After more than a decades of shady financing deals, Serbian investigators in early 2011 opened a case against state-run Electric Power of Serbia related to its operation of Kolubara coal mine in west-central Serbia. An internal audit of the company’s books revealed serious irregularities by management that resulted in unnecessary expenditures benefitting private contractors. The investigation led to the arrest in late 2011 of 17 people, including Dragan Tomic, who had been director of the Kolubara mine, deputy director at EPS and also a member of the Kolubara legislative assembly.

The suspects, which included officials from the mining company and the private businesses that resold lignite from the mine or leased machinery to Kolubara, were accused of running up fraudulent costs equivalent to around $11 million (US). According to reports, Tomic allegedly paid the companies for unnecessary mining equipment and services, and the companies overcharged for the number of hours they worked. Some of the private businesses that were accused belonged to high-level management in Kolubara. In all, 28 people were finally charged in connection with the case.

In a related case, several other executives of Kolubara Mining and EPS were also arrested for their part in fraudulently profiting from resettlement funds. An EPS board member was paid €1.2 million by the company as compensation for his house in the village of Vreoci. He claimed his house needed to be moved to make way for a new strip mine even though it was in fact located far from the mining zone and wasn’t actually his residence.

Sources:

– Bankwatch here and here

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