contract, if such person makes payments on time, and has a certain warranty, if you’ve never had any problems and you consider such person a privileged buyer- then, let’s call such a person a privileged buyer. Based on these few examples, it is obvious there are certain privileged buyers who have made a good business deal with Kolubara. These people have rented privately owned coal mining machinery to Kolubara, sometimes paid as much as around 100 euros per hour, and at the same time, they were direct coal buyers, acquiring coal prices much lower than the market ones. As we reported in the first episode, it has happened that a machine operated 24 hours non stop, 31 days in a row, or that one man operated a machine non stop, four days in a row. Also, in one of the daily logs we managed to obtain, serving as payment order for Kolubara, a machine is listed as allegedly operating 25 hours in one day. It was not possible to control for how long machinery really operated. Kolubara supervisors were supposed to control machinery, hence their signature is the only guarantor that a machine operated in the particular amount of time, but this implies, at the same time, we have only their word for it. Another, much more reliable control could have been done based on fuel consumption. For instance, a bulldozer effectively working uses around 40 litters per hour. If that bulldozer works for the whole month, 24 hours per day, on a monthly basis, it uses 29.760 litters of fuel. However, according to the information Insider came to, machinery have never worked non stop, hence it is obvious there was also a surplus of diesel oil. According to Vladan Jovicic the former Kolubara CEO, until 2008 privately owned gas stations supplied fuel for all the privately owned machinery. Hence, fuel consumption and therefore also the effective work of machinery were not controlled by Kolubara, that is, it turned out that the respective owners of machinery actually controlled themselves. Vladan Jovicic, Kolubara CEO from 2007-2009: The fuel, at the given moment, was, depending on a contract, a responsibility of Kolubara. Then again, simply put it, this was not correct, then I banned the entry and I’ve demanded that all those machinery get fuel supplies from Kolubara fuel tanks. That’s because I noticed a tremendous entry values-exit values. You cannot control if someone has filled his own machine or not, or whose fuels is it. In this way, if Kolubara provides the fuel, then at the end of the month you can say- “Look now, Mister, you machine has operated this much time, your invoice is this much, you own Kolubara this much for fuel”; that is, I could, though this mechanism, control how much working hours a machine has had. This is why I employed this mechanism of control, this technical model, so I could simply have a clear understanding of what is really going on. B92: So you are telling me now, that people brought tank fuels directly to coal fields? Vladan Jovicic, Kolubara CEO from 2007-2009: Yes, that was the practice. B92: That was the practice? Vladan Jovicic, Kolubara CEO from 2007-2009: I came into this practice, which… B92: And who paid then? Vladan Jovicic, Kolubara CEO from 2007-2009: Kolubara made payments based on derived invoice. The owners of the machinery hence controlled for themselves how much working hours a particular machine has had but also the amounts of used fuel per machine. It is interesting to note that two people in addition of having machinery with huge amounts of working hours also had their own gas stations. They are Vitomir Dimitrijevic and Nenad Zivojinovic, an activist of the local Socialist Party of Serbia and member of the municipality council. Zivojinovic refused an interview with insider. The former Kolubara CEO Vladan Jovicic had tried to restrain the uncontrolled rise in expenses by introducing fuel consumption control. He claims he banned privately owned fuel tanks to enter the Kolubara coal fields. Vladan Jovicic, Kolubara CEO from 2007-2009: It’s fairly simple, since those rented machinery were not owned by Kolubara, the owners of the companies and machinery handled supplies, and everything else, which by itself testifies that something wasn’t right starting with supervision in the first place, and then, when you perceive that expense are rising, you have to do something, to order certain measures and to put those costs in reasonable frames. B92: In a way, you have completed a circle, in your business, you also own a gas station. How did you supply your own machinery with fuel? Vitomir Dimitrijevic, “Devix” company, Lazarevac: The fuel came exclusively from my own gas station, most of the time at the coal fields and with my own fuel. B92: But, at one point, Vladan Jovicic was CEO, he claims he had banned entry of privately owned tanks… Vitomir Dimitrijevic, “Devix” company, Lazarevac: He did so, it lasted a couple of weeks, I’ve asked for permission to continue, considering I own a gas station, and he permitted so. B92: If you supply yourself with fuel, it’s like there is not much control of how much a machine effectively works. If… Vitomir Dimitrijevic, “Devix” company, Lazarevac: I do have, of course, I have an insight on working hours...It’s all taken care of… Absolutely, I do know how much fuel a machine used, when it was replaced if so, etc. The circle hence remained so totally completed, that is, there was not much of a probe on how many hours a machine really operated. At the same time, Kolubara was paying for privately owned rental machinery for coal mining work, but also for building infrastructure within municipalities surround the coal fields. However, a lot more money Kolubara had spent employing rental machinery on coal fields. It is much easier to hide malversation on coal fields. That is, if money entry shows that assets were spent, for instance, on road building in a municipality, then that road has to be easily visible. If a machine is employed at coal fields, the evidence about amount of work actually done could be re-delved everyday. There are, however, enough of inconsistencies to imply consequently double-invoicing scheme, meaning that Kolubara was charged twice per work of a single machine. This was possible since Kolubara did not directly rented privately owned machinery, but through so-called daughter companies. Namely, in 2004 and 2005, several diversified business have been formed outside of the scope of the main business i.e., coal mining. The state so formed several new enterprises. Kolubara could employ these newly formed enterprises without tender, in order to allegedly help the enterprises in their first four years of independent operations. And that is how Kolubara came to employ the former daughter companies without tender, while the daughter companies in turn engaged entrepreneurs to work in the mining basin Kolubara, also without tender. These daughter companies were left with small varying amounts of profit at the annual level. Kolubara rented machinery through several companies: “Kolubara Gradjevinar”, “Kolubara Usluge” and also “Kolubara Mali Borak”, a company which a good while ago was having a right to work with Kolubara without tender. By reference to FOIL Insider requested from Kolubara, among other things, documentation for the two month engagement of the company “Devix” through the companies “Gradjevinar” and “Usluge”. According to the daily logs we were given, there are cases when a machine of the same type