Patriotic theft - part 1 (VIDEO)

Despite the reality that Serbia has had no real authority in Kosovo since 1999, after former President Slobodan Milošević agreed to sign the Kumanovo Agreement following three months of NATO bombings, every Serbian government continues to deceive the public. In an effort to prove that “Kosovo is the heart of Serbia,” they allocate funds from the budget even for Serbian public companies that no longer operate in Kosovo, yet officially still exist for Serbia. For years, money has gone to paying dual salaries for people allegedly working in state-owned companies in Kosovo, when in reality they have been relocated throughout Serbia. Serbia has also funded roads that were never built, and buildings where only the foundations remain, overgrown with weeds. The purchase of Albanian apartments for the return of displaced Serbs has turned into enormous spending of state funds with commissions paid to private brokers.

Those most vocal about defending Serb interests—those setting up barricades and publicly stating they won't use border crossings, where, besides EULEX, staff is  Kosovo customs officials—are the very ones who, as Insajder reveals, quietly acknowledge Kosovo as a state by registering their companies in the Kosovo registry. While preaching patriotism, they’re willing to fill out forms labeled "Kosovo Republic" to register their firms. Similarly, for business purposes, they possess personal documents that also state "Republic of Kosovo." At the same time, anyone who points out their illegal ways of getting rich is branded a traitor.

“PATRIOTIC THEFT”

Besides the abuses that have occurred under the guise of patriotism and alleged aid to Serbs in Kosovo—about which you will learn in future episodes—the most egregious example is the outright theft of the budget through smuggling between Serbia and Kosovo. In a situation where few Serbian laws are respected in Kosovo, the government of Vojislav Koštunica, in 2005, when Serbia introduced VAT, decided to abolish VAT on all goods sent to Kosovo. The justification was that it would help Serbs in Kosovo by making goods cheaper in stores and more competitive in the market. However, as Insajder reporters discovered, this state decision, due to a lack of proper control, turned into smuggling. Some individuals built empires on VAT-exempt trade, particularly in oil but also in other products that, on paper, were sent to Kosovo but often returned to Serbia or entered the Albanian part of southern Kosovo through gray channels. While the narrative was maintained that the barricades were protecting Serb interests, and while Serbs living in Kosovo’s enclaves barely survived, both Albanian and Serbian businessmen managed to get enormously rich. During this time, according to Insajder's investigation, Serbia’s budget was deprived of around 300 million euros in lost VAT revenue. Despite these obvious abuses, the government of Mirko Cvetković partially repealed the regulation and reinstated VAT on oil, phone cards, and cars, but only recently and near the end of its term. At the time of the interview, Mirko Cvetković’s government was in its final days, and Goran Bogdanović was the Minister for Kosovo.

B92: Why did it take this government three years to realize the extent of the abuses and how much the budget was losing?

Goran Bogdanović, member of the Committee for Kosovo and Metohija, Minister for Kosovo (2008–2012): Because of VAT?

B92: Yes.

Goran Bogdanović: Well, you know, if you want to do a serious job, you need to conduct various analyses, you need to see if there could be any consequences from all of it, and once we established all that, we made the decision we did. I believe it's better to make a decision late than never. Even though it might have been delayed, and I agree with that.

Borislav Stefanović, member of the Committee for Kosovo and Metohija, head of the negotiating team for Kosovo (2011–2012): And if you ask me why it wasn’t done before, I can tell you, we can’t be responsible for why it wasn’t done earlier—that would be the easiest answer. On the other hand, I can say I regret that it wasn’t done sooner.

B92: How can you not be responsible?

Borislav Stefanović: But again, you're asking me...

B92: This government came to power in 2008.

Borislav Stefanović: Yes, but you're asking me something that, objectively, wasn’t under my jurisdiction.

B92: When did you realize the state was losing money because of VAT?

Borislav Stefanović: Well, you know, when VAT was removed from Kosovo, the explanation was likely—I don't know, I wasn’t involved—but I assume the explanation was that it was meant to ease the lives of people in Kosovo and Metohija.

Everything began when the Serbian government, led by Vojislav Koštunica, first issued a regulation in 2004 aimed at avoiding double taxation, meaning paying taxes both in Kosovo and Serbia. This regulation stated that those exempt from taxes in Serbia would be those who provided proof of tax payment in Kosovo, and Serbian customs officers would control the flow of goods at the crossings. However, in January 2005, Kosovo businessmen began organized protests, joined by local government officials. Their goal was to change the regulation, removing the requirement for proof of tax payment in Kosovo and eliminating customs officers at the crossings. They protested by setting up barricades and closing roads to the administrative crossings of Jarinje and Brnjak.

