VUK HAMOVIC A Serbian businessman whose dollar wealth is measured in the hundreds of millions and who has complete control of the energy market in South Eastern EuropeFor years the top business partners of former Croatian electric power authority HEP CEO Ivan Mravak were two controversial Balkan "businessmen", Vuk Hamovic and Vojin Lazarevic. Hundreds of millions of euro have poured from HEP into their numerous foreign bank accounts in the space of just a few years, and the former HEP management cared little that it had close ties to persons whose activities have for years been under the watchful eye of investigators from the USA, Great Britain. Luxembourg, Serbia and Bosnia Herzegovina. The suspicious activities of Serbian national Vuk Hamovic and Montenegrin citizen Vojin Lazarevic have also been systematically investigated over the past ten years by the secret services of the USA, Germany and Russia. Which is not surprising if one takes into consideration that, although never convicted to date, Hamovic and Lazarevic have created an enormous Balkan smuggling and brokerage network that turns over billions of euro, installs ministers and the heads of public utilities and indirectly runs the energy market of South Eastern Europe.

Hamovic, a sophisticated loan shark who got rich during the Slobodan Milosevic regime dodging the sanctions Serbia was under during the Balkan wars, and Lazarevic, who got started as an oil smuggler and gun runner that worked closely in the early 1990s with war criminal Zeljko Raznjatovic Arkan, have often been under investigation on suspicions that they funnelled massive amounts of money from major energy companies. They are suspected of doing so with the help of the top people at these companies, whom they had bribed to sign contracts that always went only to the benefit of Hamovic and Lazarevic. It is for this reason in fact that USKOK (The Bureau for the Prevention of Corruption and Organized Crime) investigators, after the HEP scandal recently broke, i.e. the case involving Sibenik-based light metals factory TLM and the Mostar-based Aluminij, has been intensively analysing all of the contracts that former HEP top man Ivan Mravak signed with Hamovic's Energy Financing Team (ETF) company and Lazarevic's Rudnap company.

And while HEP has for years been one of the biggest buyers of electrical energy in Europe, the state-owned company has never moved to open its own go-between companies abroad, which would cut the overall cost. Instead, HEP's chief suppliers, besides the Ukrainian-Slovakian firm Korlea, were the ETF and Rudnap companies. Last year alone Hamovic's ETF sold Croatia electricity worth over a hundred million euro, while Lazarevic, who works closely with Hamovic, sold HEP about 45 million euro in electric energy. The amount of electricity supplied, and a cursory glance at the business biographies of Hamovic and Lazarevic were sufficient motive for Croatian investigators to launch a complex investigation that will establish why HEP collaborated mostly with these two men under Mravak's leadership, i.e. whether, as was always suspected of the heads of other electric energy giants in other countries, Ivan Mravak had some very concrete reasons to do business with Hamovic and Lazarevic.

And their biographies are impressive for at least two reasons - the jobs on which they earned their fabulous wealth is impressive, but even more impressive is the list of investigations that have been led into their activities. Vuk Hamovic was born in 1949 as the son of a Yugoslav war hero and former Yugoslav People's Army Chief of General Staff Ratomir Rade Hamovic. After having studied from 1968 to 1972 at the Faculty of Economics in Belgrade, Vuk Hamovic received his master's degree in 1974. As the son of a war hero he was immediately given a job in the Yugoslav state-owned company Energoprojekt, and in the early 1980s came to the head of its daughter company Energodata, which was developing the TIM 011 project to create the first Yugoslav personal computer. In 1987, when it was already clear to many that Yugoslavia would break up, Hamovic joined forces with Israeli national Aleks Klorman to establish Milnah, a financial services company. Hamovic's first big deal dates from this period. Romania owed Yugoslavia a lot of money for electric power it had purchased, and Hamovic's company bought up the risky debt at a bargain price and somehow succeeded in collecting the full amount from the Romanians. Clearly grasping that there was much to be earned in the purchase and collection of debt, a year later Hamovic set up the East Point company on Cyprus and the Yu Point company in Belgrade, and successfully mediated in the collection of debt between former eastern bloc countries. As chance would have it he expanded his operations in the early 1990s - Serbia found itself under international sanctions because of the war, and almost all of its foreign trade went via offshore companies on Cyprus an a handful of future Serbian tycoons loyal to Slobodan Milosevic.

And while purportedly a big opponent of Milosevic's, Hamovic is alleged to have funnelled 500 million dollars of Milosevic's money out of Serbia by way of his father Rade to Cyprus to keep them safe - and to invest. At the same time he continued to build his image in Serbia as an opponent of the Milosevic regime. In 1990 he was one of the founders and chief financiers of the Vreme weekly, which he soon abandoned, and in 1992 he financed the Milan Panic campaign when Panic ran against Milosevic in the elections. War and sanctions did however significantly reduce the scope for business, and in 1992 Hamovic moved to London and started working for GML International, a financial bridge between the east and west - former Soviet republics and European countries. It was at this time that Hamovic received British citizenship, and when the chaotic wartime situation in the Balkans ended, Hamovic and GML were among the first big-time "players" back in the region.