worked simultaneously both for “Usluge” and “Gradjevinar”. However, the invoices Kolubara used to make payments do not contain registration plate numbers of vehicles, so it is impossible to determine if one and the same machine was paid as operating simultaneously at two places. Vitomir Dimitrijevic claims he has no knowledge about double-invoicing scheme, nor did he ever double charge a machine. Also peculiar is the case involving the company “Kacer Turist”, wherein the major shareholder is the former Kolubara CEO Dragan Tomic. A skip this company rented to Kolubara worked 10 hours per day in two places, in Belanovica and local community Mali Borak. Daily logs, also, do not contain vehicle registration plate numbers. According to our best knowledge, this company rented only one skip to Kolubara, hence it is not clear how a machine could have worked simultaneously in two different places for 10 hours, nor how it could get in 4 hours from one place to the other. The machine operated in this way for several consecutive months. Vladan Jovicic, the former Kolubara CEO, claims he has no knowledge on double- invoicing scheme, that is, according to the criminal charge filed by the anonymous group of citizens in 2008, that certain machines allegedly operated even more than 48 hours in a day. Vladan Jovicic, the former Kolubara CEO from 2007-2009: I don’t believe this was the case, I do trust, simply, people I have worked with, if they have made this much slips, that simply isn’t a slip anymore… B92: So, a machine operated 48 hours daily? Vladan Jovicic, the former Kolubara CEO from 2007-2009: Being invoiced in two places, so it’s clear it is physically impossible. I mean, this cannot be explained by an eminent scientist or so. A machine operating in two places in 24 hours, that is, definitely… a misuse. It cannot be called in a different name. Kolubara, based on the Government decisions, had the right to employ daughter companies without tender all until 2009. It is not clear what were the criteria the daughter companies, actually the state enterprises, have used to engage privately owned companies, considering there was no tender. The current directors of the daughter companies “Kolubara Gradjevinac”and “Kolubara Usluge”, Slavoljub Pavlovic Kolubarac and Dusko Obradovic refused an interview with Insider. Marinko Maric, a director of “Gradjevinar” until 2007, and party activist of G17 in Lazarevac municipality assembly, accepted the interview though. Although the entrepreneurs were formally engaged through daughter companies, like “Gradjevinar” for instance, Maric claims that even as a director, he did not have a power to decide about which entrepreneurs will be engaged in Kolubara, since this was the decision put forward by the management of the mining basin Kolubara alone. B92: What do you mean, Kolubara had the exclusive right to decide? Marinko Maric, director of “Gradjevinar” from 2005- 2007: This was defined by the contract, that Kolubara experts select machinery. B92: So, you were told- these machinery… Marinko Maric, director of “Gradjevinar” from 2005- 2007: By the list… B92: And the invoice goes through “Gradjevinar”? Marinko Maric, director of “Gradjevinar” from 2005- 2007: Yes, yes… B92: And why an invoice did not go directly, who, that is, why Kolubara did not directly engaged them? Marinko Maric, director of “Gradjevinar” from 2005- 2007: Well, ask them, I could also ask why they founded us in the first place. Hence, that’s the same question, they founded us… B92: It’s not the same question. Marinko Maric, director of “Gradjevinar” from 2005- 2007: Well, they were… B92: But that’s a red herring… Marinko Maric, director of “Gradjevinar” from 2005- 2007: There were, they were, not them…Well, most probably it was easier for them to work like this, I guess. B92: Easier in what way? Marinko Maric, director of “Gradjevinar” from 2005- 2007: Because they were, it’s a huge work load, dispersion, we were already in this business and was perhaps the reason. It never occurred to me to ask them why they are doing this through us. B92: It has never occurred to you that the reason is… Marinko Maric, director of “Gradjevinar” from 2005- 2007: Why it would occur, if I get the job… B92: The fact that “Kolubara Gradjevinar” is entitled to work in Kolubara without tender, on jobs Kolubara pays without tender. Marinko Maric, director of “Gradjevinar” from 2005- 2007: Well, that, that is… B92: Did it ever occur to you? Marinko Maric, director of “Gradjevinar” from 2005- 2007: That was the first base. However, why they didn’t give these jobs to someone else, it was up to them. I never hired a sole machine, I’m not interested in that issue. B92: How come you were not interested, you were the director in “Gradjevinar”? Marinko Maric, director of “Gradjevinar” from 2005- 2007: I just wasn’t interested…They say-they need 10 trucks and send us companies which fit into the budget. And so we send them, those were the companies, there were 200 trucks, it was a definite number, and that worked. The new CEO has reduced the total costs for rentals of privately owned machinery in 2009 for about 36 million euros. This exact amount of money would be earned, according to Nebojsa Ceran, by private companies in rental machinery business if the reduction didn’t take place. Nebojsa Ceran, Kolubara CEO: A Kolubara CEO, under these circumstances, is under constant pressure of all kinds. All kinds of pressures. I never had threats of a Hollywood character though. I don’t know. I was wondering about it, for I have reduced someone’s income for 30 million euros. But I never had nuisance of a Hollywood type. Still, being a Kolubara CEO means being under a lot of pressure. I had threats coming from some entrepreneurs, if those were really threats. It was more of a pressure, not a real threat. For example, “We will block Lazarevac because we cannot work in Kolubara”. Yes, I think there is even a written document about this, these are no secrets, phone secrets. People take this to be normal behavior, that they have a right to do so. Kolubara is an integral part of EPS, an enterprise with high strategic value for Serbia, since Kolubara coal produces about 50% of electric power in Serbia. Using various privileges, political ties but also national goods belonging to the state and its people, certain individuals, for years, made money at the expense of Kolubara. This systemic robbery of the mining basin Kolubara, an enterprise integral to EPS, lasts for many years, connived by all the Serbian governments formed between 2001 until today. According to Insider best knowledge, the police had already dealt with misusage in Kolubara in 2002, when criminal charges were filed against already former managers, who nevertheless, today hold important position within the enterprise. It is not known what has happened with those charges, but the charges imply that the government and authorized institutions are aware, for some time, what is going on in Kolubara. The mechanism of money extraction from Kolubara is well elaborated. It has not been changed for years hence a number of businessmen, individuals and politicians has become an integral part in this chain of fraud, causing the authorized institutions to be silent even today. Use your brains, turn off B92 disclosed the posters, displayed all over the town of Lazarevac, only a day after the first Insider episode about misusages in mining basin Kolubara was aired.

