Serbia plans new investments in mining industry without having the old issues solved

Serbian authorities announced on Monday the new investments of 250 million euros in the mining basin Kolubara, despite the fact that no one has been held accountable for numerous proven misuses of funds in this company in recent years.


“We will facilitate public tenders in the next 100 days, which is important for the miners. We want to increase electricity and coal production. Our plan for this year is to exceed the 2016 production of 28 million tons,” said Prime Minister and President-elect Aleksandar Vucic during his visit to Kolubara.

The Mining basin Kolubara is of strategic importance for Serbia, given that almost half of electricity production depends on the coal mined from this basin.

However, Insajder’s investigation published in 2011 shows that the lack of adequate control in the basin led to pumping money out from the mining complex and transferring it to private companies.

The mechanism of “mining the money out”

The main mechanism of money extraction from Kolubara to the accounts of private companies occurred through leasing the machinery for coal mining.

Insajder published evidence that Kolubara paid for machines of private companies even when the machines were not working.

Among other, published were the daily reports on engagement of machinery paid by Kolubara, which state that a machine was working 24 hours a day for a month without stopping. The biggest paradox is one of the reports stating that a machine was working 25 hours a day.

It also happened that Kolubara made payments on the basis of reports stating that one worker operated a machine for 24 hours, four days in a row.

Insajder discovered that the machines rented for “overtime” work belonged to the company Kacer Travel, co-owned by Dragan Tomic, high ranking official of the Democratic Party of Serbia, the ruling party at the time.

Tomic was also the CEO of Kolubara in the period of controversial machinery leasing.

In 2006, the representatives of Serbian Government made a commitment that mining complex Kolubara will repair the roads and clean the rivers and channels affected by mining activities, which was actually a legal obligation of Kolubara. However, additional investments in ecology were abused by individuals who spent the money on hiring additional machinery for Kolubara from private companies, without any visible ecological effects of the investments in the field.

Expenses for the lease of machinery began to increase from 2006, when Tomic was appointed the CEO of Kolubara. Despite the increase of mining expenses, the net production of coal was not increased in Kolubara.

After the Insajder aired the program called “Fraud of the Century” in 2011 showing the mechanism of fraud in Kolubara, the authorities stated that they started an investigation. However, it took years for the Public Prosecution to raise charges in the case.

Indictment was raised in 2016 against 11 Kolubara executives and 16 owners and directors of private companies. Former CEO of Kolubara, Dragan Tomic, is the prime suspect in the case.

No investigation of coal trades

Insajder discovered that the exclusive right to buy coal directly from the mining complex Kolubara was given to the same entrepreneurs who were leasing the machinery to Kolubara.

Kolubara gave the right to “special clients” to buy coal at much lower prices than those on the market, and then to resell the coal at higher prices.

Dragan Markovic - Palma, the Mayor of Jagodina near Kolubara, was among those who were not just reselling Kolubara’s coal, but also among those who were leasing the mechanization to the mining complex.

Markovic – Palma, whose Party is in coalition with the ruling Serbian Progressive Party in the Assembly, is not under investigation by the Public Prosecution.

Serbian Anti-Monopoly Committee published a report in 2014, which confirmed that some of the coal traders were buying coal from Kolubara and then reselling it at four times higher price.

Irena Stevic

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