Hamovic's first major scandal dates to the summer of 1999. The Montenegrin electric power authority EP CG owed a lot of money to the electric power authority of Republika Srpska (EP RS). As it was questionable whether the Montenegrins would ever settle the debt, Hamovic's GML bought up all of the EP RS claims, worth 8.4 million dollars, towards the Montenegrin company at a 30 percent discount from August of 1999 to February of 2000. To anybody on the side the deal probably seemed very risky, but it is clear that Hamovic somehow knew what others did not - that the US Government would make a multi-million dollar donation to the Montenegrin Government precisely for the payment of electric power debts. After a few such transactions the Americans noticed that Hamovic was buying up EP CG debt just ahead of USAID transfers for a given debt, and American investigators launched an investigation into the activities of Hamovic and GML, and the heads of the electric power companies of Republika Srpska and Montenegro, who continued to sign debt buyout deals with Hamovic even though it was clear that the debts would be settled by American donations.

Mediating between the energy companies of the former Yugoslav member states Hamovic gained a solid knowledge of the electricity business, and in 2000 he and a friend from GML, James Nye, set up the Energy Financing Team (ETF) on the Isle of Man, a well known offshore haven.

IVAN MRAVAK The former HEP CEO picked partners for his company that were under investigation in several European countriesA few months later he set up a company with the same name in London, and Hamovic and Nye were joined in ownership by Montenegrin national Vojin Lazarevic. It was only then that it became public knowledge that Hamovic and Lazarevic were close. The two initially collaborated secretly, and for years led ETF together, and in 2005 allegedly only nominally fell apart - probably with the aim of making it less obvious on various markets, such as Croatia, that ETF holds the majority of contracts, when in fact millions of dollars and euro went to the same group of people.
Vojin Lazarevic, born in Kotor in 1960, is practically a textbook example of a big-time Balkan smuggler of the 1990s. For years he expanded a network of oil and cigarette smuggling in Serbia and Montenegro, and protected his operations with copious funding of war criminals Zeljko Raznjatovic Arkan, Vojislav Seselj and his wartime hordes, and Radovan Karadzic. Besides typical oil and cigarette smuggling, Lazarevic and his company Rudnap have been linked to a never unravelled gun running affair. During the 1990s the American CIA and the German BND investigated the role Rudnap played in Milosevic's collaboration with Libya and Iran. At the time Libya tried to procure spare parts and technical assistance for the SS-21 rocket system via Milosevic, and in April of 1993 a shipment of 80 tonnes of ammonium-perchlorate, used as rocket fuel, was seized in Ukraine. The seized fuel came from Russia, and the shipment was to have been picked up by the Rudnap company in Ukraine for delivery to Libya and Iran. In the late 1990s Lazarevic got into Hamovic's energy field in dubious deals that involved the electric power authorities of Serbia, the Republika Srpska and Montenegro. In 1997 and 1998 they made abundant use of evading taxation by having thermal power plants process imported heating oil into electric energy "as a service" which, according to Serbian tax law was exempt for sales tax because the heating oil was "temporarily imported into Yugoslavia for processing, i.e. final processing." After "processing" at a thermal power plant there was no more heating oil, that is to say it was written off the books, and the electric power produced was sold back to Montenegro or Bosnia Herzegovina via several offshore companies.

After amassing an enormous fortune in the wartime and post war period, Lazarevic found preventive protection from possible investigation and criminal persecution in politics, first as a Member of Parliament for the People's Party in the Montenegrin Parliament. Lazarevic went on then to serve as a minister without portfolio for two year in the Montenegrin government, and then as an advisor to former Montenegrin Prime Minister Filip Vujanovic. For years he was also Montenegrin Prime Minister Milo Dukanovic's economic advisor.

After they finally publicly joined forces in the Energy Financing Team in late 2000, Vuk Hamovic and Vojin Lazarevic launched their total takeover of the energy market of the former Yugoslavia. In the space of just one or two years ETF took over the dominant role in electric power trading in Serbia, Montenegro and Bosnia Herzegovina. The business model was the same in each country - ETF bought up excess electricity cheap, resolved shortages by supplying expensive electricity, and the heads of state-owned energy companies for no apparent reason signed deals with ETF that were very detrimental to the companies they led. At the same time public tenders were set up so that an ETF bid was always one of the most favourable or - the only one that met all of the conditions, because they looked like ETF had dictated them. Hamovic and Lazarevic also had an advantage over other bidders through strong financial backing - both were co-owners of the Serbian National Savings Bank and of the Euroaksis bank that Slobodan Milosevic opened in Moscow back in 1994 in order to transfer to it masses of money under threat of blockade and sanctions. This created an artificial market cycle - through their banks Hamovic and Lazarevic provided credit to energy companies, i.e. lent out money with which these companies then purchased expensive electricity from - Hamovic and Lazarevic.