Scam of the century (part two)

The first episode revealed all the evidence about the scams in the state enterprise Kolubara, when Dragan Tomić, a party activist of Democratic Party of Serbia, was Kolubara CEO. Mayor of the Lazarevac municipality, where mining basin Kolubara is situated, is Branko Borić, another party activist of Democratic Party of Serbia. It is interesting the posters intended to communicate a message that the Insider serial was deliberately directed against Democratic Party of Serbia. This was, at the same time also a reaction to all the reported evidence about Kolubara strange business endeavors when its CEO was Dragan Tomić. The first episode revealed, for instance, that Kolubara rented a privately owned bulldozer for 74.000 per month, since the bulldozer allegedly worked 24 hours, 31 days in a row. In addition, the episode revealed that Dragan Tomić, during his directorship of Kolubara, engaged a machine of his co-owned company, while a worker operated the machine for 96 hours non stop. Today, Dragan Tomić is an advisor of director in Directorate for Investment of EPS. Dragomir Marković, EPS CEO was appointed by Democratic Party, while Aca Marković, EPS Board president was appointed by Socialist party of Serbia. In the meantime, EPS Board has rectified the Kolubara internal control report, which basically confirms all the allegations reported in the Insider show: in the period of several years certain privileged individuals have made tens of million euros at the expense of Kolubara, EPS, the state and citizens. The report, however, does not point the finger at private companies to which Kolubara made payments for years. In brief, Insider has reported that in a company, currently employed by Kolubara, one of the shareholders is Radosav Savatijevićs closest family member. Savatijević, a member of EPS Board, was involved with machinery business in Kolubara for years, either through several companies where he or his associates were shareholders, or through coal trading companies where he was a shareholder. He was appointed a member of EPS Board, the public enterprise whose integral part is also Kolubara, by the Mirko Cvetković Government, after a nomination from Socialist Party of Serbia, United Pensioners of Serbia Party and United Serbia Party coalition, in December 2008. And so the circle was completed. At the same time, an increase in electric power price is announced, justified by the claim the price is the lowest in the region. For now, nevertheless, representatives of the Government have not questioned how it was possible for Kolubara, in only a few years, to generate such extreme losses, which were eventually included into EPS aggregated loss. According to the Insider research, privileged individuals, in the absence of adequate business control, have used for years two main maneuvers to gain advantage at the expense of Kolubara and the state. Firstly, coal mining requires machinery and for this reason, Kolubara managers rented privately owned coal mining machinery, by means of an excuse the enterprise was short of machinery of its own. In this way, the largest sums of money were spent from 2004-2008. Another means to gain advantage at the Kolubara expense was also coal trading, purchase and sale of coal. Kolubara provides around 30 million tons of coal at the annual level. The majority, around 90% is aimed at thermo plants, state enterprises operating within the EPS joint system; Kolubara is also an integral part of this system. The rest, up to 10% of coal, is aimed for industrial and mass consumption. For privileged individuals, nonetheless, even this amount allowed a space for maneuver since Kolubara, for years, used to sell coal well bellow market price- to the privileged buyers. A stunning fact is that state institutions and enterprises purchase Kolubara coal though private commission agents, even though the direct, first hand purchase would be the least expensive.

Momčilo Cebalović, EPS PR director: Why is that thermo plants purchase coal through commission agents, why they do not come directly to Kolubara to make a purchase- that is a question for thermo plants. It would be much more logical if thermo plants purchase coal directly from Kolubara, as major buyers, and not through commission agents. That would be more logical. For instance, based on FOIL –obtained information, Insider found out that even today the Belgrade heating plant is not listed as a Kolubara direct coal buyer. Out of all heating plants in Serbia, only the heating plant in Bor purchases coal directly from Kolubara. This means that coal price paid by the Belgrade heating plant becomes increased at least for profit taken by private commission agent.

Belgrade power plants CEO Zoran Predić refused an interview with Insider so it remaines unclear why is it profitable for a heating plant to use services of commission agent in purchasing coal from Kolubara, since both enterprises are state enterprises. For years, Radosav Savatijjević Kene, at present a member of EPS Board, was one of the commission agents in buying and selling coal between Kolubara and Belgrade heating plant.

Slobodan Đerić, Kolubara CEO from 2001-2004:The Belgrade heating plants, as public enterprise, every year purchase from Kolubara a certain amount of coal for the so-called small heating plants outside gasification etc., and I think it’s around 25-30 000 tons a year. And this was done for years by only one coal trader…And that was a well elaborated system…to buy coal for 10 German marks, sell here for 100 marks, and so; According to our research, the companies, one way or the other affiliated with Radosav Savatijević Kene, were long time coal suppliers for the Belgrade heating plants. They are: Pam-Ek Aleksandar and Beoogrev. The only owner of Pam-Ek since September 2008 is Savatijević. In the past years, the company majority shareholding rotated between Savatijević and Gordana Kokotović, who holds a Dutch passport. In 2009, a foreign capital of 1 million euros entered the company, by means of certain Duško Dragojević from Austria. “Pam-Ek supplied coal to the Belgrade heating plants from 2004 until 2008, when Aleksandar company became the main supplier. The sole shareholder of Aleksandar was a member from Savatijević closest family until capital increase in 2009. Then, the company changed its name into Aras Beton the Savatijevićs kept a small part of the share while the majority shareholder, by means of capital increase, became Duško Dragojević, the same man who in 2009, had invested 1 million euros into Pam-Ek. Until 2008, the company Aleksandar was supplying coal for the Belgrade heating plants, and later on, this business was taken over by Beoogrev company. The owner of Beoogrev until August 11, 2009 was Radosav Savatijević, already a member of EPS Board for considerable time. Savatijević resigned from the ownership a month before a deal between Belgrade heating plants and “Beoogrev” was sealed on September 9, 2009. Beoogrev continued to supply coal for the heating plants in 2010, as the only participant in tender. From 2004 until this day, the heating plants tender offer participants are one and the same. Especially interesting is a tender from 2008, where four companies competed against each other, all affiliated with Savatijević in one way or the other.