Oliver Ivanović, State Secretary in the Ministry for Kosovo (2008–2012): I remember that protest at Jarinje, but I would say that these businessmen are often part of the political milieu. Sometimes they act according to business principles, as may be the case here, and other times they follow the political agendas of their parties.

B92: Do you think it wasn’t primarily about financial interests?

Oliver Ivanović: Well, it's a business principle. Not wanting to pay taxes twice is logical. However, it turned out that they were exempted from taxes by our Ministry of Finance, yet they didn’t pay taxes in Kosovo either, or perhaps it was planned that we would pay it later.

In 2005, based on media reports, the public impression was that some Serbs from northern Kosovo were rightfully protesting. The media broadcast fiery speeches from the barricades about how the decisions of the Serbian government were leading to Kosovo’s secession from Serbia, how Serbs from the north had to get confirmations from Albanians, and how it was unacceptable for Serbian customs officers to search and inspect Serbs at the administrative crossings—because customs shouldn’t exist if Kosovo is part of a single country.

The Democratic Party of Serbia (DSS) supported the demands of certain individuals from northern Kosovo. In the end, all demands were met, which, as it turned out, caused significant damage to Serbia’s budget.

Dušan Proroković, DSS MP and President of the Committee for Kosovo and Metohija, February 8, 2005: Customs officers opening every trunk of every vehicle only irritates people who cross there daily.

Milan Ivanović, representative of Serbs from Kosovo, February 9, 2005: I expect this issue will be resolved in the best possible way, in a way that keeps us in our own country.

Miroljub Labus, Deputy Prime Minister of Serbia, February 8, 2005: We will discuss it. We want to find a joint solution. If they really don’t want uniformed personnel, that’s fine, we’ll send tax officers, but trucks cannot pass without control.

After several days of protests by Serbs from northern Kosovo, who set up barricades in response to the regulation, the Serbian government conceded to their demands and changed the regulation, which from that moment effectively opened the door to smuggling. The agreement was reached during a government meeting between then-Prime Minister Vojislav Koštunica and the heads of municipalities in northern Kosovo: Leposavić’s mayor Velimir Bojović, Zubin Potok’s mayor Slaviša Ristić, the president of the Serbian National Council Milan Ivanović, Zubin Potok’s business leader Rade Utvić, and Members of Parliament Vladimir Milentijević and Vuk Antonijević. All the municipal leaders and MPs were members of the Democratic Party of Serbia (DSS).

This amended regulation was adopted by Vojislav Koštunica’s government and signed by then-Deputy Prime Minister and G17 official Miroljub Labus. All DSS representatives refused to speak to Insajder, explaining that they had cut ties with B92, accusing the Insajder series “Kolubara Theft” and “The Assassination of the Prime Minister” of conducting a campaign against their party. Miroljub Labus also declined an interview, claiming he did not know any details, as he had signed all regulations in his capacity as Deputy Prime Minister.

Oliver Ivanović, State Secretary in the Ministry for Kosovo (2008–2012): I believe that decision may have been made with the best intentions, but objectively speaking, it did not result in lower prices, as was intended, and at the same time, it caused a loss to the budget.

The regulation was changed in 2005. Since then, the same rules have been in effect. Goods at the administrative crossings have been inspected by members of the newly established department of the Tax Administration, although representatives of the Ministry of Finance had previously insisted that tax officers were not capable of handling this task. Moreover, proof of tax payment in Kosovo was no longer required for tax exemption, only a receipt showing the goods transaction had occurred.

According to Insajder's investigation, this opened the door to numerous abuses in the following years. On the ground, control of trucks and tankers was reduced to a minimum, and companies from Serbia established subsidiary companies in Kosovo, allowing them to issue their own receipts for goods transactions.

In 2010, the NGO Center for Regionalism investigated the movement of goods across administrative crossings in both directions and concluded that 40% of goods were in the gray market.

Aleksandar Popov, Center for Regionalism: If you start regulating that area, you automatically begin dealing with issues that ultimately lead to discussions about Kosovo’s status, which is one reason, or excuse, for why the state did not take this matter more seriously, although it is obvious that state authorities had to be aware of what was happening.

