Insajder in the making: MEDIA: WAR FOR TRUTH

Biggest looting of Serbia went via off-shore firms

Photo: Beta/AP /

It is hard to prove money laundering via off-shore companies. In order to find out from which account of which off-shore company the money was transferred to the second, third or fifth account of a different off-shore company, which is how it is done when money is laundered, serious institutional investigations are necessary. We reached this conclusion in 2007 when , on the basis of 50,000 bank statements, we attempted to establish where the money, which was taken out of the country during the wars and sanctions by the sack-load, had disappeared. We managed to find that out for just one part, and to obtain official estimates about several billion euros having been siphoned out and never returned. That money belonged to the citizens of Serbia.

It's disgraceful that Serbia never established where the money of its citizens ended up

The biggest looting of the citizens of Serbia during the 1990s went on via the off-shore companies founded in Cyprus by the state itself, but also by individuals and businessmen close to the authorities at that time. The sum that has been siphoned out of the country into the accounts of companies in off-shore zones was never established but, according to Insajder's research, it ranges between five and 11 billion dollars. One part of that money has been spent so that the state could function during the sanctions, while some ended up in private accounts through various shady transactions.

The scope of the siphoning operation is shown by the fact that the European Union had estimated it as the biggest money laundering in history between two states - Yugoslavia and Cyprus. The U.S. and the Hague tribunal have claimed that Serbia was a rich country that has its money on somebody's private bank accounts.

The money, however, was never returned, despite numerous evidence which the relevant institutions had and still have at their disposal. The Hague tribunal also sent a report about the paths of money to the Serbian authorities.

You will hear the reasons why Serbia had given up on the investigation to establish whose bank accounts the money of the Serbian citizens ended up on during the 1990s, in a video report which will be uploaded to the site during the day.

A Norwegian Hague investigator, Morten Torkildsen, who investigated the paths of money for the Hague prosecution in 2001, dealing mostly with customs and the financial constructions created for many individuals to get rich, spoke for the first time in public about the mechanism for the siphoning of money out of Serbia in an exclusive interview to Insajder, in the series "State looted by the state".

The proof that someone has an account open in an off-shore zone means absolutely nothing, because that is legal in business and enables the payment of lower taxes. Such operations, however, can also have an adverse effect on the budget if, for instance, a businessman in Serbia founds a mother company in an off-shore zone and makes that company the proprietor of everything he owns in Serbia. In serious countries, every large business that operates via off-shore zones has a mother company registered in the country of which the owner is a citizen. In that way, it is much harder to hide the profits earned abroad, on which he pays income or salary tax in his country. That was not always the case in Serbia, and businessmen avoided the profit tax by registering the mother company in an off-shore zone. 

A feat of investigative journalism, or the end of journalism on the global level?

The global affair called Panama Papers could easily grow into a worldwide scandal, in the context of journalism on the global level.

The story was published a few days ago, simultaneously in several media throughout the world, with the approximately same lead – eleven and a half million documents were “leaked” from one of the main agencies for founding off-shore companies, the Mossack Conseca. This Panamanian agency is one of the biggest creators of fictitious companies, which has branch offices in more than 30 world cities. Last year, 2.6 terabytes of data was leaked from it to investigative journalists. It is claimed that 100 world media, headed by the International Consortium of Investigative Journalists and the German paper Suddeutsche Zeitung, had participated in the investigation.

The lawyer whose firm the data about off-shore companies was leaked from claimed that the scandal was a result of a hacker attack from Europe.

Meanwhile, the representatives of Wikileaks requested that the world media and investigative journalists publish all the documents they possess, that have been leaked from the Panamanian firm, because the concealing of documents, as they said, cannot be responsible journalism.

