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Series: ABUSE OF OFFICE

The sixth episode transcript

The construction mafia exists, mostly due to corruption and abuse of power in state institutions. For example, an investor who operates in strict accordance with the law has to visit more than fifty different offices in various institutions. The "Insider" has found out that the price of residential buildings increases at each step in this long administrative chain, incorporating the real or assumed cost of bribing state officials.

Lawyers representing the investors are the usual suspects as the middlemen in this kind of corruption. Construction license depends on approvals issued by numerous city institutions like land registers, the Directorate for Urban Building Sites, the city inspectorate, the Institute of Urbanism, the Secretariat of Urbanism, public utilities, the power system, the water system, roads, gas pipes, the telecom provider, heating plants. Certified architects, planners and contractors also have an important role in the process of licensing. Construction of buildings with more than 800 square meters of space is regulated by the city administration and its Secretariat of Urbanism which issues construction and usage licenses.

In accordance with the law, license requests must be solved in 15 days, but in practice it is more like 15 months. It is common knowledge that in this procedure investors often bribe numerous officials in order to speed it up or to acquire a document which the administration is obliged to issue anyway in accordance with the law. At the same time, since there is no effective control of the source of capital invested in construction of residential buildings, many criminals have used the opportunity to become investors and legalize the money acquired, for example, in illegal drug trade. In this system, citizens are the ones who suffer most, since they have no guarantee that they will be able to move into the apartments they have bought, or that such apartments will really become their registered property. While the state has already announced the fight against the construction mafia, it seems that officials who are a part of this abuse will remain protected.

Politicians claim that corruption within the state administration, which increases the end price per square meter of constructed buildings, will decrease after the adoption of new law. The law will also simplify the issuing procedure for construction licenses.

Oliver Dulic, minister of ecology and spatial planning:  We were aware that to lower the price per square meter of space in constructed buildings and make this market more attractive, we have to change the relevant law and various tax laws in order to define and form a market for building locations, decrease their price, streamline the issuing procedure for licenses and eliminate corruption, which would lead to lower prices. In the end, citizens pay much bigger prices compared to real costs of construction because a lot of money is being wasted on corruption.

The city's Public Legal Office has filed numerous criminal charges against investors, but mostly for illegal construction. There have been no corruption charges against officials.

Strahinja Sekulic, Belgrade city public prosecutor: And how could it be? Look at it from their viewpoint. Why would they report each other if they all can make good money off it? It is very difficult to expose corruption, especially in construction industry. Why? Because there is alignment of interests. All these interests are very complex. Money can bring people together very effectively. I have already said several times – perhaps simplifying too much – that when the issuing procedure for construction licenses becomes straightforward, meaning clear conditions and a short waiting period, this will remove the main cause of corruption.

According to the law adopted in 2003, the waiting period for license issuance is 15 days, but in practice it can exceed a year because of complicated procedures.

Verica Barac, president of the Anti-Corruption Council: The law does not apply to tycoons, political parties, politicians, ministers or the president – they can break the law at will and suffer absolutely no consequences.

In 2003, illegal construction became a criminal offense. According to the law, those who build without proper licenses should be punished by up to three years of imprisonment. However, it has not happened yet. On the contrary, in 2007, the former minister of infrastructure, Velimir Ilic, who had been tasked with the fight against illegal construction, began illegal construction of a hospital in the village of Kaculice near Cacak.

As evidenced by the documentation that we have acquired in accordance with the Law on Free Access to Information, Ilic received the construction license only after the building was almost completed. After the analysis of documentation, the Republic Committee for Prevention of Conflict of Interest concluded that Velimir Ilic had violated two laws – the Law on Prevention of Conflict of Interest and the Law on Planning and Construction – and that he had begun construction without proper license. The committee also stated that Ilic received the license unusually quickly after the media reported on the subject. Although this constitutes a criminal offense, the then minister was only given a non-public warning. Velimir Ilic refused to be interviewed by the "Insider" citing doctor's orders due to recent operation.

While the minister who is supposed to fight illegal construction has engaged in illegal construction himself, state officials have built a complete bypass for Corridor X around Belgrade without any license.

Oliver Dulic, minister of environment and spatial planning: One of our first conclusions, I must say, perhaps for the first time in the history of Serbia, is that everything we build has to be absolutely perfect with regard to planning documentation. This is why we are still waiting to begin construction.

B92: What about the bypass? It has no license.

