When Canadian Zoran Markovic returned to his native Serbia to set up a business, he did not expect to have to choose between his $20-million company and his life. But that, he says, is what happened when he ran up against the violent competitive tactics common on strongman Slobodan Milosevic’s turf. In the process, he faced armed thugs, hostile courts and a well-connected billionaire—a Canadian landed immigrant— who now says he is considering a bid to lead Serbia.
Markovic, a former Belgrade cab driver, returned home in 1990 with thousands of dollars from a group of Canadian investors and launched an electronic paging company called Bel Pagette. It was an instant hit, but when Yugoslavia disintegrated into civil war, he says, his Canadian backers became desperate. In December, 1995, they sold the firm for far less than it was worth to billionaire Bogoljub Karic’s group. When Markovic refused to endorse the deal, armed members of a violent militia raided his offices.
businessman claims foul play in Serbia
Fearing for his life, Markovic fled to Romania, where he remains, vowing to return and reclaim the company. “I lost a lot,” says Markovic, 40. “I want to go back to a free Serbia.”
Opposition leaders in Belgrade say the experience of Markovic and the Canadian investors is not unusual. Dozens of businessmen have been murdered and scores of foreign investors have seen their money vanish into Serbia’s thriving underworld. Many analysts believe Milosevic will eventually be ousted by the pro-democracy activists who last month forced him to recognize opposition victories in local elections after three months of street demonstrations. But in the meantime, critics say, he is giving relatives and their cronies control of state monopolies and taking over private businesses. Organized crime has been enlisted to help in the looting, and critics claim that one mafia-style murder occurs every day. Democratic party leader Zoran Djindjic,
now Belgrade’s mayor, believes there are direct parallels between the Bel Pagette fiasco and the demonstrations that followed the annulment of the elections last November. “In both cases, it shows there is no security in the legal sense in Serbia,” he told Maclean’s. ‘We have no democracy and we have no economic rights.” For Bel Pagette’s Canadian owners, escaping Serbia would prove both difficult and dangerous— and even draw the attention of the Canadian Security Intelligence Service.
Markovic launched Bel Pagette follow-
ing a chance meeting at a fitness club in Toronto in 1989 with Jake Liem, an accountant. Markovic, a bombastic man with a penetrating gaze, told Liem about his dream of becoming rich by transforming Yugoslavia’s ancient communications network through electronic paging. Liem was so impressed that he brought together a dozen investors from the Toronto area, many of whom would contribute their life’s savings to the deal. On Nov. 22, 1990, they agreed to advance Markovic $1.3 million (U.S.) over 10 years, and in return they were to receive 70 per cent of the company’s profits during that period. “When Zoran Markovic told me how he would like to invest money in this country, I praised the idea,” said Liem. “I know what foreign capital means for a country in development.”
Markovic immediately left for Belgrade, and within a year Bel Pagette had become Serbia’s largest private telecommunications firm, with 20,000 subscribers and 400 employees. But just a year after the launch, Yugoslavia plunged into war and the United Nations hit Serbia with stiff economic sanctions. With conditions growing worse by the day, the Canadians investors wanted him to sell the Belgrade company, of which he was the registered owner. They were also enraged when Markovic refused to send them their share of the profits as promised. “I was waiting for the end of the UN embargo to settle the problem with the Canadians,” insists Markovic. “But by then, they wanted out of Serbia.”
When Markovic continued to balk at selling, the Canadians turned to Toronto immigration lawyer Cecil Rotenberg and international businessman Lowell Mask, who agreed to help the Canadians in return for a commission on the sale of Bel Pagette. They then contacted Veljko Vukota, a Belgrade businessman who represented their interests in Yugoslavia and who also had highlevel contacts in the Belgrade-based Karic bank. The bank is part of the Braca Karic
group, a billion-dollar Serbian finance and media empire owned by the Karic family— four brothers and a sister from the impoverished region of Kosovo. Over the past four years, three of the Karic brothers, Bogoljub, Dragomir and Sreten, have received landed immigrant status in Canada under a business category in which Ottawa grants residency to wealthy foreigners who invest between $250,000 and $350,000 or more in Canada. “The family is working towards moving their operations to Canada,” says Toronto businessman Robert Moorhouse, who also worked on the Bel Pagette case
“They are an economic arm of the regime.” But Bogoljub Karic, perhaps believing that Milosevic’s days are numbered, now says he is considering a challenge to the strongman for the leadership of the country. According to reports in Belgrade’s independent dailies last week, he says he wants to form his own centre-left party with other former members of the ruling Socialists. Karic told Maclean’s in a statement: “I wish Serbia to become a multicultural society like Canada [with] political freedoms and the advantages of a liberal marketplace and social justice.” Even some of his own advisers,
with Mask and Rotenberg. “They should be here within five years.”
