THE ECONOMICS OF "ETHNIC CLEANSING"

As pointed out in the information on the Crisis Committee, a major motivating factor behind the Serb takeover of the town of Prijedor was to gain control of the financial assets of the community. During the Serb takeover of the town, prominent non-Serb community leaders, businessmen and women, and professionals were killed immediately, or detained in Omarska, where many disappeared and were most likely killed. These directors of companies, municipal officials, and others were replaced by Serbs, and many businesses were expropriated almost overnight. The U.N. Commission of Experts in their 1994 report described the takeover:

Among the prominent citizens of Prijedor who had survived the initial phase of the devastation and were detained in Omarska, are long lists of identified persons. . . Among them (to mention some) were the [duly elected] Mayor. . .directors and members of the Rudnika Ljubija (iron ore mine) management board, directors and managers of Bosnamontaza, Kozaraturist, Celpak, and the biscuit factory Mira Cikota; the director and secretary of the [legitimate] Prijedor Red Cross, the president of Merhamet (the Muslim charity organization) in Prijedor, restaurant owners, business men and entrepreneurs; leaders of sports clubs and football players....the Serbs detained almost the entire non-Serbian elite -- including political and administrative leaders, religious leaders, academics and intellectuals, business leaders, and others.

According to the Commission of Experts, an article in Kozarski Vijesnik related a statement made by the then new police chief of Prijedor Bogdan Delic (Drljaca had become second-in-command in the Ministry of the Interior):

"Approximately 50,000 residents of other nationalities had lived in this district, and their assets were unofficially estimated at several billions DM. Some of the assets were destroyed during military operations, but at large they were preserved- although only for a short period of time. By various machinations, the whims of individuals members of the local police, army and civilian authorities, and the governing political party - the largest part of the "preserved assets" disappeared . . .While carrying out their tasks. . .military and civilian police and citizens confiscated large quantities of goods, motor vehicles [4,700 in Kozarac alone] cab units, trucks, agricultural vehicles, and various technical equipment and other devices, and handed them over to the units that the above-mentioned governmental bodies established for this purpose (Keraterm, TZS, Velepromet, and other storehouses). It may be stated with certainty that those storehouses have been emptied in a short time, and that the greater part of the resources have either been transferred to Serbia through private agents, or have been expropriated by private individuals."197

The newspaper went on to say that "war profiteers sacked Prijedor. . .on the model of the Sicilian model."198

The stripping of resources from the non-Serb population ranged from the sophisticated takeover of the bank and the commandeering of local businesses to the to outright robbery of houses and household items to literally stripping women to search them for money and jewelry as they left the area on convoys organized by the Serbs--often by the local Red Cross. According to the U.N. Commission of Experts: "Financial assets belonging to non-Serbswere frozen and later confiscated along with everything else belonging to them, and the financial links with the authorities in BiH [Bosnia and Hercegovina] were severed."199

Jasmin Kaltak, a survivor of Keraterm camp, was interviewed by Roy Gutman. After telling about how he had been forced by Bosnian Serbs to load the bodies of men, women and young children from villages around Prijedor onto trucks for disposal, Kaltak added that he and his work crew were then ordered to plunder the houses of Muslims, transferring the contents to two warehouses in Prijedor.200

The Commission of Experts described further the actions of the local Serbs:

The Serbs have unilaterally taken over all communal property in Opstina Prijedor whether it still remains in the district or has been brought out of it to other areas. The communal property belonged, as always, to the community at large. . .The Serb authorities have been issuing so-called "exit visas". [To obtain these visas] bribes were needed at every level, and moreover, an entry-visa to be admitted into Croatia. . .individuals were hunted when their time expired."201

Interviews conducted by a Human Rights Watch/Helsinki representative with refugees who had fled the region confirmed this information. If all the "fees" (which included fees to the military, the telephone and electric companies, and to the Red Cross, among others) were paid and one did not leave on time, the fees would have to be paid again. Non-Serbs essentially paid to be "ethnically-cleansed," and the cost varied according to who was leaving (draft-age males cost more) and when they were going (during periods when the Bosnian Serbs wanted larger numbers of non-Serbs to leave the territory, the price dropped).