Oliver Dulic: One of our dilemmas is what to do with all these roads and buildings that are almost fully built or have been built without proper licenses. What should we do?

B92: But the state itself built it?

Oliver Dulic: That's right, and I am asking you, what should we do about it? Not everything was illegal, but necessary licenses are missing and we are now trying to catch up... You wouldn't believe me if I described you the chaos that I encountered in some segments of the Ministry, but at the moment we are doing our best to compensate for it. We want to...

B92: Wait a minute, will anyone be held responsible for all these works performed without proper licenses?

Oliver Dulic: I hope that one day someone will be held responsible for many things that have happened in the past in this country. I hope so.

B92: What kind of message are we sending to citizens if major state institutions construct without proper licenses?

Nenad Komatina, secretary for urbanism in Belgrade 2004-2008:
I don't know what to tell you about that, what kind of message we are sending to citizens, this is all related to investors and inspection teams. It is not...

B92: All right, but is it a matter for relevant institutions?

Nenad Komatina: Yes, for relevant institutions. This is not a matter for the Secretariat of Urbanism.

Inspection teams investigate only after receiving specific complaints. However, even when a decision is made to demolish an illegally constructed building, such decisions are rarely enforced.

Milan Popovic, president of Zvezdara municipality: One of the citizens in the territory of Zvezdara illegally constructed a building with an area of 600 square meters. Of course, our inspectors confirmed it and after a complicated and slow procedure we went there to demolish it. Representatives of the Serbian Radical Party showed up at the scene, members of parliament, the police. He told us to back off because he was a member of parliament. The police stayed away. The building was demolished, but there was a humane note in it because it was demolished in such a way that a useful part of it remained. When you look at that object, it seems as if it was taken from horror films.

During the nineties, complete settlements were built at agricultural land without any infrastructure. Illegal construction was supported by the government. Branislav Ivkovic was the minister of construction during the period 1994-1998 and according to the laws that he had proposed, illegal construction was not a criminal offense.

Branislav Ivkovic: I think it is a complete nonsense to introduce the concept of criminal offense into the law on construction. There is a criminal code and it covers all the criminal offenses that a citizen can commit.

B92: So how does it relate to illegal construction?

Branislav Ivkovic: Please talk to a lawyer and you may find his opinion on this matter very interesting.

B92: In your opinion, is illegal construction a criminal offense?

Branislav Ivkovic: People were investing their own money because their local self-government failed to designate areas for building of individual residential objects. Belgrade and many other cities lagged behind. On the other side, we had major social issues at the time, but we were lucky because citizens could still afford to build houses.

B92: Illegally?

Branislav Ivkovic: Illegally, but they still had money to build. Today they cannot build a shed or latrine because they don't have money.

However, since illegal construction could not be punished in accordance with the Law, complete illegal settlements were built during the nineties without basic living conditions. Several settlements in Zemun were constructed after the Serbian Radical Party, which held power in Zemun at the time, sold agricultural land to citizens on which many of them built houses. As a consequence of this, many citizens lacked electrical power and sewage systems for years.

Gordana Pop Lazic, vice president of Central Homeland Council of the Serbian Radical Party: We are satisfied and proud of the fact that we have allowed these citizens to acquire construction land plots under favorable conditions and build themselves homes. In 2000 there was a change in power and between 2000 and 2004 absolutely nothing was done about this issue, you can check that with the former Zemun administration appointed by the then Democratic Opposition of Serbia (DOS). What should have been done? Regulation plans should have been adopted, which would have allowed legalization of these objects and construction of infrastructure. That would have been the right move, instead of doing nothing and complaining about the settlements. These settlements are not chaotic like those in Kaludjerica, they are very well planned.

Meanwhile, infrastructural works in these settlements, totalling in millions, are being paid by all citizens of Belgrade. It is interesting to note that the Radicals, who are responsible for creation of illegal settlements in Zemun, used to interrupt sessions of the National Parliament held in 2007 demanding solution to this problem.

Nenad Komatina, secretary for urbanism in Belgrade 2004-2008: There was the notorious incident when the session of the parliament was interrupted by Aleksandar Vucic – a Radical at the time – who demanded that Grmovac settlement finally be given electricity. Grmovac was built around ten years ago, maybe more, and during all these years it did not have access to electrical power. The Radicals thought of them only in 2007 and pressured the city to solve this problem. I am really sorry for these people who were deprived of basic living conditions in the 21st century. Someone allowed them to live and work there without electricity. It was a disaster.

