Bosnian Weekly Details Battle Between Lobbies for Control Over Power Company

Text of report by Bosnian independent weekly Slobodna Bosna, on 17 January

[Report by Asim Metiljevic: "Managers Lazarevic and Fazlic Hunt for B-H Power Company"]

The hazy allusion about a “secret Belgrade gathering” that Vahid Heco, B-H Federation minister of industry, energy, and mining, recently suggested in the 60 Minutes political magazine, unveiled a furtive battle going on between energy lobbies for a long time for control of the B-H Power Company, the biggest in the state.

Heco told us that his reference about the “Belgrade gathering” was his defence against allegations published by Dnevni Avaz the day before where the appointment of the B-H Power Company management had supposedly been agreed at a “gathering at Visoki.

“Politics will not be conducted at gatherings, not in Visoki and especially not in Belgrade,” said Heco brusquely in 60 Minutes and linked Dnevni Avaz owner Fahrudin Radoncic with the notorious “Belgrade gathering.”

Heco was no doubt referring to two Serbian tycoons – Rudnap Group owner Vojin Lazarevic and Delta owner Miroslav Miskovic, with whom Radoncic has very close private and business ties.

What triggered the scandal

The latest energy scandal was triggered by the appointment of the B-H Power Company Supervisory Committee. The SDA [Party of Democratic Action] nominated its favoured candidate, former Federation Prime Minister Edhem Bicakcic. However, by will of the shareholders, Bicakcic was elected a member but not chairman of the committee, as agreed by coalition partners, the SDA and SBiH [Party for Bosnia-Hercegovina].

However, the scandal erupted for much deeper reasons and they have little to do with Bicakcic and his return to B-H’s political and business scene. Slobodna Bosna is in possession of documents which show that Bicakcic had not disrupted relations between the energy lobbies but far bigger interests: The sale of substantial surplus electricity which brings huge profits to traders.

We learned that an offer by the Belgrade-based Rudnap to the B-H Power Company for the purchase the so-called tertiary electricity surpluses in the amount of 150 MGh triggered the energy scandal. The contract is worth about 10 million euros of which Rudnap would get a huge share, or rather owner Lazarevic and his business partner Damir Fazlic, former adviser to Bicakcic and Radoncic’s close friend.

Rudnap’s offer arrived on 11 December 2007 and about a week later Rudnap received a polite refusal from the B-H Power Company to the effect that the offer was rejected as the company could not supply that much electricity. It said Rudnap and the B-H Power Company had established “good and successful cooperation beneficial to both sides” in 2007.

Fazlic’s return to the crime scene

Lazarevic is a former business partner of Vuk Hamovic who is a far better known electricity trader, and the two parted a few years ago. Since then, Lazarevic had set up an electricity business on his own and his key partner in the business became Fazlic who kept a strong network of political, business, and media associates – especially in the Serb Republic but also in the B-H Federation – after his flight from Sarajevo to Belgrade.

A few months ago, Lazarevic’s Rudnap bid for purchase of the Sarajevo-based Energoinvest company, however the tender was cancelled because of the uncertain status of the company’s pre-war claims. A few months earlier, Lazarevic’s company Rudnap (actually Kotlogradnja company, which operates as part of Rudnap) obtained from the B-H Power Company, under dubious circumstances, a contract worth 40 million KM [convertible marks] for reconstruction of the thermoelectric power plant in Tuzla. The Hungarian company Transelectro won the contract in the tender, but the actual contractor was Rudnap. An important link in these arrangements was a broker with experience, Fazlic, who still has loose ends of his crimes and theft of government money in Sarajevo.

It is widely known that for nearly a year, Fazlic was privatization consultant for the B-H Federation Investicijska Bank and prepared the privatization of a other major state-owned companies, such as the Sarajevo Tobacco Factory. Fazlic’s monthly salary was an incredible KM 25,000 and his atrocious fees were paid through the Federal Employment Bureau! In 2001, Fazlic was dismissed from the Investicijska Bank and criminal charges were filed against him for fraud. He moved (fled, actually) to Belgrade and soon made contact with Lazarevic.

Million megawatt surplus

The interest of electricity traders on the B-H power market rose in the past few months because the B-H Power Company will have a considerable surplus in 2008, for the first time since the war. In April, a five-year contract between the B-H Power Company and Croatia’s HEP will have expired, whereby B-H was obligated to supply electricity to Croatia on behalf of its pre-war investments in B-H energy facilities. The B-H Power Company will sell the vast surplus of power of 1 million kWh a year, worth about KM 150 million, to neighbouring markets and licensed traders from the region and beyond. In addition to this surplus, there will be additional quantities of power available to the B-H Power Company, so overall export could exceed KM 240 million in 2008.