B92: When looking at it from Belgrade, one might get the impression that northern Kosovo is like some kind of Eldorado.

Oliver Ivanović, State Secretary in the Ministry for Kosovo (2008–2012): I think that term was launched with political motives from Priština, as it was important to criminalize the North. Once someone is criminalized, then all possible means can be used against them.

B92: When you place that into the relations between Priština and Belgrade, Priština and Mitrovica, does it mean we’ll turn a blind eye to the crime that objectively exists?

Oliver Ivanović: No, no, certainly not, and if you ask any citizen—not a politically aligned person—you’ll get the same answer: no one supports crime.

What is referred to in the public as northern Kosovo consists of four municipalities with a Serb majority, where the laws and Constitution of Serbia are respected only declaratively.

After the withdrawal of the police and army from Kosovo in 1999, when most courts and prosecutors were relocated to Serbia, the financial police stopped functioning, and inspection and oversight services disappeared, Kosovo became a territory where practically entirely separate laws apply. At the same time, politicians in Belgrade used Kosovo for self-promotion, to prove that Kosovo is part of Serbia, constantly raising tensions by invoking patriotism. Even the regulation that abolished VAT on all goods did not help the Serbs who remained living in Kosovo, particularly those in enclaves. Those living south of the Ibar River, in the Albanian part, often live in poverty and are forgotten by the rest of Serbia.

While Serbs with no political connections, who are forced to remain in Kosovo because they have nowhere else to go, barely survive, even in northern Kosovska Mitrovica, where the majority of the population is Serbian and also barely getting by, a completely new elite with entirely new rules of operation has emerged. At the same time, there are also Serbs who have founded political parties and participated in Kosovo elections. For example, Bojan Stojanović was elected mayor of Gračanica in the Kosovo elections. He is one of the few who publicly states that it is a complete farce when, under the pretext of "Kosovo is Serbia," a huge amount of money is taken from the budget.

Bojan Stojanović, Mayor of Gračanica: What do the Kosovo Serbs stand for? What do Kosovo Serbs have to do with VAT or customs? What does a Serb in Lipljan, where there are about eighty Serbs left, stand for? Nothing. You can go to any store here, for the past 12 years, they’ve been fully stocked. And that’s good. Serbia's economy has a major partner in Kosovo. But you can’t have someone portrayed as a terrorist on the news, while in the business segment, they’re the best partner. These are things you need to figure out.

The regulation on exempting goods from VAT and excise taxes, which was passed with the aim of making products cheaper in Kosovo and thus helping Serbs living there, quickly turned into assistance for smugglers. This was possible for several reasons, primarily due to insufficient control.

There are four crossings that were used for the transportation of commercial and excise goods from Serbia to Kosovo before last year's incidents. At the Merdare and Končulj crossings, the flow of goods has been controlled for years by both Serbian and Kosovo customs officers. At the Brnjak and Jarinje crossings, which lead from Serbia to northern Kosovo, the entry of goods was not controlled by Kosovo customs but by the international community. Until 2008, and Kosovo's unilateral declaration of independence, the UNMIK customs operated there. Since 2008, EULEX personnel have been stationed there.

Insajder journalists investigated for over six months how the crossings operated and uncovered smuggling mechanisms.

At the administrative crossing on the Serbian side, there are tax officials who record the goods going to Kosovo, check whether the goods in the truck match the declared items and quantities, and then issue a confirmation that the goods are intended for Kosovo. This confirmation is one of the proofs required for Serbian exporters to reclaim VAT. Serbian customs officers are also present at the administrative crossing, but since Kosovo is not considered a foreign country, they only record foreign goods entering Kosovo.

Up until last year's incidents, EULEX personnel at a checkpoint just a few kilometers away, due to the sensitive issue of Kosovo's status, did not check the goods that actually entered but merely inspected the paperwork. This means that if a truck even reaches EULEX, duplicate invoices passed without issue. EULEX officers directed truck drivers to report to the Kosovo Customs terminal, located 50 kilometers away in southern Kosovska Mitrovica. However, between the Serbian administrative checkpoint and the EULEX checkpoint, there are alternative routes that diverge from the main road, allowing trucks to avoid being logged at the EULEX checkpoint entirely. These trucks could either enter northern Kosovo without control or return to Serbia. Even if a truck was logged by EULEX, it didn’t necessarily have to reach the Kosovo Customs terminal. In this space, there are many alternative routes by which goods could be returned to Serbia, exempt from VAT as if they had gone to Kosovo. Similarly, some goods reached northern Kosovo, but they were black-market goods since no Kosovo customs duties or taxes were paid. It also happened that goods passed without inspection to the south and were sold to Albanians, free of Serbian VAT, excise taxes, and Kosovo duties. This turned out to be a well-established mechanism, as cooperation between Serbian and Albanian businessmen persisted for years despite everything. Thus, the state's decision to abolish VAT on goods destined for Kosovo ultimately benefited individuals on both the Serbian and Albanian sides, while Serbs who remained living in Kosovo saw no benefit from it. Meanwhile, the Serbian budget was damaged by millions due to this regulation.