"They kept 730 of us in a large garage," a survivor of Omarska told Human Rights Watch/Helsinki in December 1992, after he had reached safety in Croatia. "It had a cement floor, and it was coated in engine oil. They repeatedly poured cold water on the floor, and we were forced to lie in it. Sometimes a guard would come in and shout, `Sit down!' Whoever did not sit down quickly enough was shot. They killed all the directors, private businessmen, intellectuals and all who had money. They would take people out at night, and they would never be seen again."

Another survivor, a former employee of the Omarska mine, told Human Rights Watch/Helsinki, "First, they put us in Room # 15 [in Omarska]. Muslim policemen and local businessmen were taken out and killed that same night."202

The U.N. Commission of Experts reported that a Serb guard in the Omarska camp told a friend that "Interned here are reportedly Prijedor elite from before the Serb takeover of government control; the President of the Council [Mayor], Members of the Executive Council, the President of the Court, two judges, doctors, presidents and directors of firms, owners of private factories and businesses."

According to information gathered from refugees and camp survivors, the following companies were seized by Bosnian Serbs during the takeover of the town and their owners or employees killed or imprisoned:203

* TE-EA: Women's clothing manufacturer, exported to Italy. Owned by Hamdija Balic, a wealthy and prominent Bosniak resident of Kozarac. TE-EA employed approximately one hundred people. Balic lived in the Netherlands for a time and them returned to Bosnia to open the company. He was imprisoned and killed in Omarska concentration camp.

* Tvornica Zavarenih Sklopova: This company did not have a formal name, but was known by its description (Factory for Welded Machine Parts). Zlatan Besirevic, the Bosniak director, was a mechanical engineer and director of the company, which exported products to Western markets and appears to have been one of the more profitable businesses in Prijedor. Besirevic was also killed in Omarska. Most of the machinery of the company was stripped and taken to Serbia.

* Mira Cikota: A division of the Josip Kras company, headquartered in Zagreb, which produces cookies and candy (Kras was one of the biggest companies in Yugoslavia before the war). Miroslav Turnusek, the director of Mira Cikota, was imprisoned in Omarska, but survived. The Mira Cikota factory was also stripped of machinery, which was sent to Serbia. A number of other employees, however, perished in Omarska camp. Among them were Antonije Komsic (main technician); Uka Muric (mechanical engineer and inventor); Mr. Nasic (first name unknown, economist and member of sales division). Hakija Hodzic, head of the sales division, was detained in both Omarska and Manjaca but survived; Rizah Begverbegovic, deputy director of Mira Cikota, was detained in Omarska but also survived.

* Ljubija Iron Ore Mine: This company, as mentioned, included several mines: Ljubija, Omarska, and Tomasica. All or most of the individuals who held higher-level positions in the company were detained in Omarska. The mines were stripped and the machinery and heavy equipment (e.g. bulldozers and trucks) were shipped via military helicopter to Serbia. The following men who worked for the iron ore company were killed in Omarska: Engineers Ibrahim Paunovic, Ilija Zdrobic, and Mehmedalija Sarajlic (assistant to the director); Stjepan Maric, head of the computer division; Smajil Zahirovic, lawyer. The director, Ostoja Marijanovic (Serb) was a strategist during the "ethnic cleansing" and carried out crimes in the Prijedor region, according to reports. Human Rights Watch/Helsinki has learned that Slobodan Balaban, director of the Tomasica mine and an assistant to Marijanovic, also allegedly planned the takeover of the town and carried out "ethnic cleansing" in the region.

