- The Washington Times - Sunday, November 4, 2001

BELGRADE, Yugoslavia Alexander Radovic, a pinstriped taxman, hardly fits the image of a Balkan tough guy.
But get him talking about the cronies of former Yugoslav President Slobodan Milosevic, and the various shady means they used to get rich, and the mild-mannered accountant's eyes get steely.
"We're going to find out who stole how much and in what way. And then we'll chase them down and make them pay," he said.
Mr. Radovic is the head of the Serbian Public Revenue Agency, the state's main tax body. He also is head of a commission charged with implementing a unique new law: a one-off tax on profits made by using connections with the old regime.
While the rest of the world focuses on Mr. Milosevic's treatment of Kosovo Albanians and his trial on war-crimes charges in The Hague, here in Serbia the government is trying to reverse the economic catastrophe of the former regime.
In the 1980s, the Yugoslavs' standard of living was comparable to that in Western Europe. By the eve of Mr. Milosevic's electoral defeat last fall, however, a poll showed that the average respondent was wearing 10-year-old shoes. Now people are demanding that their new government punish those responsible for their impoverishment.
That includes pretty much every rich person in Serbia. "It wasn't possible to get rich without stealing here," said Sika Pistolova, an economic journalist for Belgrade radio station B-92. "The future of the Serbian economy depends on local entrepreneurs, and they're all thieves."
Money acquired using illegal means is, of course, subject to confiscation, and its owners are liable to prosecution. Prosecutors in Serbia are said to be collecting evidence for corruption charges against Mr. Milosevic himself.
But it was much more common for people to abuse their connections with the government to get rich in ways that weren't strictly illegal.
The new law, called Non-recurrent Tax on Extra Income and Extra Property Acquired by Using Special Facilities, identifies 20 ways in which those close to the government could take advantage. The means range from the crude to the ingenious. Some businessmen would get permits to take hard currency out of the country for the purposes of buying goods to import, and would take a bit for themselves.
Directors of state-owned companies would run the companies into the ground, while their private companies would mysteriously prosper. "They would just transfer all the assets to their private companies, while leaving the debts and liabilities to the state companies," Mr. Radovic said.
Other directors would form a bank with the assets of their company, which then would give them a loan to buy the company. "It's like performing open-heart surgery on your own body," Mr. Radovic said.
During the period of hyperinflation in the early 1990s, when prices were rising at a rate of 313 million percent, a fixed official exchange rate allowed businessmen to take out a withdrawal in foreign currency one day and pay it back the next at a fraction of the cost.
Such policies were designed not only to enrich Milosevic's associates, but also to deliberately impoverish normal people, Mr. Radovic said. "You see, when people are poor you can corrupt them with very little money."
Mr. Radovic estimates that the profits gained by such skullduggery totaled about $10 billion over the past decade, "and that's a low estimate." The annual state budget is about $2 billion.
The new law requires anyone who gained money in any of the 20 shady ways to declare the income, and then pay a tax ranging from 30 percent to 90 percent.
So far, about 2,000 people have declared such earnings, though Mr. Radovic suspects many grossly underreported. Close to 250 of them have paid their taxes, totaling a little more than $1.5 million. Most of them were small fish, but one was current Interior Minister Dusan Mihajlovic, who had an import company that took a reported $500,000 in profits from shady currency operations.
To press the others into paying the tax, Mr. Radovic's commission is preparing lists of suspected tax dodgers. So far it has completed lists for six of the 20 tax bases, and some of the names have caused a stir. In addition to Mihajlovic, the list includes current Serbian President Milan Milutinovic and media tycoon Bogoljub Karic, a former small-time Kosovo-based businessman whose BK Group owns a private television station, a bank and the major cellular phone operator.
Most on the list have shunned publicity, but Mr. Karic who has been assessed a tax of more than $30 million has waged a media campaign to clear his name. He has accused the government of going on a witch hunt and casts himself as a victim of the Milosevic era. "We didn't succeed we survived. Any company that survived the last decade is a great company," he said in an e-mail interview with the Belgrade newspaper Politika.
In an open letter, he told Mr. Radovic that whatever the government took, he would get back. "If we survived the last decade, trust me, Radovic, we will survive you."
Last month, he briefly fled the country, apparently to Russia, claiming he had seen snipers outside his house and implying that they were sent there by Mr. Radovic. He denied leaving to avoid paying the tax.
Mr. Radovic says the largest 200 scofflaws have yet to declare themselves. "It's going to be a long, hard, painful job," he said. It's also dangerous he has round-the-clock bodyguards.
The bloated, ex-communist bureaucracy is on the government's side. The Public Revenue Agency has more than 10,000 employees, "so for me it's not a problem to put 15 inspectors just on Karic," Mr. Radovic said.
The goal is not to get all the money back, but to make an impression on ordinary people that now nobody is above the law.


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