Borislav Stefanović, member of the Committee for Kosovo and Metohija, head of the negotiating team for Kosovo (2011–2012): Let’s not let anyone think that the responsible authorities of the Republic of Serbia have failed to address this issue because it suits someone’s business interests locally. That is really too bold a claim, and I truly do not believe in it.

B92: Are you aware of the damage done to Serbia’s budget and how the situation created an opportunity for smuggling?

Oliver Ivanović, State Secretary in the Ministry for Kosovo (2008–2012): Yes, in principle. I don't know the exact amount, but objectively speaking, it is a significant loss. However, you can’t have it both ways. It's simply difficult to enforce control on the ground. We are constantly struggling between political desires—wanting the population to remain there—and, on the other hand, confronting a serious group of people who do not want us to operate in any part of that area.

One of the issues with insufficient control is that the goods entering Kosovo are inspected by members of a special department of the Tax Administration instead of customs officers. The director of the Tax Administration at the time when we requested an interview was Dragutin Radosavljević. He received permission from the then Ministry of Finance to speak to Insajder, but he refused the interview.

The PR officer for the Tax Administration, Zoran Jovanović, avoided arranging any meetings for three months. Eventually, Insajder journalists went to the Tax Administration offices with cameras to find the director and ask why he was avoiding answering questions that were in the public’s interest. Instead of the director, PR officer Zoran Jovanović appeared and explained on camera that the director was away and would respond to Insajder’s request for an interview.

Despite the promise made on camera that the then-director of the Tax Administration would respond to our calls, it never happened.

Besides the members of the Tax Administration who monitor the movement of goods at the administrative crossings with Kosovo, there are also Serbian customs officers. However, at the crossings, they only log foreign goods and not goods from Serbia, as the official position of the state is that Kosovo is part of Serbia.

B92: What are we seeing here now? Is there some sort of trade between Serbia and Kosovo?

Milovan Krsmanović, senior customs inspector: Yes. We are currently at the administrative crossing Rudnica, one of the border crossings where the trade of goods with the territory of the Autonomous Province of Kosovo and Metohija (APKiM) takes place.

B92: Okay, and what do we have here now, considering the current situation?

Milovan Krsmanović, senior customs inspector: Specifically, what we see here is the control of passenger traffic, which is carried out by officials of the Ministry of Finance, and the control of domestic goods destined for the territory of APKiM.

B92: So, when the trucks leave this crossing, they are free from all...?

Milovan Krsmanović, Senior Customs Inspector: Simply, yes. As far as we are concerned, under the current regulation and the customs law, which regulates this area in its transitional and final provisions, the transit process is completed here.

Due to the lack of adequate control, even by international institutions, Serbian and Albanian smugglers in Kosovo have established strong cooperation. Smuggled goods would reach Albanians in the south without Serbian VAT or Kosovo customs duties.

B92: Are you aware that the fact that EULEX does not control these routes makes smuggling very possible?

Xavier de Marnhac, Head of EULEX: I know. But it's not true that there is no control because KFOR has checkpoints in certain places, where at least they can determine what passes through. However, this is indeed a problem.

B92: But are you aware of the damage this type of border causes to Serbia’s budget?

Xavier de Marnhac: Honestly, I don't know, because I don't know what the specific budget of Serbia is in that area. I knew there was some kind of trade based on VAT, but as far as I understand, Serbia is taking some steps to make it harder or less appealing for people to exploit that.

Another issue is the lack of data exchange between the Serbian Tax Administration, Kosovo customs, and EULEX. Kosovo customs officers receive data from EULEX on how much goods entered Kosovo, but only for what has been reported to EULEX.