* Celpak: An independent source, who used to work at Celpak, a local paper product company, and still has a relative working there, told Human Rights Watch/Helsinki on November 14, 1996 that Simo Drljaca, local "Serbian Red Cross" president Srdjo Srdic, and Dragan Kijac, Minister of the Interior, all have financial interest in the company.204 Many Serb individuals who worked for this cellulose factory ended up participating in the "ethnic cleansing." The factory was connected to a network of factories in Bosnia and Croatia, and produced paper and cellulose, distributing it to publishing houses and stationary supply stores, including the prominent Zagrebacka Papirnica.

* Flour mills: Many flour mills in the Prijedor area were privatized early on (before the war) and were taken from their owners when Prijedor was taken over.

* Restaurant and Hotel "Mursel" (next to electric company): The owner of this restaurant and hotel, Muharem Murselovic, was expelled during the war. The hotel, which had been under construction, was then blown up, and the restaurant expropriated.

* "Korzo": Senadin Ramadanovic owned this ice cream shop next to Stari Grad. He was killed in Omarska.

* "Ami": Amir Izetagic owned this bar. He was brutally killed in the beginning of the war

* "Asaf": Asaf Kapetanovic owned this coffee bar/restaurant. During the war, it was burned down, the restaurant was taken over, and Kapetanovic was killed near Omarska. The restaurant, which was next to the warehouses in the center of town, was later blown up.

* Shoe Store: Esad Avdagic owned this shoe store in Prijedor. The store was taken over during the war by a Bosnian Serb policeman named Zoran. Avdagic was expelled, and survived.

* Car sales and repair shop: According to former residents of Prijedor, Simo Drljaca reportedly arranged for the murder of owner Hamdija Kurdovic in 1992 in order to take over his business. An international monitor shared similar information with Human Rights Watch/Helsinki, but stated that to his knowledge, the business had been a "Volkswagen dealership." The former residents also claimed that Drljaca and Slobodan Kuruzovic brought stolen cars and furniture to Prijedor from Croatia during the war, and sold them on the black market.

Simo Drljaca has a number of business interests, and most observers believe that he came about his wealth through illicit activities. Drljaca, according to both IFOR and IPTF sources, owns the "Aeroklub" restaurant, and his wife owns a perfume shop in Prijedor.

Interestingly, in meetings with a U.S. Congressional delegation, Simo Drljaca, Mayor Stakic and Milorad Malud, President of the Prijedor Election Council, "called attention to the Omarska iron ore mine and the Celpak paper mill as critical employers needing access to international markets.205 In other words, the Prijedor authorities are lobbying the U.S. government for funding for the rebuilding of a mine which was a concentration camp, and a paper mill in which these former concentration camp guards have a direct financial interest. As mentioned, mine shafts at Omarska and Ljubija have reportedly been used as mass graves.

In January 1996, Predrag Radic, the then-mayor of Banja Luka, told Reuters that Bosnian Serb leaders were negotiating a deal with the Croatian government to trade iron ore from the Omarska and Ljubija mines for oil. Radic stated that the deal had been delayed because an iron works in the Croatian town of Sisak was not ready for production. The U.N. Tribunal, according to the report, " has plans to look into allegations that thousands of victims of Serb `ethnic cleansing' were buried in the Ljubija mine, some fifty kilometers west of Banja Luka."206

A local source told Human Rights Watch/Helsinki that a lot of equipment from the mine was sent during the war to a copper mine in Bor, Serbia. "The Serbs ruined their own companies, and now they are asking for money for the mines?" he asked, incredulously.

Tangled in the Web: Reconstruction Aid and the Architects of "Ethnic Cleansing"

Since the signing of the Dayton agreement, millions of DM have been invested in Prijedor through the implementation of community reconstruction projects. A confidential source directly involved in the allocation of reconstruction aid volunteered information that due to the continuing influence and control of the town by local authorities under investigation by the ICTY, it has been difficult to ensure that projects meant "to improve the human condition" of ordinary people have not also benefited those accused by numerous witnesses of orchestrating "ethnic cleansing" operations, overseeing concentration camps, and violating the Dayton agreement.