Gordana Pop Lazic, vice president of Central Homeland Council of the Serbian Radical Party: We were very careful to make all the land plots the size of 6-7 ares [op. metric unit - 120 sq.yards], well organized, at right angles and with streets, so that infrastructure could be built later and public transport introduced. We didn't want chaotic construction. Indeed, the value of these land plots has now reached several tens of thousands of euros, not taking into account the value of houses.

Representatives of the Serbian Radical Party, at the time of their mandate in Zemun, leased the building of Magistrate for the period of 30 years. This building was previously occupied by the VI Municipal Court and under protection by the Agency for Protection of Cultural Heritage. After the democratic changes, the new government initiated a procedure to annul the lease contract. In March 2003, the IV Municipal Court ordered the building returned to the municipality within 15 days, but Serbian police din not assist in this nor helped the municipal government to implement the court's decision.

In the meantime, the Radicals won the power in Zemun again in 2004 and appealed the decision. For unknown reasons, the municipal public attorney, Snezana Kokir, failed to file a claim and the building will remain in use by the Serbian Radical Party until 2028. However, had the building been rented in accordance with its market value, the municipality would now have a source of revenue in the amount of around six and a half million dinars a month.

Gordana Pop Lazic, vice president of Central Homeland Council of the Serbian Radical Party: The Republic Directorate for Property of the Republic of Serbia approved this lease contract. Therefore, if the court had made an incorrect decision, the only solution would seem to be to go to Strasbourg, but I believe that this was not the case.

After acquiring the Magistrate building, representatives of the Serbian Radical Party organized a tender for allocation of the land in the building's yard, which was in violation of the law and regulations. The Radicals offered the land within the yard of the building protected as a cultural heritage, at an archaeological site, as a location for a shopping mall. In 1999, the tender was won by Dejan Obradovic and the price of the land was 3.5 million dinars.

Gordana Pop Lazic, vice president of Central Homeland Council of the Serbian Radical Party: In accordance with the contract, the land was given to the Serbian Radical Party together with the building that we use. We have turned it into a commercial real estate and gave it back to the Zemun municipality so that the municipality could offer it to public tender and build a shopping mall. And it was built there, as you can see.

B92: How is it possible that a piece of land that is an integral part of a cultural heritage site can be used for construction of a shopping mall? Wasn't there any other land available in Zemun? Why there, in the Magistrate's backyard?

Gordana Pop Lazic: Why not? But excuse me, what is a cultural heritage site?

B92: The Magistrate building.

Gordana Pop Lazic: That's not true.

B92: What do you mean, it's not true?

Gordana Pop Lazic: How can it be a cultural heritage?

B92: It is protected by the Agency for Protection of Cultural Heritage.

Gordana Pop Lazic: But the land is not under protection.

The shopping mall was open in April 2002, while the Zemun municipality was ruled by Democratic Opposition of Serbia. In the meantime, the Detailed Spatial Plan for this location was adopted by the City Assembly in 2003. This plan stipulates that the Magistrate building and the shopping mall are public buildings to be used for cultural purposes. In this way, the shopping mall was designated a cultural heritage site – another proof that everything is possible when it comes to spatial plans.

While the Radicals were busy giving away the property of the Zemun municipality during the nineties, the local and municipal governments in Belgrade started a business deal that could be called "kiosk – Belgrade". Kiosks were placed at each corner. Licenses were issued to anyone who bribed the representatives of then local government. At the same time, privileged individuals were given land plots. For example, "Stankom" company, owned by Zivadin Mihajlovic, also known as Zika Mustikla, was given an exclusive right to construct large settlements in the Cukarica municipality. Mihajlovic was a deputy of the Socialist Party of Serbia in the Federal Parliament. Before that, he was the director of the construction cooperative "Nas Stan". In the beginning of the nineties, it was transformed into the "Stan Komerc" company, and later became a private company named "Stankom".

The city's Public Legal Office investigated the manner in which the land was allocated during Milosevic's rule.

Strahinja Sekulic, Belgrade city public prosecutor: The Cukarica municipality allocated the land to him.

B92: On what basis?

Strahinja Sekulic: His request was approved in accordance with the law.

B92: In accordance with the law?

Strahinja Sekulic: Yes, as far as I know, a public tender... his duty was to relocate people from certain locations and construct buildings. You have to realize that it was a different system. There were no private companies, or there were only a few of them. Everything was within public property, and controlled by the state. The state did not recognize commercial entities as something that was separated from it. That was not such kind of a system.

