Press release

Belgrade -16 current and former members of the management of Serbian state-owned energy company Elektroprivreda Srbija (EPS) were arrested today and yesterday across the country over allegations of embezzlement of company funds. Some of these are people that the European Bank for Reconstruction and Development (EBRD) has entrusted this summer with managing an 80 million Euros loan for the development of the Kolubara lignite fields near Belgrade.

Among those arrested are: Dragan Tomic, EPS general director between 2004-2008 and currently an advisor in the Directorate for Strategy and Investments at EPS; Vladan Radovanovic, current deputy director of Kolubara mining complex and former director of Barosevac-Kolubara field; Zivojin Jovanovic, current director of all four mine fields at Kolubara; Milutin Bobic, current director of West Tamnava Field; Milan Petrovic, current director of Kolubara Field D. Tomic, who had apparently been informed about the possible arrest, was caught at the border with Macedonia, while trying to escape to Greece.

In August this year, the EBRD approved an 80 million Euros loan for “environmental improvements” at Kolubara lignite fields [1], in spite of receiving repeated warnings from NGOs CEE Bankwatch and CEKOR [2] that the management of EPS, which would oversee the developments, should not be entrusted with this money unless the police investigation – already begun at that time – clears them of all corruption allegations.

“Rather than wait for the results of the police investigation, the EBRD chose to rush into this loan rubbing its hands at the prospects of making profit from expanding lignite production in Serbia,” comments Zvezdan Kalmar, Bankwatch Serbian national coordinator. “Funnily enough, the Serbian media is writing that the amount syphoned off EPS in the past decade amounts to almost 130 million Euros. If this management that the EBRD chose to give money to had been honest, Serbia would not have needed to indebt itself to the EBRD in the first place!”

For more information, contact

Zvezdan Kalmar
Bankwatch Serbian national coordinator
zvezdan AT bankwatch.org
+381655523191

Notes for the editors:

1. Bankwatch and CEKOR argue that this money would in fact support the expansion of lignite power generation in Serbia to the tune of 700 MW.

2. See earlier Bankwatch press releases here or here.

Brussels – The Resource Efficiency Roadmap published today by the European Commission envisages all kinds of right recommendations for Europe to become a renewable based, resource efficient economy but the actual value of this document depends largely on the EU budget.

“We were pleased to see in this text so many positive signals from the Commission, all under the framework goal of moving towards an economy based on reuse and recycling, with residual waste close to zero,” says Marijan Galovic, waste campaigner at CEE Bankwatch Network. “This roadmap does set us in the right direction.”

“But what we are waiting to see now is whether the spending priorities for the next one trillion euro EU budget (2014-2020), to be announced in October, are really in line with the Resource Efficiency Roadmap,” Galovic added. “If the Commission actually puts money next to the goals set out in the Resource Efficiency Roadmap, then this will be a strong proof of political will for greening our economy. Otherwise, the goals in the Roadmap run the risk of not being implemented in useful time for meeting the Europe 2020 climate objectives and, fundamentally, for staying away from runaway climate change.”

According to Bankwatch, a fundamental weakness of the Roadmap is its overarching pro-market orientation, seen in the prominent role given to investment banks and innovative financial instruments in resource efficiency measures. One example is the core role envisaged by the Commission for public-private partnerships (PPPs) and to the European Investment Bank (EIB) in the financing of resource efficiency measures. The history of PPPs shows they are unlikely to be a useful instrument for ecosystem and natural resource conservation [1]. Previous Bankwatch research into PPP projects in central and eastern Europe [2] has shown these to be associated with high costs, low risk transfer to the private sector, difficulties in contract enforcement, and lack of transparency. Additionally, the NGO doubts the ability of the EIB, a bank specialized in large, mainly infrastructural projects of over 25 million euros, to be an appropriate promoter of ecosystem services.

For more information, contact:

Marijan Galovic
Waste campaigner, CEE Bankwatch Network
marijan AT zelena-akcija.hr
+38598849982

Anelia Stefanova
Campaign coordinator, CEE Bankwatch Network
anelias AT bankwatch.org
+ 393338092492

Notes for the editor:

1. Read more about the UK experience with PPPs: https://bankwatch.org/news-media/blog/times-crisis-polands-take-emperors-new-clothes

2.Read the Bankwatch study Nevermind the balance sheet. The dangers posed by public-private partnerships in central and castern Europe: https://bankwatch.org/documents/never_mind_the_balance_sheet.pdf

Brussels – CEE Bankwatch Network publishes today a study showing that central and eastern European governments have been using EU funds overwhelmingly for road over rail development, ignoring EU calls for decarbonisation of the transport sector. The Commission can make sure that this pattern is not replicated with the next EU Budget (2013-2020) by introducing strict conditionalities in the new Cohesion Policy regulation next month.