The projects, many of which were funded by the British Overseas Development Agency (ODA), the foreign assistance program of the British government, and implemented by IFOR, have focused on the reconstruction of schools and other community institutions. The impetus for most of the IFOR projects came from British ODA, which sought to improve the British IFOR contingent's image in the local community. "There was a radical change of ODA's policy and mandate," the source told Human Rights Watch/Helsinki. "[British ODA] decided to invest in Prijedor and let the people know what they are doing. . . Each project has a public opening on television. . . The new strategy has proven to be excellent. [IFOR] now has terrific relations with the local authorities as a result of these projects, which show the `nice side' of IFOR."

These projects are undoubtedly worthwhile endeavors in and of themselves, but according to information received by Human Rights Watch/Helsinki, IFOR and other groups have not been able to award contracts to legitimate businesses in Prijedor or distribute aid without interference from members of the "Crisis Committee," who retain control over the infrastructure and public companies of the town, expropriated many private businesses, and continue to intimidate private business owners. According to IFOR and IPTF sources, this group of individuals is highly organized - "all the way up to Karadzic," according to one international observer.207

The confidential source, who has direct knowledge of project implementation by IFOR and NGOs, informed Human Rights Watch/Helsinki that IFOR officers on the ground regretted it was necessary to "deal on a daily basis with persons who are believed responsible for war crimes, in order to help the ordinary people." He also stated that while every attempt was made to prevent local authorities from benefiting from the projects, that it was not always avoidable.

According to the source, Mayor Stakic and former Chief of Police Drljaca wanted IFOR to give all reconstruction contracts to public construction companies. "When the CIMIC [Civilian-Military Center] center gave money only to private [companies]," the source explained, "Simo's guys came [and threatened the private construction workers]." During the election period, the "electoral police" (under control of the political authorities) had demanded payments from local businesses to the SDS. Private company owners then approached IFOR to express fears that if no contracts were awarded to public companies, that private businesses would literally be burned down by Drljaca's men. They asked IFOR to give some contracts to publicly owned companies in order to protect them. Following the incidents with the "electoral police", IFOR met with the Mayor, to express concerns about the intimidation. IFOR agreed to give projects to public companies as well as private, but warned the Mayor that if the intimidation did not stop, all IFOR projects would be suspended. "[IFOR now] spreads evenly between public-private-public-private companies. . .all companies give estimates on a particular project," he stated, and stated that IFOR takes the lowest bidder, depending on how good the company is [what expertise they have].

The source confirmed, however, that nearly "everything is controlled by `Simo' [Drljaca]," and added that Drljaca, along with other members of the "Crisis Committee," is "behind everything that is going on.. . .There's no way [to implement] projects just with the private companies," because "everything's controlled by the [local] mob." Since IFOR started awarding projects to public companies, the intimidation of private companies appears to have abated.

In at least one case, IFOR engaged a company called "Komgrad," which it knew to be controlled by Simo Drljaca and Mayor Stakic. While care was taken to ensure that no cash was involved, the source acknowledged that "When a project is given to Komgrad, it is known that Simo and Stakic benefit from it, but it relieves pressure on the private companies and buys IFOR good relations." Komgrad, according to the confidential source, "is Stakic's construction company....[and] Simo's friends. . .the Mayor sits on the board." According to the source, private construction companies are not controlled by the SDS and probably are not therefore controlled by Simo Drljaca. But, he added, "They don't like Simo and are scared of him." The source declined to divulge the names of other public construction companies, and did not want to give the names of any private companies for fear of retribution against them.