In the beginning of the nineties, "Stankom" was given the opportunity to construct buildings in several hundred land plots in the locations Filmski Grad and Suncana Padina at Banovo Brdo. Although there was a deadline for these projects' completion, construction was stopped in mid-nineties. Representatives of the Association of 1000 Claimants bought many apartments at these locations in 2003 and 2004, but even today no apartments have been built there. The owner of the company "Delta Legal", Aleksandar Lukic, who is in custody at the moment, was one of the co-investors in these locations.

Problems began in 2003 with the adoption of the Law on Planning and Construction. At the time, "Stankom" owned an enormous amount of land but did not use it for its designated purpose. The company was threatened with confiscation if it fails to begin construction in a year. In autumn 2003, "Stankom" concluded contracts with several co-investors and began construction at all locations in order to keep them. The contracts specified proportionate participation in revenues from the sale of constructed buildings. Apartments have been sold on the basis of these contracts but, as a rule, in every case construction was stopped, with "Stankom" claiming that a co-investor had sold apartments that do not belong to him. At the same time, citizens were deprived of apartments they had paid.

Katarina Ogrizovic, buyer of apartment from "Stankom – Delta Legal": The lawyer said that everything was OK from the legal point of view. The only remaining issue was when the construction would be finished. I paid the advance for the apartment, received a receipt and waited for construction to begin.

However, after receiving money from buyers, "Stankom" publicly announced problems with co-investors, who had allegedly sold apartments belonging to "Stankom".

Aleksandar Mihajlovic, "Stankom": We made a final calculation of all construction costs and gave a share of apartments to the co-investor as a payment. After that, it turned out that the co-investor had sold our apartments to other buyers. Do you understand?

B92: Wait a minute, some co-investors – who had been practically anonymous until they began their cooperation with you – were able to deceive you, an established company operating for many years?

Aleksandar Mihajlovic:
Yes, that is true. They stole from us.

B92: It seems such a scenario has already happened to you several times?

Aleksandar Mihajlovic: Well it is obvious that there exists... You should investigate that. There is some kind of organization, something organized. I don't want to go there.

One of Stankom's co-investors was the company "Cuming". For example, Cedna Nikoletic bought an apartment from "Cuming", but "Stankom" sold the same apartment to another buyer despite being prohibited by court.

Cedna Nikoletic, buyer of apartment from "Stankom – Delta Legal": We bought the apartment in March of 2005. The advertisement said that construction should be completed in July of the same year, but it was delayed and we were promised that it would be finished as soon as possible. However, in November 2006 we found out that apartments were sold twice.

After seeing Stankom's advertisement for sale of her apartment, Ms Nikoletic filed a claim before the Second Court and the court made a decision to prohibit the sale of the apartment. After Stankom's appeal against the decision, the Regional Court confirmed the prohibition on May 16, 2007. However, despite the court order, according to the documentation acquired by the "Insider", "Stankom" sold the same apartment in July 2007.

Aleksandar Mihajlovic: That's not true. I have told you, it is possible that... I have already told you...

B92: Is this your contract?

Aleksandar Mihajlovic: I have told you, if someone had done that, he would have been placed in prison. No one has been imprisoned.

B92: Can you have a look, is this your contract?

Aleksandar Mihajlovic:
I am telling you, perhaps it was... yes, this is one of our sale contracts, what is wrong with it?

B92: Please look at the date.

Aleksandar Mihajlovic: I see it, so what?

B92: And this is from the Regional Court.

Aleksandar Mihajlovic: Where does it say this is from the Regional Court? Let me tell you something... If someone had done something like that, he would have been in jail by now. I am telling you...

B92: Wait, isn't this...

Aleksandar Mihajlovic:
I have told you, such a person would have been jailed by now. Probably the dates are... I cannot examine it now. Probably the dates are in disagreement. Most probably we had sold the apartment before the verdict, otherwise someone would have been in prison by now, as you have said, because this would have been a classic fraud.

B92: Mr. Mihajlovic, it is written here: May 16, 2007 and June 18, 2007?

Aleksandar Mihajlovic: There's the difference, here's May and there's June.

B92: Yes, this is from the Regional Court, and before that there was a first-degree verdict which had also prohibited the sale of the apartment. The first-degree verdict was made in February 2007. Despite this, several months later, you made another contract.

Aleksandar Mihajlovic:Let me tell you, a verdict is effective when it goes into effect.