In the years ahead, the B-H Power Company plans the construction of 10 hydroelectric and thermoelectric power plants in partnership with three foreign companies, which will nearly double the power production. The recent conflict among energy lobbies should be viewed in that context, and their aim to install their own people in the B-H Power Company to control forthcoming lucrative deals and the sale of electricity.

[Box] Bicakcic to Slobodna Bosna in 2004: About Fazlic and Radoncic

The Federal Government paid Fazlic, British citizen of Bosnian heritage, KM 25,000 for consulting services, so we would like to hear how you came into contact with Fazlic.

Fazlic was never my adviser. Osman Topcagic, then ambassador and currently head of the Directorate for EU Integration, introduced me to him in our embassy in London, saying he was a successful young businessman who had graduated from top schools in Britain. Fazlic hosted a dinner at the Westminster Palace. After that he came to Sarajevo as a representative of British companies interested in privatization. Fazlic sought engagements on various accounts. He was engaged in the ministry for trade and communication as a consultant in a tender for the Sarajevo-Zenica highway. He had an arrangement with the ministry for energy, but he never had a contract with the government and prime minister. I have nothing bad to say about Fazlic and I think he was fair.

What good did Fazlic bring to privatization in B-H?

You have to ask him that, I do not know.

Does Radoncic own the company that publishes Dnevni Avaz and other publications?

He is one of the owners.

Since you know that he is one of the owners, tell us who the others are.

I wish I knew, as that would clarify many things.

[Box] “Radoncic told me: “When you went stealing, you forgot to call me”

Journalists have inundated Heco’s office but he was in no mood for an interview. He agreed to speak with Slobodna Bosna and answer some of the allegations against him.

[Heco] It is not true that the strategic partners of the B-H Power Company for the construction of power facilities were chosen without a tender. The tender was published in all relevant newspapers in B-H and beyond, and 37 foreign companies applied, 10 of them had an international reputation. We chose three strategic partners that will construct energy facilities with the B-H Power Company but will not own them. They will collect payment for their investments through power deliveries after which the facilities will remain in the ownership of the B-H Power Company. We sought to keep energy sovereignty in the B-H Federation and we succeeded in that.

Two factions clash

[Slobodna Bosna] The strategy differs considerably from the energy strategy in the Serb Republic.

[Heco] Very much so. None of our partners will become owners of the new facilities, unlike in the Serb Republic, where every strategic partner became co-owner or majority owner of a new facility. I think our strategy is better because we attracted foreign investors without giving them ownership.

[Slobodna Bosna] How do you explain the tremendous media interest in the appointment of the supervisory committee?

[Heco] Media interest is welcome, but I am afraid that in cases there are certain lobbies hiding behind these interests that wish to take control of the B-H Power Company. That will not pass, no matter how much they attack me.

[Slobodna Bosna] What specifically did you mean when you said that decisions on energy would not be made at gatherings in Visoko or Belgrade?

[Heco] That was my response to an attack in Dnevni Avaz and accusations that I put together the composition of the B-H Power Company Supervisory Committee at a “gathering in Visoki.” That is a notorious lie, because the committee members were proposed by two parties, the SDA and SBiH, and elected by the shareholders assembly by secret vote. Personally, I was not delighted by the proposal to elect Bicakcic chairman, but I did not oppose it because I respected the agreement. I did not interfere in the election of the committee chairman in any way. I mentioned the “Belgrade gathering” as a response to allegations about the “Visoki gathering” as I had heard that an informal meeting took place in Belgrade which discussed personnel issues in the B-H Power Company.

“Belgrade gathering”

[Slobodna Bosna] Who participated in the meeting?

[Heco] I will not reveal details; electricity traders who played host to some of our local brokers.

[Slobodna Bosna] You will not reveal their names?

[Heco] I think everyone knows who these people are.

[Slobodna Bosna] How do you explain the ferocity of the attack in Dnevni Avaz, which accused you of a serious crime?

[Heco] I got a text message from Radoncic today, which read: You did not call me when you went stealing.” So, if Radoncic had been in on the deal, everything would have been okay. This is what I have to say to Radoncic and everyone else: There are no schemes in the B-H Power Company, sales and procurements must all go through a public tender and not through “schemes” and lobbies.

Originally published by Slobodna Bosna, Sarajevo, in Bosnian/Croatian/Serbian 17 Jan 08, pp6- 9.

(c) 2008 BBC Monitoring European. Provided by ProQuest Information and Learning. All rights Reserved.