At that time, the owner of the company “Aleksandar is Jasmina Savatijević. The owner of Beoogrev, at the time of the tender offer, was Radosav Savatijević. The sole owner of Pam-Ek until September that year was Radosav Savatijević, later a co-owner, from September on, with Gordana Kokotović. The fourth company is Beokran sistem, co-owned by Gordana Kokotvić, also the co-owner of “Pam-Ek, along with Savatijević. From September on, the sole owner of Beokran sistem is Ivan Ivanović, a director at the same time, of Savatijević Beoogrev. All four companies also had, for years, coal mining machinery engaged in Kolubara. Also, Insider came to a very interesting contract between “Pam-Ek” company and mining basin Kolubara, regarding coal supplies for Belgrade heating plants. The contract dates from 2004. This contract binds Kolubara to supply “Pam-Ek” company with enough coal for Belgrade institutions and enterprises demands, but there are no names of directors, while the signatures of contract parties’ representatives are illegible.

The contract also states: “Delivery of 19.860 tons of dried coal, approved by the tender, is to be increased to 22.000 tons due to the loss made through coal transport in trucks and wagons”.

This implies that “Pam-Ek” company so received 2000 tons more then it was specified by the Belgrade heating plants’ tender, with an explanation that so much coal disappears through transport.

Slobodan Đerić, Kolubara CEO from the end of 2001 until 2004, had tried to ban this practice, that is, he had tried to impose Kolubara as a direct supplier of Belgrade heating plants. In 2002, after public procurement law was passed, Belgrade Assembly, as a founder of Belgrade heating plants, announced a tender offer for coal supply. Đerić says the authorized city institutions insisted firmly on having a commission agent assisting in the purchase.

Slobodan Đerić, Kolubara CEO from 2001-2004: We applied for the tender, but got disqualified. And they said- you did not deliver balance for the last year and you do not have enough experience in coal trading and you cannot, with your existing machinery, transport coal to small heating plants, for example, to Mechanical Engineering University, you would have to travel and retract into small street areas etc. And, then I tried, I won’t say through political connections and Ministry of Internal Affairs, I tried to say “Wait here, something is truly fishy in here”, and our offered price was 365 dinars per ton. Our rival engaged in the business for years, had at that time, I think 903 dinars per ton, and they wanted him to supply coal to Belgrade heating plants. We had, for transport, our transport enterprises of course. We used railroad to Belgrade, this was less expensive and ecologically more justified transport. And then we also won the tender in the next year, to supply Belgrade heating plants, but of course, when I was sacked from my job, a trader or traders again got to supply coal for Belgrade heating plants, what can you do…

B92: This is the second time you imply there’s one big time trader. Are you referring to a man who, at present, is a member of EPS Board, Radosav Savatijević, known as Kene?

Slobodan Đerić, Kolubara CEO from 2001-2004: Well, yes. He’s the one.

Radosav Savatijević refused an interview with Insider, and hence he lost an opportunity to comment on Đerić’s allegations regarding the price difference of coal purchasing from the state enterprise Kolubara and resell price paid by the state enterprise Belgrade heating plants. In effect, in the past 10 years, Kolubara was a direct supplier only in 2003. Despite that the state enterprises, Belgrade heating plants and mining basin Kolubara lose money because they use service of a private commission agent, not a one former or current Kolubara managers, except for Slobodan Đerić, see it as a problem. They actually claim it is impracticable for Kolubara to engage in commerce, and that also Belgrade heating plants did not demand to become a direct buyer.

B92: Why it is that Kolubara didn’t directly sign a contract and supply the heating plants?

Vladan Jovičić, Kolubara CEO from 2007-2009: Well, this probably is a question for the heating plants, obviously it wasn’t suitable for them, obviously it wasn’t suitable for them to work directly with Kolubara.

B92: How it could be not suitable, when this is the lowest possible price?

Vladan Jovičić, Kolubara CEO from 2007-2009: Probably because Kolubara didn’t apply to the tender offered by the heating plant.

B92: And why you didn’t apply?

Vladan Jovičić Kolubara CEO from 2007-2009: Well, there are possibilities, if something is feasible or not.

B92: Wait, are you saying it wasn’t in Kolubara’s best interest to take over such a large buyer and supply coal directly?

Vladan Jovičić, Kolubara CEO from 2007-2009: Yes, well, it wasn’t registered for such activity.

B92: How it is not registered?

Vladan Jovičić, Kolubara CEO from 2007-2009: Because, when a buyer makes a purchase, a buyer always buys but without transport costs…do you understand, and furthermore transport- whether it’s by railroad, or road transport-that’s up to the buyer.

B92: But Kolubara has means to transport, by railroad, to Belgrade?

Vladan Jovičić, Kolubara CEO from 2007-2009: No, it doesn’t.

B92: A CEO, sitting here just before you, has tried to do that, and he used this option, that is, a coal transport to Belgrade by railroad.

Vladan Jovičić, Kolubara CEO from 2007-2009: Well, did he do so?

B92: Yes.

Vladan Jovičić, Kolubara CEO from 2007-2009: Well, what did he do?

B92: One year, he supplied coal to Belgrade heating plants.

Vladan Jovičić, Kolubara CEO from 2007-2009: One year, he supplied coal to Belgrade heating plants…

B92: The first year he tried, in the third year he was sacked out from his job, the second year he managed to supply coal to

Belgrade heating plants.

Vladan Jovičić, Kolubara CEO from 2007-2009: And why he didn’t do so in the first year?

B92: He didn’t stay in the game.

Vladan Jovičić, Kolubara CEO from 2007-2009: He didn’t break the contract, or what?

B92: No, but he got an explanation that Kolubara has no experience in coal trading.

Vladan Jovičić, Kolubara CEO from 2007-2009: He got an explanation that Kolubara has no experience in coal trading.

Well, OK, it is possible that Kolubara has no experience, if he got that explanation, and Kolubara sells coal for decades, he was the only one who didn’t know how it is done.

B92: But, you just said a while ago that Kolubara has no possibilities to sell.

Vladan Jovičić, Kolubara CEO from 2007-2009: Maybe, I said that as a possibility, not as a claim.

B92: But you were CEO, and now I’m asking you: have you had the opportunity or not?