B92: You mean the one from the Regional Court?

Aleksandar Mihajlovic: I don't know, I don't want to go there. If you have an effective... if a verdict is effective, and you fail to obey it, you must bear consequences.

B92: What is the situation with this apartment? Do you know anything about this?

Aleksandar Mihajlovic: I have no idea.

Cedna Nikoletic brought a civil action suit against "Cuming" and "Stankom" because her apartment was sold twice. In the last verdict by the Second Municipal Court, "Cuming" was ordered to return to the buyer the money paid for the apartment in the amount of around 100,000 euros. However, the Second Municipal Court concluded that "Stankom" was not guilty although the company had sold again the apartment despite the court order. Cedna Nikoletic appealed to the Regional Court and the process is pending. It is interesting to note that the president of the Second Municipal Court, Gordana Mihajlovic, is now a lawyer that represents "Stankom". Mihajlovic had worked in the Second Municipal Court since 1977 and for a while was a president of the Court. During her tenure in the Court, the legal office of Djordje Visnjic represented "Stankom". Today, Gordana Mihajlovic works together with the lawyer Djordje Visnjic, which is obvious from the authorization to represent the company given by "Stankom" to Djordje Visnjic. The authorization states that Gordana Mihajlovic is authorized to represent "Stankom" if Djordje Visnjic is not available.

Aleksandar Mihajlovic, Stankom: Where did you get that information?

B92: There is an authorization with her name on it.

Aleksandar Mihajlovic: She became my personal lawyer after beginning her practice.

B92: Exactly.

Aleksandar Mihajlovic: So there is a connection, this means that the World Bank, which has hired her as an exclusive representative for Southeast Europe, was also connected with Mrs Mihajlovic while she was the president of the Second Municipal Court.

B92: Wait a minute, what a coincidence. The president of the Second Municipal Court became Stankom's lawyer, and before that...

Aleksandar Mihajlovic:Not Stankom's lawyer. She became my personal lawyer.

B92: Your lawyer. Are you the Stankom company?

Aleksandar Mihajlovic: I am a minority shareholder of "Stankom" and I work for "Stankom". There are... Please, don't confuse private and business connections.

Cedna Nikoletic, buyer of apartment from "Stankom – Delta Legal": The worst thing is the feeling of powerlessness, the feeling that there is no one who can protect you. After considering everything that I have done, all the places I have visited, I felt truly helpless.

Dragoslav Sumarac, minister of construction 2001-2004: At the time, I appealed to citizens not to buy any property that was not registered or that lacked licenses.

One of the main problems is the registration of the right of ownership. In order to obtain a construction license, investors must provide an ownership certificate for the land on which they intend to build. However, it sometimes happens that the license is issued on the basis of a forged ownership certificate. Documentation may seem all right to prospective buyers, but after moving in the apartments they discover that their property cannot be registered because the license was issued on the basis of forged documents.

Dragan Benovic, head of the Land Register Department of the Second Municipal Court: Even if the construction license and other necessary documents for construction of a building are obtained, the right of ownership over such a building cannot be registered with the land register if there are any remaining unsolved legal or ownership issues related to the land the building is built on. This fact can have huge consequences on buyers of such real estate property. The land register department is freely and publicly accessible and I advice citizens who want to buy real estate property, especially the buildings whose construction has not been completed, to always check whether the investor – the one who has obtained the license to build on that land plot – is actually the one who is registered as the owner or the rightful user of the land, regardless of the documentation presented to them by the investor.

Djordje Bobic, architect and Democratic Party representative in the City Assembly, chief city architect 2003-2008: Many people criticize me when I say this, but I believe that there is no construction mafia. Allow me to make fun of it, but I think that would be an insult to the real mafia. Watching films and reading books about mafia, one gets an impression that it is a serious organization. There are individual cases – investors, state officials, people from the city administration, architects... For example, let's suppose there was problem with an architect who does not want to be a part of it. He would be out of work because he would be considered inefficient.

B92: Are you one of these architects?

Djordje Bobic: I am pleased to say that I am.

Architect Djordje Bobic has for years worked as an official in numerous institutions of the city in the area of spatial planning. At the same time, he and his wife own the designing company "Slavija Biro". Bobic believes that there is nothing disputable about that.