Naim Huruglica, Director of Kosovo Customs: EULEX explained that a bit more at the time. Regarding the political situation, I think EULEX is still maintaining neutrality concerning Kosovo’s status, so they didn’t want to do anything that might be seen from another angle as supporting the institutions of the Republic of Kosovo. That’s roughly the explanation I heard, although it might not be the official position.

In addition to these uncontrolled crossings, Insajder's investigation found that smuggling is also facilitated by a network of illegal roads leading to northern Kosovo. Forest paths, village roads, more or less passable, have become the main routes in recent years for trucks and goods exempt from all duties.

B92: You yourself know that there are numerous alternative crossings to Kosovo here; how can we be sure everything is under control?

Milovan Krsmanović, Senior Customs Inspector: Well, honestly, it's very difficult to give an answer to such a question. However, as you saw today during the filming, there were no problematic situations. Simply put, our system of work and functioning implies that when we confirm the goods have exited, and when the goods cross that imaginary line, the process is considered complete.

B92: Who controls the alternative crossings?

Milovan Krsmanović, Senior Customs Inspector: Honestly, for that question, you'll need to find someone else to talk to because, as I said, we are stationary and only operate in the area where we are located now.

The lack of adequate border control is also possible because various politicians, through their views and so-called patriotism, support those whose goal is to ensure no control exists. One of the loudest voices is Borislav Pelević, who until recently was an SNS representative in the parliamentary Committee for Kosovo.

Borislav Pelević, member of the Committee for Kosovo, former member of the SNS Presidency: You keep talking about smuggling, and I’m talking about the survival of the people in Kosovo and Metohija who didn’t want to cross the border and be inspected by Albanian police and Albanian customs officers. Instead, they avoided that by using those roads to buy food for themselves.

B92: Mr. Pelević, I’m talking about the fact that goods can be brought back into Serbia via those alternative roads and sold illegally, thanks to the VAT exemption.

Borislav Pelević: Do you think the people down there, who were struggling to survive, really cared about smuggling? They cared about surviving, about their children surviving, and about staying on Kosovo and Metohija. That’s what it’s about, Miss. It has nothing to do with smuggling.

B92: Why didn’t you advocate for border control so that aid could be delivered there, instead of...

Borislav Pelević: Who should control it? Albanian customs officers? Albanian police? Please, this is Serbia. Northern Kosovo and Metohija, and Kosovo and Metohija are part of Serbia.

B92: All of Kosovo is part of Serbia, that's what I'm telling you. And there is control at Merdare and Končulj, and we don’t have such extensive...

Borislav Pelević: What kind of control is there? Albanian customs officers and Albanian police. That kind of control will never exist at Jarinje and Brnjak, you can be sure of that. The people of northern Kosovo and Metohija are determined that Brnjak and Jarinje will not become like Končulj and Merdare.

Bojan Stojanović, Mayor of Gračanica: What represents sovereignty and integrity over a territory? Whose customs are they? What’s the issue? It’s customs. It’s a border. You can call it whatever you like. Let’s say, to avoid offending you, call it, it doesn’t matter, a “ski slope,” just to exaggerate so people can understand what it’s about. Where are you removing VAT? For whom are you removing VAT?

Because officially no border exists, in several cases it happened that a truck would merely arrive at the administrative crossing, where it would receive confirmation, securing the necessary proof for VAT exemption, and the truck would then return to Serbia.

The value of a 25-ton truckload of domestically produced sweets, including VAT at 18%, is 82,600 euros. Since goods going to Kosovo are exempt from VAT, the value of the goods is reduced to 70,000 euros per truckload. This means that, theoretically, one kilogram of VAT-exempt sweets should cost 2.8 euros. However, as with other goods, it turned out that the price in stores in Kosovo was not reduced and remained the same as in the rest of Serbia, where VAT is paid. With VAT, the price per kilogram of sweets is 3.3 euros.

For the exporter of this truckload of sweets to be exempt from VAT, they must have a confirmation from the Serbian Tax Administration at the administrative crossing, proving that the goods are indeed intended for Kosovo. This confirmation is granted simply by showing up at the crossing and stating that the destination is Kosovo. The second necessary proof is payment evidence, which in this case involves a transaction between the company exporting the sweets and the company in Kosovo buying them. To obtain this proof, exporters often find a fictitious company, which is usually their newly established firm, and conduct a fake transaction. This way, they acquire all the necessary evidence showing that the goods were indeed exported to Kosovo. However, due to inadequate control, using alternative routes, they can return to Serbia after crossing the administrative checkpoint, with all the required documents proving the goods were exported to Kosovo. Thus, the sweets exempt from VAT are sold in Serbia at the VAT-included price, allowing the exporter to pocket a "clean" profit of 12,600 euros—just from one truckload. At the same time, the Serbian budget suffers a loss of the same amount for every truck that fictitiously exports goods to Kosovo.