Vladan Jovičić, Kolubara CEO from 2007-2009: It wasn’t in my best interest to apply for the tender, from the very simple reason- I didn’t have enough of trucks for transport to Belgrade heating plants.

B92: Why Kolubara doesn’t apply for a tender to supply coal for Belgrade heating plants?

Nebojsa Ćeran Kolubara CEO since 2009: Kolubara does not apply to tenders for coal supply, so it doesn’t apply for this one either. This is the situation I found, and I have no intentions of changing it.

B92: Belgrade heating plants, it’s state enterprise, belongs to the state, that is to the city of Belgrade. Kolubara is also the state’s. Wouldn’t it be more favorable for the state itself, to do the business directly?

Nebojsa Ćeran Kolubara CEO since 2009: If Belgrade heating plants would contact us with a request to directly make a coal deal without a tender, we would, probably, that is, I’m positive we would have a positive attitude to discuss this and try to find ways, technical conditions to do the good job.

B92: They didn’t contact you?

Nebojsa Ćeran Kolubara CEO since 2009: If Kolubara could supply coal directly to Belgrade heating plants, we could probably solve this, if we would, say, sit down, discuss and make some kind of a plan. No, I don’t know, we never tried it.

B92: But Kolubara supplies heating plant in Bor.

Nebojsa Ćeran Kolubara CEO since 2009: Yes, the heating plant in Bor, it does buy coal directly from us, probably because it’s not paying. Let me make some…Since we mentioned Bor, I have to praise Bor since they started paying this new coal, that is, after several years they finally started paying us for the coal. This is important to note: mining basin Kolubara has to engage in coal production for thermo plants. You’re now asking me why Kolubara does not have a network of trade sales, implying that is a good concept for Kolubara development. No, that’s not a good concept for Kolubara development.

B92: I’ve asked you about the state enterprise and supplying of a state, that is, city enterprise?

Nebojsa Ćeran Kolubara CEO since 2009: There are probably some other enterprises worth discussing further. In order to, perhaps, with some deals and discussions, in due time, organize direct supplies.

More than 90% of Kolubara coal production is used by thermal- power plants to generate electricity, while the rest, 10%, is being sold for mass consumption. Kolubara sells coal to direct buyers for a lot lower prices than the market value, and this has created a large room for maneuver. Last year, a rulebook was introduced regulating buyer’s eligibility to trade directly with Kolubara, but until that time, privileged individuals had a good opportunity to access direct trading.

The new rulebook, ratified in 2010, only partially regulates coal sales. According to this document, Kolubara coal is first supplied to syndicates, retirement associations, associations of disabled, industry and then afterwards, to private warehouses, that is, traders. However, even this new rulebook didn’t solve the problem of eligibility, since a decision about which trader can conduct business directly with Kolubara, along with quantities of coal, is still made by the Kolubara commercial affairs director. From 2006, Radosav Ranković, a long time member of Socialist party of Serbia, is Kolubara commercial affairs director.

B92: Before 2009, the rulebook didn’t exist?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: But there were unwritten rules and those rules were mostly handed over and regulated by conditions and means of sales, in this rulebook, ratified in 2010.

B92: So, what are the eligibility requirements, according to the new rulebook today, does a buyer have to have a warehouse or what?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: Traders have to fulfill certain requirements, the first one being to file a certain request, a written request showing he is capable of doing this job, the second requirement is a confirmation of Serbian Business Registers Agency that a particular company is registered for coal trading sales, and also this requirement has to be fulfilled: that a company is not under an injunction, a permanent court order forbidding business activities.. These are the conditions that every buyer has to fulfill, in order to conduct business with Kolubara; in addition, a buyer should file a request well in advance, not in the peak of heating season, so that Kolubara can adequately respond, and offer also some quantities to new buyers.

B92: So, you claim that a company has to be registered in Serbian Business Registers Agency for coal trading in order to conduct this business?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: That’s right.

B92: And what if it turns a company is not registered?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: Then we will admit to our mistake. I have asked several times from the authorized services, information, to watch over who buys coal from Kolubara, and if a buyer fulfills every condition regulated by the rulebook since the rulebook is a Bible for Kolubara and commercial affairs. Insider obtained, based on FOIL-obtained information, a list of Kolubara direct coal buyers. This list contains a number of companies not registered officially in Serbian Business Registers Agency for coal trading or anything similar.

For instance, “Devix” company is registered in Serbian Business Registers Agency for production of metal constructions.

“Janko Stajčić”, another direct company buyer, is officially registered for education.

“Plan Projekt” company, officially registered for building homes and other buildings, then “Autocentar Pavlović”, registered for maintenance and repair of vehicles, owned by Marica Pavlović.

“Luneja Kolor”, a company registered for production of plastic parts for construction, the owner is Ljiljana Mrkić.

Another direct coal buyer is a company “Klik group”, owned by Igor Dramićanin, registered for sales of office machinery and equipment.

Radosav Ranković, assistant to Kolubara general director for commercial affairs: I have official data, but I don’t claim this is not true, I have official data within commercial affairs department, there are other managers too, people who know this job well, I am not aware that these mentioned companies are from the territory of Lazarevac, what I know is that those companies are long term privately owned companies, since 1970’s and I’m not sure that they are not registered for coal trading.

For coal mining, the state enterprise Kolubara uses heavy duty coal mining machinery. So called auxiliary machinery, Kolubara is renting for years from privately owned companies.

From 2004-2008, for this purpose solely, Kolubara spent more money than it was planned for. For all those years, EPS, whose integral part Kolubara is, never reacted. It seems that no one found it peculiar that the very same companies renting machinery to Kolubara were also listed as Kolubara coal direct buyers.

This can be explained in twofold possible ways: firstly, it is possible that individuals who rented machinery to Kolubara had a connection in the state enterprise, which allowed them to acquire less expensive price for coal, in order to resell it later under much higher prices. Secondly, also related to the engagement of privately owned machinery in Kolubara, is that perhaps Kolubara paid for rental machinery in coal, in the goods hard to get and always in demand.

Hence, it is precisely those individuals who rent privately owned machinery to Kolubara and trade with coal at the same time, who have the greatest possibility to make money through this state enterprise.

