By Vesna Peric Zimonjic
BELGRADE, Jan 10 2006 (IPS)

After making much of privatisation, the Serbian government has taken over one of the biggest private firms, the cell phone company Mobtel.

“The licence for mobile phone operations was revoked for Mobtel after it was established that the company made an illegal contract with Mobikos from Pec, owned by Ekrem Luka,” the government said in a statement. It accused both Mobtel and Mobikos of making illegal profits without paying their dues to the state.

Mobikos is a cell phone company in the southern Serbian province of Kosovo. It is headquartered in the Kosovan town Pec, 120 km south of capital Pristina. The province, populated by ethnic Albanians, has been administered jointly by the United Nations (UN) and a local government since 1999, but Serbia still claims the area as its own.

Mobtel is part-owned by the Karic family, originating from Pec, but living in Serbia since the early 80s.

“Luka siphoned all profits to Kosovo, gravely violating the founding act of Mobtel, as the state has 49 percent of ownership in the company,” capital investment minister Velimir Ilic told reporters. Under a partnership agreement between Mobtel and Mobikos, a part of the profits should have gone to Serbia but did not, Ilic said.

“The national security of Serbia was also in danger, apart from the financial interests,” Ilic added. “Mobikos could have insight into all cell phone communications in Serbia.”

Luka, an ethnic Albanian businessman from Pec, has often been accused by nationalist Serb authorities of financing leaders backing independence of the province from Serbia.

But few accept the arguments of financial loss or a security threat. The takeover of Mobtel had been expected for other reasons.

Mobtel was the first cell phone operator to have come into Serbia in 1994. It has more than two million clients in a population of 7.5 million. The other is state-owned Telecom Serbia, with 1.5 million clients.

The Karic family that founded Mobtel together with the state in 1994 sold its 51 percent stake to an Austrian consortium several months ago. This was done without informing the state, co-founder of Mobtel.

When news surfaced that the Karic family had been paid more than 400 million dollars for the sale, questions were asked why the government had taken no action to get its dues, despite warnings from the tax administration and auditing firms.

International auditing companies found that the profits had been diverted to dozens of companies owned by the Karics, the tycoon family that became rich under the regime of former leader Slobodan Milosevic.

Government sources told IPS that the Austrian consortium has promised to pay long due profits to Serbia in several instalments. The consortium believed it would be profitable to pay some of the earlier dues in anticipation of future profits.

The consortium, headed by Austrian businessman Martins Schlaff was involved in an almost similar operation in Bulgaria several years ago. In 2002 it bought local mobile phone company Mobiltel, and sold it to an Austrian company in 2005, with a net profit of some 950 million dollars.

But negotiations between the consortium and the government that were meant to bring a first instalment of some 15 million dollars by Dec. 30 failed. Government sources say that the consortium was apparently not sure that the whole operation would proceed as they wanted.

“It was obviously too much for them (the Austrian consortium), almost half a billion dollars in total,” a government source said, “despite the fact that cell phone operations are the most profitable investments in the Balkans.”

Economic experts say the mess arises from the murky circumstances of the 90s at the time of wars and isolation, when only those close to the ruling Milosevic family could run big business.

“This is all a classic example of irregular activities, irregular profit making and irregular circumstances that still prevail in Serbia, five years after Milosevic’s regime fell from power,” leading analyst Misa Brkic told IPS. “Tycoons from his era tend to run their business as they want to, regardless of any rules.”

Head of the Karic family Bogoljub Karic (51) has clear political ambitions, and sees the takeover of Mobtel by state as “organised retribution” against him.

He founded a party, the ‘Movement Power of Serbia, Bogoljub Karic’ (PSS). He ran unsuccessfully for president in 2004. But public opinion polls show that the PSS has became third in popularity in Serbia, with 17.2 percent voter support. The first is the ultranationalist Serbian Radical Party, followed by the Democratic Party.

The PSS was unable to pass the five percent threshold in the last 2003 parliamentary elections, but Karic formed a caucus in the Serbian parliament by winning over five MPs. Several reports allege that the MPs were paid a million dollars between them. An official inquiry into the allegations is continuing.

“This is just the beginning of the political drive against me,” the controversial Bogoljub Karic said in a statement released over his BK television, one of the most popular channels in Serbia. “It’s the fear against me and the return of a process of confiscation of private property at a time when the government pretends to favour privatisation and the market economy.”

The Austrian ministry for communications and infrastructure said in a statement that “if the Serbian government remained firm in its decision to revoke the licence, this would send a fatal signal to other international and Austrian investors.”

The Austrian consortium has said it will lodge an appeal before the Serbian Supreme Court.

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