Ranđel Nojkić, member of SPO from Gračanica: This could have been prevented by tracking registered goods that enter Rudnica and those that crossed northern Mitrovica. The difference would show what stayed behind, but no one wanted to determine what that difference was. If you follow the trail of the Minister of Police, he said, “Why do Serbs need so much fuel? How much fuel did they use in northern Kosovo?” Well, isn’t it his job to ask where that fuel ended up? Why wasn’t the matter pursued further beyond this statement?

Criminal charges are rare, but they show that state authorities have been fully aware all these years of what has been happening in this uncontrolled area and the scale of the damage to the budget. According to Insajder's analysis, the sale of fuel in Kosovo became a big business in 2008. That year, oil and oil derivatives worth 22.4 million euros were delivered from Serbia to Kosovo, and by 2010, this had jumped to 31.7 million euros. The fact that Serbian companies exported twice as much fuel per capita to northern Kosovo as was sold in Serbia in the same year highlights the enormous quantities involved.

According to data obtained by Insajder, 40 gas stations were opened in northern Kosovo in just the last few years, which is the best indicator of how profitable that business—free from VAT and excise taxes—was for certain individuals. Our investigation also uncovered a mechanism by which fuel, exempt from VAT and excise taxes, was returned to Serbia.

B92: We investigated and found that tankers with double bottoms were being made here...

Goran Bogdanović: I have no reason not to believe that, but I'm neither a policeman nor does my ministry deal with such things. If there were such abuses, it was primarily the responsibility of the Ministry of the Interior (MUP), the criminal police, to uncover such things, as well as customs at those administrative crossings, etc. So I have to admit, I have heard about such things, but I don’t have any proof that this really happened.

The scheme was uncovered in May 2009 when the police arrested an organized criminal group led by Ivan Šikor and Goran Stojisavljević, who, during 2008 and 2009, exploited the VAT and excise tax exemptions for the Kosovo territory to sell over 760,000 liters of oil derivatives. According to the indictment by the Special Prosecutor's Office, they evaded paying excise taxes and VAT, causing a loss to the Serbian budget of around 470,000 euros. The trial, based on the indictment from the Special Prosecutor's Office, is ongoing.

According to the indictment, they sent tankers filled with water to the administrative crossings. About four tons of fuel were left at the bottom of the tankers, while the upper, partitioned section—where oil should have been—was filled with 21 tons of water so that the tanker would have the full weight of 25 tons. During the control at the administrative crossings, the tanker appeared to have the full weight. If a sample was taken for inspection, it was drawn from the section containing the small amount of fuel. According to the indictment, after crossing the administrative line, they would drain the water from the tankers, and the remaining four tons of fuel were either returned to Serbia for further sale or delivered to certain companies in Kosovo.

Aleksandar Popov, Center for Regionalism: For example, we have data showing that, according to the perception of business people, from 2008 to June 2011, 200 million liters of fuel, worth about 150 million euros, were returned to Serbia. In that same period, from 2008 to June 2011, 670 million liters of fuel, worth 503 million euros, were sent to Kosovo. Our estimate is that the Serbian budget was damaged by around 90 million euros just from this one scheme.

Rade Milić, Acting Head of the Kosovo and Metohija Headquarters at the Serbian Ministry of the Interior: When we had active cooperation with UNMIK police, through joint efforts, we discovered an entire hose system installed deep under Lake Gazivode, where the fuel wasn’t transported at all but instead moved through a long hose under the water from one side of the lake to the other. This posed a risk of ecological disaster if the hose were to burst or leak. We managed to prevent that kind of operation as well.

B92: Yes, but there is great ingenuity among those who find ways to...

Rade Milić: Obviously, imagination is vast when it comes to profit, earnings, and easy money; the imagination is very broad.

Naim Huruglica, Director of Kosovo Customs: If you look at the population size and the entire region in the northern part, there is not a large population that could consume all that goods. The goal of the criminals was to find a way to transfer those goods to the central part of Kosovo, to Pristina or other cities. Otherwise, the northern part is not economically strong enough to consume all that quantity of goods.