Radosav Ranković, assistant to Kolubara general director for commercial affairs: I am positive that the coal quantities these people received were real, and they were not favored, not one or the other, or third, at the expense of other buyers. As far as machinery goes- well, that is hardy a question for commercial affairs.

B92: Explain this now, according to our research, the whole system is set in the following way: certain people rent machinery to Kolubara, those same people also buy coal from Kolubara, and we think that they must have a connection inside Kolubara. Who is the connection?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: That I don’t know.

B92: Would you, if you were in my shoes, believe these people operate in totally legal way, without malversations happening far from the public eye?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: I really would not go into how much money individuals make.

B92: No, I’m asking if you would believe in such story?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: I have a right to believe or not.

In contrast with mining basin Kolubara, open pit mining Kostolac, another dependence company of EPS, sells coal through tenders. In order to satisfy the greatest number of buyers, and to avoid domination of major buyers at the market, Kostolac has limited coal quantities per buyer. Hence, in Kolubara, there are a few buyers separating from the others by the coal quantities they get, while in Kostolac these differences are much smaller and almost everybody gets the same share of the cake.

Radosav Ranković, assistant to Kolubara general director for commercial affairs: I think that a tender offer by Kostolac, I think it’s not suitable and I don’t think it can be applied to Kolubara, it cannot be applied in Kolubara.

B92: Why?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: I told you why, what are our basic aims, basic aims are industry and self production, that’s inevitable, we have to fulfill those aims, for schools, hospitals, kindergarten, syndicates, retired, disables, associations…

B92: There is a limit, an upper level of coal quantities for sale. Kostolac did it. So, a buyer can purchase a maximum of 3000 tons or 5000 tons. Wouldn’t this also solve a dilemma in Kolubara?

Nebojsa Ćeran, Kolubara CEO since 2009: That’s an idea, but I’m afraid we would not get a considerable quality. I really don’t know what did Kostolac get by this restriction. I appreciate the effort – tender offer- and we will take their experience into consideration, really. We cannot be compared, Kolubara is a much bigger source, much more important producer than Kostolac and a mistake in this could cause a strong domination of individuals in the market.

B92: But, therefore, it is much more important to put things in order?

Nebojsa Ćeran, Kolubara CEO since 2009: I agree. I agreed openly. There are two mains issues here, payment is solved, but managing the third part is not solved. It’s not solved, there is still a possibility of individual assessment. This was the situation for 40 years, and this was also the same in 2010. We will try, in cooperation with the Ministry, to offer a tender. I am positive it’s in Kolubara best interest to offer a tender. If you are asking me, if Kolubara would make more money- yes. We could set up a starting price of 50 euros and surely we would, on tender, gain.

B92: It’s not only one man that decides on coal quantities?

Nebojsa Ćeran, Kolubara CEO since 2009: If you are referring to particular companies, that’s decided by the commercial department.

According to our best knowledge, two companies renting machinery to Kolubara also have a privilege of being a direct coal buyer. The companies are registered to the son and daughter in law of Dragan Marković Palma. “ATP Palma”, owned by Palma’s son is listed as a Kolubara direct coal buyer but also as a coal buyer of Kostolac, an integral part of EPS. Dragan Marković, according to his words, trades with coal for the past 30 years.

Besides Dragan Marković Palma and Radosav Savatijević Kene, there is a long list of individuals renting machinery and reselling coal at the same time. Party and municipality officials of Lazarevac are also on this list.

For example, Nenad Živojinović, a member of Lazarevac municipality council and party activist of Socialist party of Serbia, through his company “Neol gradnja”, is working with the state enterprise Kolubara for many years. Živojinović, the sole owner of “Neol gradnja” refused an interview with Insider. A member of municipality council and party activist of New Serbia, Vladimir Jevtić known as Jefta, is an owner of “Nukleus” company, listed as a direct coal buyer from Kolubara. An interesting fact is that another company, “Plan project”, also renting machinery to Kolubara, has the same address as “Nukleus” but a formally different owner.

Slavoljub Pavlović Kolubarac also refused an interview, hence we don’t have an answer to the question if he represented “Eurotem” company. Pavlović is the president of Lazarevac Socialist party of Serbia and director of “Kolubara Građevinar” company that used to rent machinery to Kolubara for many years; his is a daughter company of mining basin Kolubara holding.

Formally, the owner of “Eurotem” is Ljubica Bjeličić, a secretary of the local Socialist party of Serbia. However, in daily journal “Press”, in a recent article, Pavlović was associated with this company which used to be a direct coal buyer and at the same time, had privately owned machinery engaged in Kolubara. For years, a company “Janko Stajčić” is making profit in business deals with Kolubara. A long time manager of this once state enterprise was Mileta Radojević, a party activist of Socialist party of Serbia. As a co-owner of another company, Radojević has become a co-owner of “Janko Stajčić” enterprise. Still after privatization, the enterprise continues to work with Kolubara, hence Janko Stajčić even at present has machinery in Kolubara , and at the same time is listed as a coal direct buyer. In the meantime, Mileta Radojević became appointed as an acting director of Belgrade Public Transport Enterprise.

“Kalča”, another company from Lazarevac, is also simultaneously involved in rental machinery business and coal trading. The owner of the company is Marija Pavlović, daughter in law of Nenad Pavlović Neks, the driver of the former Kolubara CEO, Dragan Tomić. Nenad and his brother, Predrag Pavlović, a member of Police Antiterrorist Unit, maintain a close association with Democratic Party of Serbia. As B92 reported earlier, Predrag Pavlović was hired in the police forces by the former Minister Dragan Jočić, despite Pavlović had a criminal record.

B92: Were there privileged coal buyers, from Kolubara, since we know now that at one time, coal bought directly from Kolubara had a lot lower purchase price than sale price on the market? Were there privileged buyers?

Radosav Ranković, assistant to Kolubara general director for commercial affairs: A very straight answer- no, no privileged buyers. If you consider a privileged buyer to be the one who engages in organized coal sales, and who is a constant buyer in an industrial society, which can all be seen from the data, if the person is engaged in coal acquisition from Kolubara during the whole year, from January to December, if such a person, regardless of the heating season, buys constant quantities of coal and if we respect the contract, if such person makes payments on time, and has a certain warranty, if you’ve never had any problems and you consider such person a privileged buyer- then, let’s call such a person a privileged buyer.

