Tycoon's Trials Rivet Serbia, Land of Graft

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PARIS -- When Miroslav Miskovic posted a record $16 million bail late last month after spending more than seven months in jail on charges of fraud and tax evasion, the outsized sum solidified the reclusive 68-year-old tycoon's reputation as one of the Balkans' richest businessmen, even as it breached his well-known preference for understatement and invisibility.

The spectacular rise and fall of Mr. Miskovic, an enigmatic figure who Serbian journalists say is suspected of paying the news media not to write about him, has riveted the region. The Serbian government hailed his arrest last December as part of a crackdown on organized crime and corruption to aid the country's bid to join the European Union and shed a culture of lawlessness, a legacy of the Balkan wars of the 1990s.

Aleksandar Vucic, Serbia's powerful first deputy prime minister, who is spearheading the fight against corruption, used his Facebook profile late last year to vent his frustration with the once seemingly untouchable business magnate. "Nobody has and nobody will beat Serbia, and that includes Miroslav Miskovic," he wrote.

Prosecutors said Mr. Miskovic has been accused, along with his son Marko and nine others, of siphoning off more than $30 million during the privatization of a now bankrupt road repair company between 2005 and 2010. He was freed pending trial. If convicted, he faces up to 10 years behind bars.

Mr. Miskovic's aides said he was not available for an interview. But his supporters insisted that the charges were politically motivated, and that he was being targeted as a scapegoat. A Web site produced by his company, Delta Holding, entitled "Who is Miroslav Miskovic?" said that he had committed no wrongdoing. "We reject all accusations," said Branislava Milunov, a spokeswoman for Delta Holding.

The government's pursuit of Mr. Miskovic is part of a growing effort to root out corruption among the newest members of the European Union, raising the admissions bar for aspiring entrants like Serbia. The Czech Republic recently intensified a high-profile anticorruption investigation that toppled the prime minister. Bulgaria has been mired in weeks of protests against endemic graft. Romania put a former prime minister behind bars last summer on corruption charges. Croatia, too, is grappling with organized crime even after joining the union last month.

A few days after posting the record bail, Mr. Miskovic made a rare public appearance at a news conference for his retail empire, where he said that he had been able to stay in touch with his business associates, even from his prison cell. Delta Holding is Serbia's largest privately held company, with 7,200 employees across the Balkans, and a network of businesses that encompass real estate, food production, retail sales and insurance.

In a country that has struggled to shrug off economic hardship and corruption since the overthrow of the former Serbian strongman Slobodan Milosevic in 2000, analysts said Mr. Miskovic had become a potent emblem of the unhealthy link between business interests and the state that has allowed a handful of tycoons to amass enormous riches.

Mr. Vucic, the first deputy prime minister, has accused Mr. Miskovic of giving monthly "allowances" ranging from $40,000 to $65,000 to some 20 senior politicians, the Beta news agency reported. He has also accused Mr. Miskovic of trying to bring down the government to avoid closer scrutiny of his business. Mr. Miskovic's company spokeswoman declined to comment on the accusations.

"Miskovic simply became too big for this little country to be tolerated," said Dejan Anastasijevic, the Brussels correspondent for Tanjug, the Serbian national news agency. "The crony system in Serbia created him, and now the state is trying to restore the balance."

Mr. Miskovic's business empire took root under Mr. Milosevic, whom he briefly served as deputy prime minister, assigned to privatize Serbian industry. His aides said he had resigned because he disagreed with Mr. Milosevic's tactics. Mr. Milosevic died in his jail cell in 2006 during his trial for war crimes.

After leaving the government, Mr. Miskovic founded a private company, Delta 2M, which thrived despite war and international sanctions by selling coveted consumer goods like toys, chocolates and roller skates. After Mr. Milosevic was overthrown, Mr. Miskovic assiduously aligned himself with the country's pro-Western democratic reformers and expanded his empire.

But the past continued to haunt him. A 2007 cable from the American Embassy in Belgrade, obtained by WikiLeaks, the antisecrecy group, said that Mr. Miskovic had been "the beneficiary of egregious political corruption." It suggested that Delta Holding had benefited from a questionable deal with Serbian customs in the 1990s. The cable also recommended denying Mr. Miskovic permission to visit the United States.

His fortune "was made on the backs of the Serbian people as they struggled through crippling sanctions and hyperinflation while he collected on their misery," it said.

According to the cable, Yugoslavia's customs chief at the time, a close ally of Mr. Milosevic's, gave favorable treatment to Delta, most conspicuously a 45-day grace period to pay customs duties. At a time of rampant hyperinflation, it said the deal allowed Mr. Miskovic to store the goods at customs and to time their release when prices skyrocketed.

Ms. Milunov, the Delta Holding spokeswoman, said that all goods had been released as soon as they arrived in Serbia, and that all companies at the time had a 45-day grace period to pay duties provided they had a bank guarantee, which Delta Holding had. Moreover, she stressed that Delta Holding was not on a list of companies blacklisted by the United States and European countries in the late 1990s.

Mr. Miskovic, like many wealthy Serbs seeking to avoid international sanctions imposed in the 1990s, registered an offshore company called Hemslade Trading in the tax haven of Nicosia, Cyprus, and transferred his company's profits there. Ms. Mulinov said that Hemslade was created in 1992 to support Delta Holding's international business and that it paid all legally required Serbian and Cypriot taxes.

The son of a traveling shoe salesman who owned a farm in Bosnjane, a village in central Serbia, Mr. Miskovic is a former national track athlete, and studied economics.

On the Web site Who is Miroslav Miskovic? he recalled that when he tried as a young boy to make shoes, his taskmaster father was never satisfied. "These aren't good enough," he recalled his father saying, even when, as a prank, he handed him shoes that the elder Miskovic had made.

While his personal wealth is shrouded in secrecy, in 2007 Forbes magazine estimated his net worth at more than $1 billion. In 2001, Mr. Miskovic, who is married with two children, was kidnapped and released the next day after paying $5 million in ransom.

Mr. Anastasijevic, the Serbian journalist, said it remained to be seen whether the case against Mr. Miskovic would have a lasting effect on a system of patronage so entrenched and institutionalized that it could not be easily overcome.

"The question is whether this government is serious about reform, or whether a new Miskovic of the ruling party will merely replace him," Mr. Anastasijevic said.

world

This article originally appeared in The New York Times.


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