Under the Law on Free Access to Information, we obtained data on the largest oil exporters from Serbia to Kosovo in the period from 2005 to 2011. According to this information, large companies delivered the largest quantities of oil in the first few years after VAT was abolished, only for completely unknown companies to appear in the business in the last few years.

Companies recording million-dollar turnovers mostly have one or two employees. 

At the top of the list of those selling goods in Kosovo in 2008 was the company "Nafta A.D." with a reported turnover of 11.7 million euros. "Nafta A.D." is a company actually composed of several private gas station owners in Serbia. The Chairman of the Board is Nebojša Atanacković, President of the Employers' Union. In 2008, a large turnover was also recorded by the company "Team Oil," which deals with the sale of oil derivatives. They reported sales in Kosovo in 2008 amounting to 5.6 million euros. That same year, "Lukoil" also sold oil derivatives in Kosovo, with a turnover of 2.1 million euros.

In 2009, the largest oil and derivative sales were again made by "Nafta A.D." with a turnover of 4.2 million euros. Among the suppliers was also "Petrobart," which operates "AVIA" gas stations, and its directors, Zoran Obradović and Ratko Zatezalo, are long-standing members of the business club Privrednik. 

In 2009, "Petrobart" recorded sales in Kosovo worth 1.2 million euros.

In that same year, for the first time among those selling oil in Kosovo, the company "Knez Petrol" appeared. At that time, the owner of this company was already under investigation, accused of being a member of the "oil mafia." That year, "Knez Petrol" recorded an export turnover of 1.4 million euros. In 2010, "Knez Petrol" delivered goods worth 3.7 million euros. That same year, "Knežević Petrol," registered at the same address as "Knez Petrol," sold oil and oil derivatives in Kosovo worth three million euros. "Knežević Petrol" was one of the largest exporters in 2011 with a turnover of five million euros. The owner is Jelena Knežević, and according to the financial report, the company has one employee.

In 2010, when the oil trade increased, little-known companies entered the business. At the top of the list of those selling goods in Kosovo in 2010 was the company "Cerena Trade" from Sombor, with a turnover of 6.5 million euros. 

According to financial reports from 2009 and 2010, the company had only two employees.

Among the Serbian companies with the largest sales in Kosovo in 2010 was "Bisina Univerzal" from Raška, with sales of 5.3 million euros. The company was founded in September 2009, and the owner is listed as Nebojša Milićević. In 2010, the company had one employee.

"Taxi Petrol" is a Serbian company that deals in fuel sales and recorded a turnover with Kosovo of 4.8 million euros in 2010. The following year, 2011, it sold goods worth 5.2 million euros in Kosovo, ranking third in turnover among all Serbian companies. This is a company from Pančevo, founded in June 2005.

Rade Milić: We observed large convoys of tankers during the period up to 2010 when there were no restrictions. Naturally, the quantity of fuel exceeded the needs of the Serbian population and the number of people living in the northern Kosovo and Metohija region. Their appearance at our crossings was accompanied by proper documentation. Beyond that, our system of control essentially ended due to the presence of international security forces in the area, and that’s where the abuses occurred. The abuse was that large quantities of oil were actually going to the southern part, where profits were made due to the price difference.

OFF - In addition to the oil trade, another profitable business in recent years, due to the abolition of VAT on goods going from Serbia to Kosovo, has become car sales. According to an Insajder investigation, when comparing the data from Kosovo customs, EULEX, and Serbia’s Tax Administration and Customs, it was concluded that in many cases, the cars that supposedly went to Kosovo and were therefore exempt from VAT never actually left Serbia.

B92: We conducted a comparative analysis of our customs data and EULEX data and found that, for example, in 2008, cars worth 15 million euros were exported from Serbia, while EULEX recorded only four million euros. We have reasonable grounds to suspect that 11 million euros worth of cars returned to Serbia.

Goran Bogdanović: Well, if that data is accurate, what else can we believe but that it’s true.

The business of reselling cars that were exempt from VAT because they supposedly went to Kosovo became lucrative because, for example, Person A, residing in Serbia, and Person B, residing in Kosovo, could buy the same car at drastically different prices. For a person with a Kosovo ID card, a new car exempt from VAT costs 10,000 euros. The same car for someone in central Serbia is significantly more expensive, costing 11,800 euros.