Based on these few examples, it is obvious there are certain privileged buyers who have made a good business deal with Kolubara. These people have rented privately owned coal mining machinery to Kolubara, sometimes paid as much as around 100 euros per hour, and at the same time, they were direct coal buyers, acquiring coal prices much lower than the market ones. As we reported in the first episode, it has happened that a machine operated 24 hours non stop, 31 days in a row, or that one man operated a machine non stop, four days in a row.

Also, in one of the daily logs we managed to obtain, serving as payment order for Kolubara, a machine is listed as allegedly operating 25 hours in one day.

It was not possible to control for how long machinery really operated. Kolubara supervisors were supposed to control machinery, hence their signature is the only guarantor that a machine operated in the particular amount of time, but this implies, at the same time, we have only their word for it. Another, much more reliable control could have been done based on fuel consumption.

For instance, a bulldozer effectively working uses around 40 litters per hour. If that bulldozer works for the whole month, 24 hours per day, on a monthly basis, it uses 29.760 litters of fuel. However, according to the information Insider came to, machinery have never worked non stop, hence it is obvious there was also a surplus of diesel oil.

According to Vladan Jovičić the former Kolubara CEO, until 2008 privately owned gas stations supplied fuel for all the privately owned machinery. Hence, fuel consumption and therefore also the effective work of machinery were not controlled by Kolubara, that is, it turned out that the respective owners of machinery actually controlled themselves.

Vladan Jovičić, Kolubara CEO from 2007-2009: The fuel, at the given moment, was, depending on a contract, a responsibility of Kolubara. Then again, simply put it, this was not correct, then I banned the entry and I’ve demanded that all those machinery get fuel supplies from Kolubara fuel tanks. That’s because I noticed a tremendous entry values-exit values. You cannot control if someone has filled his own machine or not, or whose fuels is it. In this way, if Kolubara provides the fuel, then at the end of the month you can say- “Look now, Mister, you machine has operated this much time, your invoice is this much, you own Kolubara this much for fuel”; that is, I could, though this mechanism, control how much working hours a machine has had. This is why I employed this mechanism of control, this technical model, so I could simply have a clear understanding of what is really going on.

B92: So you are telling me now, that people brought tank fuels directly to coal fields?

Vladan Jovičić, Kolubara CEO from 2007-2009: Yes, that was the practice.

B92: That was the practice?

Vladan Jovičić, Kolubara CEO from 2007-2009: I came into this practice, which…

B92: And who paid then?

Vladan Jovičić, Kolubara CEO from 2007-2009: Kolubara made payments based on derived invoice.

The owners of the machinery hence controlled for themselves how much working hours a particular machine has had but also the amounts of used fuel per machine. It is interesting to note that two people in addition of having machinery with huge amounts of working hours also had their own gas stations. They are Vitomir Dimitrijević and Nenad Živojinović, an activist of the local Socialist Party of Serbia and member of the municipality council. Živojinović refused an interview with insider. The former Kolubara CEO Vladan Jovičić had tried to restrain the uncontrolled rise in expenses by introducing fuel consumption control. He claims he banned privately owned fuel tanks to enter the Kolubara coal fields.

Vladan Jovičić, Kolubara CEO from 2007-2009: It’s fairly simple, since those rented machinery were not owned by Kolubara, the owners of the companies and machinery handled supplies, and everything else, which by itself testifies that something wasn’t right starting with supervision in the first place, and then, when you perceive that expense are rising, you have to do something, to order certain measures and to put those costs in reasonable frames.

B92: In a way, you have completed a circle, in your business, you also own a gas station. How did you supply your own machinery with fuel?

Vitomir Dimitrijević, “Devix” company, Lazarevac: The fuel came exclusively from my own gas station, most of the time at the coal fields and with my own fuel.

B92: But, at one point, Vladan Jovičić was CEO, he claims he had banned entry of privately owned tanks…

Vitomir Dimitrijević, “Devix” company, Lazarevac: He did so, it lasted a couple of weeks, I’ve asked for permission to continue, considering I own a gas station, and he permitted so.

B92: If you supply yourself with fuel, it’s like there is not much control of how much a machine effectively works. If…

Vitomir Dimitrijević, “Devix” company, Lazarevac: I do have, of course, I have an insight on working hours...It’s all taken care of… Absolutely, I do know how much fuel a machine used, when it was replaced if so, etc.

The circle hence remained so totally completed, that is, there was not much of a probe on how many hours a machine really operated. At the same time, Kolubara was paying for privately owned rental machinery for coal mining work, but also for building infrastructure within municipalities surround the coal fields. However, a lot more money Kolubara had spent employing rental machinery on coal fields.

It is much easier to hide malversation on coal fields. That is, if money entry shows that assets were spent, for instance, on road building in a municipality, then that road has to be easily visible. If a machine is employed at coal fields, the evidence about amount of work actually done could be re-delved everyday.

There are, however, enough of inconsistencies to imply consequently double-invoicing scheme, meaning that Kolubara was charged twice per work of a single machine.

This was possible since Kolubara did not directly rented privately owned machinery, but through so-called daughter companies. Namely, in 2004 and 2005, several diversified business have been formed outside of the scope of the main business i.e., coal mining. The state so formed several new enterprises.

Kolubara could employ these newly formed enterprises without tender, in order to allegedly help the enterprises in their first four years of independent operations. And that is how Kolubara came to employ the former daughter companies without tender, while the daughter companies in turn engaged entrepreneurs to work in the mining basin Kolubara, also without tender. These daughter companies were left with small varying amounts of profit at the annual level.

Kolubara rented machinery through several companies: “Kolubara Građevinar”, “Kolubara Usluge” and also “Kolubara Mali Borak”, a company which a good while ago was having a right to work with Kolubara without tender.

By reference to FOIL Insider requested from Kolubara, among other things, documentation for the two month engagement of the company “Devix” through the companies “Građevinar” and “Usluge”. According to the daily logs we were given, there are cases when a machine of the same type worked simultaneously both for “Usluge” and “Građevinar”.