While it was not clear to the source what other specific financial interests were held by the local authorities, the reports of the U.N. Commission of Experts and others clearly indicate that the "Crisis Committee" was instrumental in taking over the finances of the majority of local businesses. A local source told Human Rights Watch/Helsinki that a number of private companies are in fact controlled by the SDS, among them "Zitopromet", "Celpak", and "Unipromet".208 As mentioned elsewhere in this report, many private companies were taken over by members of the SDS in 1992 and after, and many directors were killed. Since 1992, other businesses have been taken over; their directors and managers replaced by SDS party members.209 On May 1, workers at a private company in Novi Grad (part of the area under Drljaca's control) staged a strike in protest of the replacement by the government of the director of the firm because he was a member of an opposition party. An SDS party leader was installed as general manager.210 Special police forces arrived and detained five strike organizers and forced the strikers back to work. Drljaca was present at the scene and was reported to be in charge during the incident.211

Several projects were turned down by IFOR when it seemed that the money might be misused or when certain facts were obscured. For example, one proposal requested funds for an educational project which was actually a fish restaurant. The applicants claimed that the restaurant would serve as a "school for waiters," a supposition IFOR project managers reportedly thought dubious at best. In another case, involving a textile factory, "Elegant", the owner "wanted tons of money, but he could not substantiate the costs he was claiming," accordingto another source. In another case, a Canadian builder wanted to be involved in a reconstruction project (which did not, in this case, involve British ODA funds) but was turned down when he was observed to be going around with Mayor Stakic's bodyguard and it became known he was making visits to Pale.

In one project involving the Japanese Red Cross, school supplies were given to local school children in Prijedor. Unbeknownst to the Red Cross representative, Bosniak and Bosnian Croat children were held back while other children were sent to the gymnasium to receive the gifts. Further, there were problems of double distribution of supplies to particular schools because of a lack of coordination. IFOR later tried to remedy the situation by ensuring that non-Serb children also receive supplies.

British ODA funds are restricted to projects which will "improve the human condition." The limit for individual projects is 42,000 DM (US$28,000), and strict accounting is required by British ODA, according to Human Rights Watch/Helsinki's confidential source. IFOR has assigned a "technical supervisor" to oversee the projects.

The source divulged that he was revealing this information to Human Rights Watch/Helsinki because he felt sorry for the residents of Prijedor, who live in fear of the authorities. He specifically mentioned the control of the local housing commission by Drljaca, as previously mentioned.212 "Simo gives permission to the [Prijedor] Commission on Property and Commission on Refugees and Displaced Persons [for all they do]," the source explained. "Simo personally selects who gets a house in Prijedor. Simo is the key man in this. If you know him, you get a house. If you don't, you don't get a house. Everyone knows this in Prijedor....Refugees don't have houses. Local leaders who deal with the refugees have problems. . .they came to [IFOR] scared of being killed by Simo." In a number of cases, the sum of 2,000 DM was paid for houses to local officials involved in organized crime.

British ODA Response to Information Gathered by Human Rights Watch/Helsinki

Human Rights Watch/Helsinki contacted the British ODA office in Banja Luka regarding the reports received in the field about ODA projects.

According to Gillian Mclean, the British ODA official responsible for overseeing British ODA projects in Multi-National Division Southwest, British ODA avoids working through municipality officials and conducts investigations of companies in order to diminish the possibility that funds will be misused. Instead, British ODA prefers to work directly with the institutions involved, i.e. hospitals or schools.213

British ODA denied outright that any agreement had been made to give a percentage of projects to public companies. British ODA pointed out that of twenty-four British ODA projects approved in the Prijedor area, only five involved public companies. (According to information gathered by Human Rights Watch/Helsinki, however, the agreement was made after a number of projects had already been initiated, and thus would not necessarily be reflected in the total number of projects). It seems that the agreement was made not by British ODA, but by IFOR, although it is unclear why British ODA was not advised of the agreement.

The reason for using public companies does not, according to British ODA, stem from any agreement with the municipality, but rather reflects the fact that because privatization has been limited, public companies generallyhold the expertise necessary for particular projects. British ODA stated, "As far as the specific use of Komgrad is concerned, with the exception the of the Prijedor garbage dump, all British ODA funds for work carried out by this company were used purely for the purchase of material. In every case, the materials were purchased and delivered to the work site by the military [meaning IFOR] project officers. The municipality then paid Komgrad for labour." It is not clear where the municipality obtained the funds for the labor. British ODA claims, "We have no evidence to support the allegation that the former Chief of Police or Mayor Stakic have a financial interest in Komgrad, but we would be interested in any evidence that you may have." British ODA states that "if, at any stage in the process, any impropriety in the activities of a company comes to light, it is automatically excluded."