Djordje Bobic, architect and Democratic Party representative in the City Assembly, chief city architect 2003-2008: I am under impression that the state actively fights the experts. Don't be so surprised. This is a fact. Suppose that you want to have a chief city architect in Belgrade, a reputable architect with a rich professional career, but with a precondition that he has not been a part of any project. How can you achieve that? It's a nonsense. You may hire a bureaucrat who has never achieved anything and who would have absolutely no conflict of interest. On the other side, I am full of conflicts of interest. Why? Because I am a good architect and everyone wanted to hire me as a designer; in this way, eventually we became friends.

Dragan Benovic, head of the Land Register Department of the Second Municipal Court: I know there is talk about corruption, but I accept responsibility for everything that happens in the Second Municipal Court as a land register court. I hear a lot of stories, and it is possible that some people pay mediators, some mediators, that someone has taken money from the end-user, but I guarantee that such money is not in the pockets of the land register employees.

Nenad Komatina, secretary for urbanism in Belgrade 2004-2008: Relevant authorities investigate such things, they investigate whether someone has broken the law or not.

B92: I suppose that you cannot guarantee that no one from the Secretariat has taken money?

Nenad Komatina: I cannot guarantee for anyone.

B92:
Can you guarantee for yourself?Nenad Komatina: Of course. I can be certain only about myself.

Verica Barac, president of the Anti-Corruption Council: How does this systemic corruption work? The system relies on corruption and it can be understood very well. Possibilities for corruption, for these influences, is first built into the law itself and later into the functioning of institutions and procedures. It is only a question of which mechanism is most suitable in any given moment. This applies to spatial planning, privatization, anti-monopoly regulations. If you create such possibilities for corruption, even the best and most efficient judges and prosecutors in Europe will not be able to fight it.

Dragan Benovic, head of the Land Register Department of the Second Municipal Court: The state is guilty for not preventing the appearance of the construction mafia. Issuance of construction licenses should be more efficient, including everything that might contribute to corruption. Some people do not pay issuance of construction licenses, ownership certificates or land registration, anything related to documentation necessary for construction.

B92: Is there a construction mafia?

Strahinja Sekulic, Belgrade city public prosecutor: I don't know.

B92: How is it possible that you don't know?

Strahinja Sekulic: How could I know?

B92:What is your opinion? You have filed charges against some people. Against whom?

Strahinja Sekulic: The charges we have filed have nothing to do with organized crime, but to irregular construction or danger to general public. This is not such a structure of offenses. We have something related to that. I am not trying to ignore such problems. There have been some strange murders and shootings; it is obvious that something is happening within the criminal circles related to construction business. But what worries me most, and I believe everyone else, is that there are reasons to believe that dirty money made in classic criminal activities, drugs, weapons trade, extortions, and other kinds of crime, has found its way to construction business.

Several murders in Belgrade have been mentioned with regard to the construction mafia. In September 2007, the bodies of Darko Zivkovic, Vladimir Samardzic and Dusan Pejovic were found in the construction firm " S Kompani" at Vidikovac. The owner of the firm, Branislav Sekulovic, has been hiding since then. According to media reports, Sekulovic owed money to the victims because he borrowed money from them in order to construct buildings in Vidikovac. During 2007 and 2008, there were three attempts on the life of Zoran Stankovic Kiza, the owner of the construction company "Stankovic". Stankovic has constructed buildings mostly at the territory of Cukarica and Rakovica. Aleksandar Milosevic, also known as Aca Kostur, was murdered in June 2008. He owned the chain of betting shops "Kalco" as well as a construction company. Family Obradovic was murdered in October 2007 in Zarkovo. These murders were also thought to be connected to the construction mafia, because Zoran Obradovic was a construction contractor.

Dragoslav Sumarac, minister of construction 2001-2004: Yes, that has always been a problem. I even believe that after the "Sabre" anti-crime campaign, while we were still a part of the government, a lot of this money was being laundered through construction of buildings. In the case of those so-called investors, who have no money at all but somehow build buildings, some of them often get killed in these conflicts within the Belgrade organized crime circles while their projects remain unfinished. The money stops flowing and they lose their locations and projects, leaving many of these investments unfinished.

Apart from criminals, who have safely invested their money earned in criminal activities and become investors due to government's mistakes, citizens are often defrauded by various investors as well as officials that are supposed to protect them. Residential buildings in 23-25 Balkanska Street are an example of a possible fraud that might harm apartments' owners.