However, the invoices Kolubara used to make payments do not contain registration plate numbers of vehicles, so it is impossible to determine if one and the same machine was paid as operating simultaneously at two places. Vitomir Dimitrijević claims he has no knowledge about double-invoicing scheme, nor did he ever double charge a machine. Also peculiar is the case involving the company “Kačer Turist”, wherein the major shareholder is the former Kolubara CEO

Dragan Tomić. A skip this company rented to Kolubara worked 10 hours per day in two places, in Belanovica and local community Mali Borak. Daily logs, also, do not contain vehicle registration plate numbers. According to our best knowledge, this company rented only one skip to Kolubara, hence it is not clear how a machine could have worked simultaneously in two different places for 10 hours, nor how it could get in 4 hours from one place to the other. The machine operated in this way for several consecutive months.

Vladan Jovičić, the former Kolubara CEO, claims he has no knowledge on double- invoicing scheme, that is, according to the criminal charge filed by the anonymous group of citizens in 2008, that certain machines allegedly operated even more than 48 hours in a day.

Vladan Jovičić, the former Kolubara CEO from 2007-2009: I don’t believe this was the case, I do trust, simply, people I have worked with, if they have made this much slips, that simply isn’t a slip anymore…

B92: So, a machine operated 48 hours daily?

Vladan Jovičić, the former Kolubara CEO from 2007-2009: Being invoiced in two places, so it’s clear it is physically impossible. I mean, this cannot be explained by an eminent scientist or so. A machine operating in two places in 24 hours, that is, definitely… a misuse. It cannot be called in a different name.

Kolubara, based on the Government decisions, had the right to employ daughter companies without tender all until 2009. It is not clear what were the criteria the daughter companies, actually the state enterprises, have used to engage privately owned companies, considering there was no tender.

The current directors of the daughter companies “Kolubara Građevinac”and “Kolubara Usluge”, Slavoljub Pavlović Kolubarac and Duško Obradović refused an interview with Insider.

Marinko Marić, a director of “Građevinar” until 2007, and party activist of G17 in Lazarevac municipality assembly, accepted the interview though. Although the entrepreneurs were formally engaged through daughter companies, like “Građevinar” for instance, Marić claims that even as a director, he did not have a power to decide about which entrepreneurs will be engaged in Kolubara, since this was the decision put forward by the management of the mining basin Kolubara alone.

B92: What do you mean, Kolubara had the exclusive right to decide?

Marinko Marić, director of “Građevinar” from 2005- 2007: This was defined by the contract, that Kolubara experts select machinery.

B92: So, you were told- these machinery…

Marinko Marić, director of “Građevinar” from 2005- 2007: By the list…

B92: And the invoice goes through “Građevinar”?

Marinko Marić, director of “Građevinar” from 2005- 2007: Yes, yes…

B92: And why an invoice did not go directly, who, that is, why Kolubara did not directly engaged them?

Marinko Marić, director of “Građevinar” from 2005- 2007: Well, ask them, I could also ask why they founded us in the first place. Hence, that’s the same question, they founded us…

B92: It’s not the same question.

Marinko Marić, director of “Građevinar” from 2005- 2007: Well, they were…

B92: But that’s a red herring…

Marinko Marić, director of “Građevinar” from 2005- 2007: There were, they were, not them…Well, most probably it was easier for them to work like this, I guess.

B92: Easier in what way?

Marinko Marić, director of “Građevinar” from 2005- 2007: Because they were, it’s a huge work load, dispersion, we were already in this business and was perhaps the reason. It never occurred to me to ask them why they are doing this through us.

B92: It has never occurred to you that the reason is…

Marinko Marić, director of “Građevinar” from 2005- 2007: Why it would occur, if I get the job…

B92: The fact that “Kolubara Građevinar” is entitled to work in Kolubara without tender, on jobs Kolubara pays without tender.

Marinko Marić, director of “Građevinar” from 2005- 2007: Well, that, that is…

B92: Did it ever occur to you?

Marinko Marić, director of “Građevinar” from 2005- 2007: That was the first base. However, why they didn’t give these jobs to someone else, it was up to them. I never hired a sole machine, I’m not interested in that issue.

B92: How come you were not interested, you were the director in “Građevinar”?

Marinko Marić, director of “Građevinar” from 2005- 2007: I just wasn’t interested…They say-they need 10 trucks and send us companies which fit into the budget. And so we send them, those were the companies, there were 200 trucks, it was a definite number, and that worked.

The new CEO has reduced the total costs for rentals of privately owned machinery in 2009 for about 36 million euros. This exact amount of money would be earned, according to Nebojša Ćeran, by private companies in rental machinery business if the

reduction didn’t take place.

Nebojša Ćeran, Kolubara CEO: A Kolubara CEO, under these circumstances, is under constant pressure of all kinds. All kinds of pressures. I never had threats of a Hollywood character though. I don’t know. I was wondering about it, for I have reduced someone’s income for 30 million euros. But I never had nuisance of a Hollywood type. Still, being a Kolubara CEO means being under a lot of pressure. I had threats coming from some entrepreneurs, if those were really threats. It was more of a pressure, not a real threat. For example, “We will block Lazarevac because we cannot work in Kolubara”. Yes, I think there is even a written document about this, these are no secrets, phone secrets. People take this to be normal behavior, that they have a right to do so.

Kolubara is an integral part of EPS, an enterprise with high strategic value for Serbia, since Kolubara coal produces about 50% of electric power in Serbia. Using various privileges, political ties but also national goods belonging to the state and its people, certain individuals, for years, made money at the expense of Kolubara. This systemic robbery of the mining basin Kolubara, an enterprise integral to EPS, lasts for many years, connived by all the Serbian governments formed between 2001 until today.

According to Insider best knowledge, the police had already dealt with misusage in Kolubara in 2002, when criminal charges were filed against already former managers, who nevertheless, today hold important position within the enterprise. It is not known what has happened with those charges, but the charges imply that the government and authorized institutions are aware, for some time, what is going on in Kolubara.

The mechanism of money extraction from Kolubara is well elaborated. It has not been changed for years hence a number of businessmen, individuals and politicians has become an integral part in this chain of fraud, causing the authorized institutions to be silent even today.