22 March 2007

Kosovo privatization violates Serbian property rights

SERBIANNA (USA), December 28, 2005 09:21 AM


International administrators in Kosovo are violating commonly accepted rights to property through a UN privatization scheme that is transparently discriminatory, says Veselin Kocanovic, a coordinator for development and reconstruction for the Coordination Center for Kosovo.


"Kosovo Privatization Agency has basically confiscated all state owned property in Kosovo and declared that the firms have no ownership nor control over it although Serbia has invested over $17 billion since 1970 through the underdevelopment fund derived from taxes of ordinary Serbs so that majority Kosovo Albanians could get economic help," say Kocanovic.


The building into which the Saudi Joint Relief Committee for Kosovo is stationed in Pristina is owned by a Serbian factory Novi Dom. Novi Dom was never consulted whether they wish to rent the property nor are they receiving any compensation for the usage.


Critics like Kocanovic are pointing fingers at UNMIK, the UN mission that runs Kosovo province, for its widespread disregard for ownership rights of property that existed prior to the UN takeover of administration of the province.


Albanian separatists have demanded that the UN suspend all laws prior to 1989, including property rights contracts. Unable to find owners of property suddenly found unrecognized, the UN declared control over it and is now privatizing it.


"What's going on in Kosovo should not called be privatization," says Kocanovic "because some companies are resold for the second time."


According to former UN's Kosovo governor Soren Jessen-Petersen's decision, says Kocanovic, property ownership is irrelevant because it can be established by litigation at some later date. However, Kosovo's horrendous track record of judicial corruption and lack of any legal enforcement makes any future litigation tantamount to today's property confiscation.


Kocanovic warns that foreign investors who think of buying property in Kosovo may be in for a prolonged litigation after the purchase so that the property bought now may actually turn into a financial and legal nightmare later.


"Serbia did not do enough to secure property of its firms, banks and individuals in Kosovo as well as in other former Yugoslav republics," says Milan R. Kovacevic, a consultant for the foreign investments in Belgrade.


According to the Serbian Finance Ministry, a preliminary figure is that Serbia has invested in the past 30 years over $17 billion in Kosovo's economy and firms from central Serbia directly own about 1,218 pieces of property and additional 140 by firms from Vojvodina province. The figure does not include properties where Serbian firms were at least 51% majority owners nor does it include minority ownership, properties owned by individuals, institutions and the Serbian Orthodox Church.


"Question of ownership can be initiated anytime regardless of statutes and standards," says Nikola Radosavljevic, legal advisor to the Kosovo Coordination Center.


"Serbia needs to formulate its principles, document its investments and submit them to the UN Security Council and the Council of Europe," says Kovacevic.


Unofficial sources say that the Serbian negotiating team is actively recruiting economic and business experts to catalogue the property and its finances in the province and present the economic case that may demonstrate that Kosovo's independence may be more of an economic problem then a solution. However, with the negotiations on the Kosovo status now over, it is unlikely that the issue of confiscated Serbian property will get any hearing any time soon.


In late December, The Kosovo Trust Agency has put up for sale another batch of properties whose title history may be questioned once a new owner acquires it.


So far the Kosovo Trust Agency that runs the privatization process has sold off 145 firms for 148 million Euros, which translates in an average selling price of little over 1 million Euros. Critics argue that this is too low of a price and the depressed prices may indicate that the privatization was done in a rigged market that is transparently flawed.


Kocanovic cites the case of a Pristina-based wallpaper company, Fazita, who was originally purchased by a firm Sinteleon from Backa Palanka located in Vojvodina province. When Fazita was sold, the majority Albanian workers cashed in by selling their shares of stock to Sinteleon. In 2002, Kosovo's international authorities have declared Sinteleon's purchase null and void and Fazita was resold. Sinteleon was never compensated.


Critics also cite that all of the privatized firms were sold to ethnic Albanians and no foreigners or ethnic Serbs took part of the purchase which may be an additional indicator of a rigged and corrupt process that favors the dominant ethnic group.


"As more powers are transferred to the Kosovar [Albanian] Provisional Government from UNMIK, corruption problems may intensify," writes USAID in its study of Corruption in Kosovo: Observations and Implications for USAID. According to USAID, business people are considered the second most corrupt group of people in the province.


"All warnings sent to the UN, World Bank, IMF and others that the privatization is against private property principles and basic tenants of a market economy were futile," says Kocanovic.