The buildings in 23-25 Balkanska Street, in the center of Belgrade, were expropriated in 1995. The detailed spatial plan at the time specified that the buildings would be demolished and a hotel built in its place. However, in 1995 the Belgrade City Assembly concluded a contract with Sima Igumanov Foundation. The contract with the city, that was signed by the Patriarch Pavle on behalf of the Patriarchate, stipulated that the location would be used to build a residential-commercial complex, with an obligation to relocate tenants from the buildings and provide them other apartments. Since nothing was built at the location by 2003, the tenants have been successful in their attempt to take the location away from the investor – the Patriarchate – and return it to the city of Belgrade.

The Detailed Spatial Plan stipulates that the buildings in the Balkanska Street should be demolished, but they are still intact. The location became a high-value target for numerous investors and it seems that the owners of apartments in the buildings will suffer most of the damage. Since the building is designated to be demolished, the tenants cannot invest in it. The building is in a decrepit condition and threatens the safety of everyone who lives in it.

In 2004, the company "Akt Inzenjering", owned by Velibor Pavlovic, built a residential building at a separate land plot which is almost inside the yard of the building at 23 Balkanska Street. A part of the yard was destroyed during the construction, jeopardizing the safety of tenants in the building no. 23. Walls of the apartment on the ground floor have almost fallen off. Although the tenants filed complaints with relevant institutions and inspectorates, these steps have been unsuccessful. In the meantime, the owner of "Aktiv Inzenjering", who wanted to buy the building's location, submitted a request, in accordance with the Law, for merging of his land plot and the land plot of the building no. 23 due to circumstances on the ground – which he had caused himself. The tenants filed a complaint that was upheld and his request was denied.

In the meantime, the MN Group – a designing office – submitted a request to the Secretariat of Urbanism containing a project for construction of a hotel at the land plots where the buildings are located. The Insider has found out that this request was approved, but it is still not known who is the investor on whose behalf the MN Group designed the project.

In this way, the tenants who live in 23-25 Balkanska Street – who own these apartments – will be deprived of their property at this location although the city administration has not solved all the legal and property issues. Since the buildings had been expropriated and designated to be demolished in accordance with the detailed spatial plan, the city is obliged by the Law to conclude contracts with the tenants and provide them an adequate replacement for their apartments. However, this has not happened. Without any prior agreement with the tenants, the city administration has transferred the location to the investor. This means that the investor will acquire a location in the city center without any tender or lease, on which he will be able to construct thousands of square meters of space – namely, the city may decide to put out to tender only the land. In this case, the buildings were given to the investor, with an obligation to provide the tenants an adequate compensation. However, it is uncertain what the investor may offer the tenants and at what price, since he has already received all necessary documentation from the authorities. In this way, the authorities have deprived the owners of the apartments of any choice and forced them to accept the investor's offer, whatever it may be.

In some parts of Belgrade there are detailed spatial plans which are not being implemented. In other cases, detailed spatial plans are being modified to fit previously built settlements. Such was a case recently with the sport center Kovilovo. Few years ago, a sports complex was built illegally on this agricultural land. The Belgrade City Assembly adopted a detailed spatial plan for this area that legalized everything that was constructed.

Construction of the sport center in Kovilovo, located some 10 km from Belgrade, began in the end of the nineties. The center was completed in 2004 and has been working to this day although it was built on agricultural land. With an area of 26 hectares, it comprises of a hotel "President" with 17 rooms and 10 apartments, a conference center, a sport hall with four fields for small sports, open sport fields with artificial grass, two grass football fields with night lighting, shooting range with flying targets, and a swimming pool. The owner of the sport center, Milan Sotra, is not well-known to the public. In his own words, before the war in former Yugoslavia he had been active in the field of black metallurgy and was a director of several smaller public companies in Bosnia and Croatia.

Djordje Bobic, architect and Democratic Party representative in the City Assembly, chief city architect 2003-2008:
I think that they built it using some kind of temporary licenses. If I recall correctly, the owner or the user of the land was PKB company. The then director of PKB was a fan of shooting sports and he allowed construction of these objects at this location. And it looks really fantastic.

B92: But it was built without licenses?

Djordje Bobic: They had temporary licenses. Two world championships had been held there and the facility was widely known in Europe at the time. For this reason, in 2006, if I remember correctly, Mr. Bogdanovic and I decided to make a detailed spatial plan for this area, because there...

B92: You wanted to modify the Detailed Spatial Plan once again?

Djordje Bobic: We wanted to adapt it and put this location in proper order.

In this way, the City Assembly modified the Detailed Spatial Plan and allowed those who had illegally built huge complexes on agricultural land to acquire many hectares of city's land for free.