According to the data we obtained, customs at the crossings towards Kosovo record drastically different figures on cars reported at administrative crossings from year to year.

A large number of cars in transit were suspicious to members of the Serbian customs at the Končulj crossing. According to the documentation we accessed, they sent a letter to the Customs Administration explaining that something was happening at the crossing that could cause significant damage to Serbia's budget because, it appears, cars are returning to Serbia.

Namely, car registrations are handled by police departments. The police departments from Kosovo were relocated to central Serbia in 1999 under Resolution 1244. Therefore, it happens that the owner of a car, for example, that needs to be registered with plates from the municipality of Gnjilane, simply appears at the administrative crossing between Serbia and Kosovo and receives the necessary documentation to be exempt from paying VAT. Then they return to central Serbia to register in the relocated Police Department, which in the case of Gnjilane, is in Vranje. This means the car physically returns to Serbia without ever actually crossing the administrative boundary into Kosovo.

The car may never return to Kosovo at all because, formally, Kosovo is part of Serbia, and no one monitors this movement.

Borislav Stefanović: Yes, I mean, I am familiar with this information, and of course, I have seen it. It’s good that steps have been taken to stop such criminal activities. I mean, in general, I don’t know if you’re trying to get me to say that what you’re talking about wasn’t right and still isn’t right. Of course, it’s not right. And if you ask me who is responsible for this, I don’t have an answer because that’s not my area. I’m not an investigative judge or prosecutor. But if you ask me whether it wasn’t right, of course, it wasn’t, but we did something, and I think we were very efficient in stopping it.

Oil, cars, and all other goods were leaving Serbia for Kosovo with almost no control because there is no data exchange between the Serbian and Kosovo sides on how much goods are reported as going to Kosovo and how much actually entered Kosovo.

The official data from Serbia’s Tax Administration, the Serbian Chamber of Commerce, Customs, Kosovo Customs, and EULEX, which Insajder requested by law, are completely different. According to official data from the Serbian Tax Administration, goods worth over two billion euros were sent to Kosovo over six and a half years. This means that, according to official data, goods worth over 840,000 euros were sent daily from Serbia to Kosovo. Insajder also obtained data on how much Serbian-origin goods were reported to Kosovo Customs, that is, how much officially entered the southern part of the province where Kosovo taxes and fees are collected. According to our investigation, the differences in the reported goods at our administrative crossings and those reported to Kosovo Customs are in the millions. Over six years, these discrepancies amount to more than 600 million euros.

Naim Huruglica: And the only reason so far, to my knowledge, is political, because the Serbian customs service has not been in a position to agree on data exchange with Kosovo customs. If that existed, we would know, and the Serbian customs would also immediately know whether the goods had entered Kosovo or not, and vice versa. Smugglers know this. Of course, criminals take advantage of this for their own benefit.

The lack of data exchange only benefits those who smuggle goods. It makes it easy for them to obtain the necessary documentation to be exempt from VAT in Serbia. For a Serbian exporter to be exempt from VAT, they need not only a confirmation at the administrative crossing, but also proof of financial transactions between the exporting company and the company in Kosovo that allegedly imports the goods. That’s why, it seems, since the Serbian government issued the decree in 2005, more than 1,000 companies have been established in Kosovo. Most of these companies are fictitious, and often the same owner exports and imports the goods. After several months of investigation, Insajder journalists, based on official data, determined that this was the method used to obtain the second piece of evidence required for VAT exemption.

According to official data from the Serbian Business Registers Agency, by 2005 the number of Serbian companies in Kosovo was 249. Over the last six years, the number of companies has increased more than sixfold. Today, there are 1,683 active companies and business entities in Kosovo registered with Serbia's Business Registers Agency (APR). This is an indication that the mass creation of new companies in Kosovo was largely fictitious, primarily due to the VAT exemption decree. Proof of financial transactions with a company in Kosovo was required for VAT to be refunded. Since there is no control, Insajder’s investigation found that many of the newly established companies served only as a cover to provide the necessary documentation.

In the next episode, you will learn who profited from such an uncontrolled space—from both the Serbian and Albanian sides—what the months-long barricades were used for, how smuggling is conducted today, and whose tankers with oil and excise goods we filmed with hidden cameras on the illegal road leading from Serbia to Kosovo. On that road, goods are repackaged from larger to smaller trucks, and oil is transferred from larger to smaller tankers, which are concealed under tarps.