Audits of the operations of electric energy companies were carried out in Bosnia Herzegovina in 2003, which quickly led to an investigation into Hamovic's former company GML. International prosecutor Jonathan Ratel and the then UN High Representative in Bosnia Herzegovina Paddy Ashdown sought the aid of the British Serious Fraud Office, whose investigators removed 34 bags of business documentation from the London head office of the ETF on suspicious operations in the Balkans. The grounds for the investigation were the same as in many other cases - the heads of energy companies were suspected of selling electricity to ETF under market prices, buying at many times higher prices and signing a series of detrimental contracts that benefited only ETF. Parallel to the investigation in Bosnia Herzegovina, ETF became the subject of an investigation in Serbia in 2004. Serbian parliament set up a committee that was to have investigated the operations of the Serbian electric power authority, that is to say all of the deals top officials at the leading energy company in Serbia concluded with ETF, especially considering the fact that ETF was from month to month assuming an ever greater share of the sale of electric energy. An investigation was also launched in to the many years of "heating oil processing service" through which taxation was evaded, with other criminal details also surfacing. A dispatcher employed at the Serbian state electric company explained to the parliamentary committee how the state had needlessly imported electricity from ETF - in October of 2003 there was a rapid increase in the flow of the Drina River to the Bajina Basta hydroelectric power plant which the dispatchers, instead of producing electric energy, had to allow to flow past the dam because Serbia had at the same time imported high-priced electricity from ETF. That was just one example of the detrimental deals executed by the heads of the Serbian electric power authority to the benefit of ETF, but by no means the only one.

In late 2005 the Serbian press reported that Vojin Lazarevic was leaving ETF, but it was by all accounts only a bogus parting of ways to make the Hamovic-Lazarevic dominance of the Balkans appear weaker than it actually was. Indicative of this was the fact that they were unwilling to publicly comment the departure of Lazarevic from ETF, and the fact that almost nothing changed in the electricity business, except that Rudnap began to "win" new markets. And so in February of 2007 a major scandal broke in Albania when the state company suddenly broke off its long time cooperation with the Italian company AEM and announced that it would in the future buy electricity from Lazarevic's Rudnap, whose bid was exactly seven euro cheaper than the Italian offer at an evidently fixed tender. The decision to purchase electricity from Rudnap was allegedly preceded by a secret meeting in Moscow between Vojin Lazarevic and Albanian Prime Minister Sali Berisha, after which the Albanian opposition for months accused their Prime Minister of having taken liberal bribes for the lucrative contract won by Lazarevic. In the meantime the investigations into Hamovic's and Lazarevic's operations in Bosnia Herzegovina and in Serbia were wrapped up, for the most part because of a lack of evidence, but many feel that the two have become so rich and powerful that they are directly protected by bribed politicians at the highest positions.

VOJIN LAZAREVIC The former oil and cigarette smuggler and financier to Arkan, Seselj and Karadzic has sold high-priced electricity to HEP for yearsConfirmation of the rumours of the power Hamovic and Lazarevic have accumulated in the Balkans over the past ten years is the alleged conflict the two have with leading Russian capitalists who have tried for years to get into the energy business in the Balkans. Since the sector is under the firm control of Hamovic and Lazarevic the Russians have sent both a clear message that they should not oppose the entry of Russian companies into the Balkan market, and as a method of applying pressure the Russian federal security service has launched an investigation into their shady dealings in the Moscow-based Euroaksis bank. According to some sources, Hamovic got the message and has allowed the Russians to share a part of the market, but his long-time partner Vojin Lazarevic has rejected all Russian "reasoning" and as a preventive measure increased the number of his personal bodyguards. Indicative of the magnitude of the conflict between the Balkan energy lobby and Russian businessmen is a case from January of 2008 when a high-ranking political delegation from Russia visited the Serbian government for a secret meeting where top Serbian politicians were allegedly shown documents that, besides the criminal operations of Hamovic and Lazarevic, allegedly also contain evidence of their connections and the bribing of many Serbian politicians.

After that it appears that Vuk Hamovic and Vojin Lazarevic somewhat slowed the tempo of their total conquest of the Balkan energy market and in some media Hamovic has even announced that he might start building or buy some energy companies in the former Yugoslav member states. And so in October of last year Hamovic received a group of Croatian reporters at the Belgrade branch of his London-based ETF, whom he managed to charm, and then "revealed" his business secret - that he wants to purchase Croatian electric energy company HEP. In these plans he may have had some insider help from some of the key HEP directors with whom he has successfully collaborated for years. And USKOK investigators are now investigating the scale of this Balkan collaboration - how much HEP lost, and how much Vuk Hamovic and Vojin Lazarevic gained in the operation.