Milan Popovic, president of Zvezdara municipality:I am under impression that priority is given not to the interest of the public, but to special interests of people with money. I am sometimes unhappy because of that.

The government readily accommodates individuals who have been building illegally and adopts Detailed Spatial Plans which legalize their actions. There are also examples of construction licenses being issued for locations where any construction is forbidden.

Milan Popovic, president of Zvezdara municipality: Let me tell you something that you don't know. Numerous objects, larger than 800 square meters each, have been legalized in Mirijevo despite the fact that they have septic pits. I hope you can believe me.

Verica Barac, president of the Anti-Corruption Council: The main mechanism and potential for corruption is related to spatial planning. If you read the General Spatial Plan, you will see the planning of corruption. They have specified possibilities which allow changing of land's purpose.

Corruption is pervasive and officials have been allowed to individually decide, regardless of the law, on the number of square meters that could be built by investors, which is further evidenced by an inexistent – as it has turned out – instruction for issuance of construction licenses. According to Insider's sources, since 2005 the Secretariat for Urbanism and various municipalities have been using the instruction allowing investors to construct ten percent more space than specified by the plan. This instruction was allegedly sent from the cabinet of the mayor, Nenad Bogdanovic, with his signature on it. However, as it has turned out, the original of the instruction does not exist and the signature seems to have been forged. Most of the licenses have been issued on the basis of this instruction. In the end of 2008, the management of the Secretariat for Urbanism was changed and it was discovered that the instruction officially does not exist.

Nenad Komatina, secretary for urbanism in Belgrade 2004-2008: We have applied this instruction in practice, but it was officially adopted sometime in 2005.

B92: Who adopted it?

Nenad Komatina: It was delivered from the cabinet of the mayor.

B92: It was allegedly made by the City Assembly, but later it has turned out that it was a forgery?

Nenad Komatina: It was not the City Assembly, but the mayor. The authorities – the police and the prosecutor's office – will establish whether it was a forgery or not. We cannot comment on whether something is a forgery or not at this moment. I don't want to make any statement regarding that issue, but the instruction existed and it has been used in the process of creation of spatial planning documents and conditions, as well as for the purpose of clarification of certain issues. We have received a document...

B92:It was a mandatory instruction?

Nenad Komatina: Yes, of course, it was mandatory for us.

B92: And what is your interpretation of the latest discoveries?

Nenad Komatina: This document was an instruction from the mayor. It even said that all questions should be sent to the city architect.

B92: At the time, the city architect was Djordje Bobic?

Nenad Komatina: Yes, Bobic. It was signed by Nenad Bogdanovic.

B92: Don't you find it strange that it was confirmed these days...

Nenad Komatina: What was confirmed?

B92: It was established that such a document does not exist in the City Assembly.

Nenad Komatina: Well, the City Assembly and the mayor's cabinet should deal with that. I cannot comment on that. They are required to keep all documents signed by the mayor Bogdanovic.

Djordje Bobic claims that he has never been consulted regarding the instruction, and that he was not aware of any such instruction. No one is able to explain how it is possible that the officials have acted in accordance with the instruction that was – as it seems now – a forgery. According to Insider's sources, the instruction allowed privileged businessmen to build ten percent more square meters than was originally specified in spatial plans. This means that the authorities have allowed investors to increase their profits on the basis of the instruction that, as it seems, has never been officially adopted.

Oliver Dulic, minister of ecology and spatial planning: They have also begun regulating things using so-called spatial planning projects, adopted by Planning Committees – independently from municipal assemblies – to define some things which were outside their scope and issue documents on the basis of that. Many such things happened and we are aware of that, we are aware of many economic interest groups, of the pressure exerted and all the problems in regulating this area. We have no choice but to continue. A new law must be adopted and strictly enforced. The new law is welcomed by honest people, honest investors, because it will allow them not to pay for huge corruption at different levels of government.

In all these cases, there is no system that would protect citizens. Courts are slow to prosecute illegal constructors or those who have abused their position. Aside from this, courts usually do not even punish illegal construction, although it is a criminal offense punishable by imprisonment of up to three years. In all these ways, both the buyers and the state's budget have suffered damage. The construction mafia exists mostly because of corruption at the local level. However, much more damage, measured in billions of euros, is caused by representatives of the national and local governments who give away many hectares of high-value locations to privileged businessmen, harming both the state's budget and citizens.

ABUSE OF OFFICE