Regarding the activities of Drljaca and Stakic, the British ODA representative stated in a December 13 letter to Human Rights Watch, "We are aware of the rumours surrounding the activities of Stakic and Drljaca in 1992, although neither has been indicted as a war criminal. . .rumours abound as to who may be indicted as war criminals in the future, in all three factions. I can assure you that we also want to see war criminals brought to account and it is part of IFOR's mandate to assist in this process wherever possible. However, it is essential that these individuals are formally indicted, because to proceed on the basis of rumour would be neither productive nor equitable. If there is insufficient evidence for these people to be indicted by ICTY, it is inappropriate for us to unilaterally deem them to be war criminals."

Aid to the Prijedor Hospital

Milan "Mico" Kovacevic, original member of the "Crisis Committee," and the President of the Executive Board of the [Bosnian Serb] Assembly in Prijedor during the 1992 takeover, recently accepted a donation of 350,000 DM from UNHCR for the hospital in Prijedor, Human Rights Watch/Helsinki was told in November by an U.N. Civil Affairs officer, who showed Human Rights Watch/Helsinki a news item which stated that the money was for the renovation of part of the hospital for use as a geriatric center.214

A confidential source with direct knowledge of hospital affairs told Human Rights Watch/Helsinki that the fuel, clothing, and medication given to the Prijedor hospital by the U.N. or IFOR/SFOR is taken by Kovacevic and Mayor Stakic. According to the source, fuel designated for the hospital is sold in gas stations in Prijedor and the other items are given to the Bosnian Serb Army or are sold on the black market.

Non-Serbs are afraid to use the hospital, because they are fearful they will not receive good treatment and also because treatment for those without medical insurance is prohibitively expensive. Most non-Serbs do not have medical insurance, having been disenfranchised after the takeover.

Milan Kovacevic, according to Human Rights Watch/Helsinki sources, had meetings in 1992 with the military and civilian police and SDS leaders about what to do about the non-Serb staff of the hospital. The heads of the hospital departments reportedly still work very closely with the SDS.215

According to Physicians for Human Rights and the U.N. Commission of Experts, during the war, a number of doctors "disappeared" and are believed to have been killed in Omarska, among them the following persons: Osman Mahmuljan, internist; Enes Begic, surgeon; Zeljko Sikora, gynecologist; and Razim Music, neuropsychiatrist (he mayhave survived, according to a Human Rights Watch/Helsinki source). The director of the hospital during the time of the "disappearances" was Radojka Elenko, who still works as an internist at the hospital.

According to a report by Physicians for Human Rights, "By May 1992, most non-Serb with white-collar jobs, including physicians, had been removed from their posts [in Prijedor]. . When Bosnian Serb forces captured the town of Prijedor, they took special care to detain "all the prominent people of Prijedor," as one former resident of the town told PHR. This included health professionals, such as internist Osman Mahmuljan, gynecologist Zeljko Sikora, and ear-nose-and threat specialist Esad Sadikovic."216

According to reports, during the war, the heads of the hospital were working in collaboration with the army and the police. Police and military came into the hospital, made a list of all the staff of the hospital, and used that list to take people away from the hospital. They took some people away from the hospital directly, and others from their homes."217

Roy Gutman of Newsday reported: "The [non-Serb] mayor was deported to the notorious Omarska camp, while his wife, a physician and medical director of the Prijedor hospital, was told not to report to work. On May 28, 1992, all hospital personnel were stopped on their way to work and divided into groups based on presumed ethnicity. Only Serbs were allowed into the hospital, while non-Serbs were either returned home or deported to concentration camps."218