Opposition politicians in Belgrade, however, say the Karies are benefiting from the disintegration of their own country. They claim Milosevic helped create the Karic bank in 1989 to finance Serb rebellions in Bosnia and Croatia and to divert money out of Serbia to the safety of the bank’s tax-sheltered operation in Cyprus. Under the UN embargo, the brothers’ bank accounts outside Yugoslavia were frozen because officials believed they were moving government money out of the country and taking over public and private companies on behalf of Milosevic. The freeze was lifted when UN sanctions ended, but in Belgrade many people still believe the Karies are helping the administration. “They are providing for Milosevic financially and are carrying out certain financial transactions abroad for the regime,” says Radoje Prica, a respected Belgrade attorney who represented Markovic.
however, question his credentials for the task. “It would be a disaster,” said one last week. “He is not trained for politics.” Certainly Karic was in pure business mode in the summer of 1994. At that time, he offered Markovic a house in an exclusive neighborhood of Belgrade and $2 million for two-thirds of Bel Pagette. Karic told Markovic that the bank would keep onethird and PTT, the state-owned post and telephone monopoly, would take the remaining third. Markovic countered that the company, which had just won government approval to operate a cellular phone network, was worth $20 million and refused to sell. Markovic says he was also threatened. “They noted how some businessmen in Russia had been killed,” says Markovic, “which I took as a threat that it could happen to me.” After Markovic turned Karic down, the government suddenly pulled Bel Pagette’s licence to operate the cell-phone network, contending it should be public rather than
private. Then, fraud investigators showed up to investigate the firm’s financial statements and detained the firm’s general manager and its financial chief. ‘They spent a month going through Bel Pagette’s books,” says Markovic. “In the end, they could find no evidence to suggest the company had done anything wrong.”
Increasingly frustrated by Markovic, Vukota summoned several Bel Pagette executives and his lawyers to his home in Belgrade on Oct. 19,1995. Markovic refused to attend. Vukota said that the Canadians, still desperate to get their money out of Serbia, had given him 70-per-cent management rights to the company, which would make it easier to sell the firm to the Karic brothers. Vukota filed the reorganization plan with a Serbian court, but when one judge indicated she was about to reject the application, it was withdrawn and resubmitted to a second judge who approved it. The independent Serbian newsmagazine Vreme reported sarcastically that the first judge “seems not to have fully understood the demand and she had the case taken away from her.” Following the judgment, Vukota showed up at the Bel Pagette offices, but security guards turned him away. He returned five days later with a vice-president of the Karic bank and a court warrant. Markovic then appealed to two higher courts to have the deal with £ Vukota voided. Markovic lost, but I no one familiar with politics in g Serbia was surprised. The presi% dent of the Commercial Court that 1 ruled against him was the same S person who presided over the elec5 tion committee that annulled the rights’ municipal elections. “Our system is a combination of Chinese communism and South American mafia,” says opposition leader Djindjic. “Our socialists like money, but they don’t like capitalism.” When Markovic still refused to recognize the court’s decision, the ownership question turned into a test of wills between Markovic and the Karies. Both sides denounced one another in the Belgrade media and the brothers met almost daily to plot strategy. Then, on the night of Dec. 17,1995, gunmen belonging to the notorious Tigers militia seized the Bel Pagette offices. The militia, which fought in Bosnia, is headed by Zeljko (Arkan) Raznjatovic, who is wanted in several European countries for murder and extortion over his involvement in organized crime. Markovic, fearing he would be murdered, fled to Romania. “If everything is legal then you come with your briefcases in the morning to take over a company,” he says. “These people came with guns in the middle of the night.”
Within 24 hours of the raid, the Karies
bought a 70-per-cent share of Bel Pagette from the Canadians for $1.2 million (U.S.). The investors say they never met the Karies personally but chose to deal with the brothers when Markovic refused to return their money. “We didn’t have a choice,” says Liem. “It looked like Karic was the only one who was strong enough to confront Markovic.” Even though the Toronto investors got their money back, they were bitterly disappointed that they did not receive far more for a company they believed was worth at least $20 million. One of them also apparently complained to the federal government about the treatment they received in Belgrade. And in the spring of 1996, CSIS agent Christine Marshall interviewed lawyers Moorhouse and Mask. Moorhouse said that Marshall wanted to know if the Canadians had been intimidated by Raznjatovic into accepting the Karies’ offer. But neither Mask nor Moorhouse was able to link Karic to the notorious militia leader, who is under investigation by the international war crimes tribunal in The Hague. “They were looking for Arkan,” says Moorhouse. “The mere mention of his name made her eyes light up.” Bogoljub Karic, meanwhile, says he should be considered a hero for rescuing the Canadians from Markovic. “Bel Pagette is a fantastic story,” he told reporters in November. “It was an attempt to rob foreign businessmen.” Karic officials claim that Markovic tried to sell him the Canadians’ interest in the company, that he improperly used the company’s assets as security against loans for operations in other countries, and that he took computers, vehicles and paging equipment that belonged to the company. Karic also denies that he had any involvement with Arkan Raznjatovic. “We don’t have any kind of relationship,” insisted Karic. “It is some kind of misinformation.” Still, the militia members and a poster of Arkan were still in the company’s office almost a year after Karic bought the firm.
Most of the shares in the Canadian-registered arm of Bel Pagette are now controlled by Komet Ltd., the Karic brothers’ holding company in Toronto, which is a subsidiary of a tax-sheltered offshore company. Miodrag Kusic, a representative of Komet in Toronto, is still angry at the exiled Markovic. “He took all the funds for himself,” says Kusic. ‘We don’t get any income from Yugoslavia.” But officials with Bel Pagette in Belgrade claim the firm is actually making money. “The company is doing very well,” says Vukota, who now acts as the firm’s general manager. That fact will no doubt only increase Zoran Markovic’s desire to get back the company he created—if Serbia’s strongman falls.
TOM FENNELL in Toronto and DOUG HOLMES in Bucharest with PAUL WOOD in Belgrade
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