‘To my knowledge, all of the money went to Cyprus’

By Elias Hazou

MILLIONS OF pounds in cash were jammed into plastic bags and then shipped from Yugoslavia to Cyprus in the 1990s, in contravention of a UN embargo, a former Serbian bank treasurer testified in court yesterday.

Dusan Colic, who worked as a treasury manager at Beogradska Banka, described in detail how, “under instructions from above,” millions of Deutschmarks (DEM) were siphoned away to the island.

With authorisation from Yugoslavia’s National Bank, the money was counted by treasury employees at Beogradska, arranged in packets and placed inside bags. The bags were then transported by car to the airport by Beogradska security personnel.

Each wad of cash typically consisted of 1,000 DEM, the bags containing anywhere from 300,000 to 500,000 DEM, although “sometimes there were millions inside”, Colic said.

“We realised that we were breaking the law, but we had instructions from the National Bank.

This practice was like a state secret, it was known only to certain circles.”

Because of the embargo, Colic said, wire transfers abroad were not allowed, so the only way would be to physically transport the cash.

“To my knowledge, all of the money going abroad at this time went to Cyprus,” he said.

The case concerns a claim by Predrag Djordjevic, a Serbian businessman based in Nicosia, against the Popular Bank of Cyprus (now known as Laiki Bank), for compensation and damages in a DM900,000 transaction that was never completed.

Djordjevic says he first heard of an offshore company called Antexol in 1994, after arranging to sell raw cotton worth DM900,000 purchased from a Russian company to a Serbian businessman.

The businessman had a licence issued on humanitarian grounds by the United Nations that allowed him to sell cotton for making medical products to a Serbian company while sanctions were being applied against Yugoslavia.

To facilitate payment, Djordjevic opened an account at Beogradska Banka in Nicosia in the name of Genemp, his trading company. But instead of receiving the full amount from Belgrade directly, Genemp was credited with DM537,000, which had been transferred from Antexol's account at Popular Bank.

Djordjevic is claiming the remaining DM360,000 plus damages from Popular Bank. He believes this amount was also credited to Antexol's account at Popular Bank but was used for other purposes.

The Popular Bank accepted Antexol made the DM537,000 payment, but claimed it had no knowledge of the DM900,000 transaction.

Antexol and several other Serbian-owned offshore companies were used for sanctions-busting by the government of Slobodan Milosevic, the former Yugoslav president.

Many of these were registered as “trading corporations” by the Tassos Papadopoulos law firm.

It is Djordjevic’s contention that his company was mistaken for one of these fronts, and inadvertently caught in the money-laundering web at the height of the Bosnian war.

Several billion dollars transferred illegally to the island by the government of Milosevic were deposited in the Cyprus Popular Bank.

The funds were used to buy weapons, equipment and fuel for the Milosevic regime to pursue wars in Bosnia and Kosovo, according to an investigation by the United Nations war crimes tribunal at the Hague.

In court yesterday, Colic was grilled by Kikis Tallarides, the chief lawyer for Laiki.

In his cross-examination, Tallarides tried to demonstrate that there was no way of establishing a solid connection between the bags of money, the Cyprus branch of Beogradska and the Popular Bank.

Moreover, citing a payment order for the transfer of the 900,000 DEM to Djordjevic’s account, Tallarides asked the witness whether the name of the recipient – in this case Genemp Trading – was written on the bag of cash.

The witness said he did not recall the specific transaction – which took place 12 years ago –but said the name of the recipient was not written on the bag. However, each bag was accompanied by a payment order.

Tallarides next asked whether a copy of the payment order was sent to Beogradska.

Colic replied that a copy was sent to the Popular Bank, because it “didn’t make sense to send this to Beogradska.”

“The bags were to be delivered to the Popular Bank. How exactly this was done I do not know.”

Tallarides then tried to cast doubt on the witness’ credibility, asking Colic who had paid for his travel expenses and accommodation in Cyprus.

“Mr Djordjevic, of course,” said Colic.

“And did he pay or offer you anything else in exchange for your testimony here today?” pursued Tallarides.

“No sir, he did not,” Colic replied.

Tallarides then proposed that the reason why the claimant, Djordjevic, did not receive all of his money might have been because the Yugoslav National Bank cancelled payment.

Although not a banker by profession, Colic said that payment cancellations are made for the whole amount concerned, not part of it.

Copyright © Cyprus Mail 2006

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