The creator of Wikileaks is Julian Assange, who became the most famous person in the world in 2010, after Wikileaks published more than 251,000 diplomatic cables, i.e. the correspondence between the Department of State and the U.S. diplomatic offices worldwide. That material contains as much as 40 percent of confidential material and more than six percent of classified documents. Since then, an Interpol warrant has been issued for his arrest. He was arrested in Great Britain and, since Sweden requested his extradition, he was granted political asylum by Ecuador in 2012 and has been staying in that country’s embassy in London ever since. He is staying inside because, if he by any chance left the premises of the embassy, he would be arrested. Meanwhile, his release was also requested by the U.N., but journalists throughout the world have mainly forgotten about Assange. When they published the first discoveries from the Panama Papers, the British paper The Guardian reported in the introduction to the text that they had obtained a greater number of documents than Wikileaks. 

In their reaction to the Panama Papers affair, the representatives of Wikileaks estimated that the U.S. was directly behind the publishing of the story about the Russian president on the basis of data leaked from the Mossack Conseca company and that this undermined the integrity of investigative networks and of the journalists who participated in analyzing the data.

Commenting on the different interpretations about the leaked data, Wikileaks stated that, although the reporting about the scandal was biased, the claims that the Panama Papers leak represented a conspiracy against Russia were still pointless.

For this reason, the spokesman of Wikileaks, an investigative journalist from Iceland, Kristinn Hrafnsson, called for all of the Panama Papers to be published on the Internet.


Wikileaks: “If you censor more than 99 percent of documents, then you’re doing journalism only one percent.”

Hrafnsson said that he disagreed with the estimate that the way in which this data was published represented responsible journalism.

“I can understand the gradual publishing of information, we have done that with diplomatic cables at Wikileaks in 2010 and 2011… but the entire documentation was eventually published in on-line searchable databases.”

Wikileaks: “Overall, The Guardian published two documents from the entire Panamanian documentation, Suddeutsche Zeitung zero.”

“That should be done with the Panama Papers, they should be available to the entire public, so that everyone, not just a group of journalists who work on that data, can browse them.”

We will not publish the entire documentation

The response of the International Consortium of Investigative Journalists (ICIJ) from Washington to the question about why not all the Panama Papers had been published, reads that they would publish the documents which are in the interest of the public, but that a part of the documentation was private in nature and irrelevant to the public.

"The ICIJ will not publish personal data en masse, but will continue to search the database with its media partners."

A text on the web-site of the Guardian from Great Britain reads that the database, known as the Panama Papers, was the biggest document leak in history, larger even than the database published by Wikileaks.


Screenshot: Gardijan
Screenshot: Gardijan

The U.S. is not behind the publishing of the Panama Papers

Meanwhile, the spokesman of the Department of State, Mark Toner, stated that the U.S. authorities were not responsible for the publishing of the Panama Papers.

"Journalists have received support from various donors, including the U.S. Government. These are the kind of organizations that USAID has and continues to fund, but not specifically to go after any particular government, or any particular individual, but simply to conduct independent investigative journalism," Toner stated.

He said that the U.S. had no prior knowledge about this research, nor about the results the journalists have accomplished because, as he said, they did not interfere with their work.

"I would reject the assertion that we’re in any way involved in the actual leak of these documents," he said, reiterating that the U.S. authorities had made it clear that they would not discuss the contents of these classified documents.

Media zoom-in on Putin first in Panama Papers

The reports were published on the basis of the Panama documents by the world journalists' organizations and media which cooperated with the International Consortium of Investigative Journalists from Washington, DC.


The documents contain internal data of this law firm about more than 214,000 off-shore companies, which are brought in connection with persons and companies from more than 200 countries. The database of documents, which consists of e-mail correspondence, financial reports and business documentation, unveils the hidden ownership of companies and bank accounts registered in 21 off-shore destinations, in the period from 1977 to the present day.

The ICIJ has processed the data of the Panama company Mossack Fonseca, which was first sent to the German paper Suddeutsche Zeitung.

The first analyses published in the media were about the operations of close associates of Russian President Vladimir Putin. According to the media, they were involved in a money-laundering chain via off-shore agreements and loans worth two billion dollars. It was also published that the name of the Russian president did not appear in any of the documents.

However, the Panama Papers disclose the names of people from numerous other countries who have done business via the tax havens. Although this form of business is not prohibited by law, if it is uncontrolled, it could potentially have adverse effects on a country's budget.