“Transport is the only sector of the European economy where GHG emissions are increasing, and rapidly,” says Pavel Pribyl, Bankwatch transport coordinator. “EU member states have committed themselves to gradually decarbonising the sector. But the newest members do not seem to get it: ever since most of them joined the EU in 2007, they have used the bulk of funds available for them for the development of road and air transport, at the expense of the cleaner rail. The EU, holding the purse strings on the expenses, has to do more to prevent this attitude.”

The Bankwatch study [1] analyses how EU regional funds allocated for transport for the period 2007-2013 have been used in four member states: Bulgaria, Estonia, Poland and the Czech Republic. In all countries, expenditures for roads take up the majority of available EU funds for transport: 1.3 billion out of 2 billion Euros for transport have been allocated for roads in Bulgaria; in Poland, 10 out of 19.4 billion Euros go to roads. In both Poland and the Czech Republic, in spite of disproportionately large initial allocations for roads, national governments have additionally attempted to further reallocate rail moneys to roads.

In the Czech Republic and Bulgaria, insufficiently transparent tender procedures, faulty environmental impact assessments for various projects, and the marginalization of civil society in the process of deciding over allocations have also been documented, to the level that makes it plausible that “business and political interests have succeeded in privatizing the public interest,” as the Bankwatch report says.

“In January this year, the Commission called on member states to use regional funds more effectively to promote sustainable transport, even indicating concrete measures national authorities could take in this direction,” explains Pribyl. “But we doubt such a ‘soft’ call, coming past the half of the seven-year budget period, could make any difference. The Commission should act preemptively instead and introduce enough safeguards in the Cohesion Policy regulation to be published this October to make sure that it can punish bad spenders with immediate withdrawal of funds and reward good spenders instead. We fear only a strong stick and carrot approach from the EU can make a difference in our region.”

For more information, contact:

Pavel Pribyl
CEE Bankwatch Network transport coordinator
pavel.pribyl AT hnutiduha.cz
+420 603 207 249

Notes for the editors

1.
Bankwatch study “Transport cohesion on the right track?”:
https://bankwatch.org/sites/default/files/OP-transport-in-four-countries.pdf

European Commission communication “Regional Policy Contributing to Sustainable Growth in Europe 2020”: http://ec.europa.eu/regional_policy/sources/docoffic/official/communic/sustainable/comm2011_17_en.pdf

Belgrade – Next week, the EBRD is deciding whether to invest 80 million Euros in the Kolubara „environmental improvement” project in Serbia.[1] With the help of this money, state-owned Elektroprivreda Srbija (EPS) will expand lignite production in Serbia at the cost of forcefully resettling local communities. CEKOR and CEE Bankwatch Network urge the EBRD to rethink this investment.

„The EBRD should reject this loan for EPS because it would entail supporting a company whose integrity and corporate social responsibility are questionable at best,” argues Zvezdan Kalmar, Bankwatch Serbian national coordinator. „I personally witnessed the trauma of hundreds of families from Vreoci who for the past two weeks are watching their local cemetery unearthed by EPS under massive police presence. The company is going ahead with its plans to get the coal out from under Vreoci in spite of any human rights considerations: even though the community has not agreed to the EPS resettlement plan, the company — supported by national authorities — is already implementing it.”

Moreover, EPS is currently under investigation for corruption, as allegedly Kolubara management has been implicated in a number of different schemes involving equipment procurement and leasing and the sale of coal. [2] A recent internal audit at EPS itself revealed that serious irregularities committed by company management led to unjustified increases in EPS expenditures to the benefit of private companies. [3] According to the NGOs, the EBRD should not approve a loan to EPS before the official investigation is completed.

Finally, the EBRD should decide against this investment because it will likely support the expansion of coal in the power generation mix of Serbia, while at the same time indirectly limiting investment opportunities in more sustainable and climate-friendly energy developments. Burning coal already produces 70 percent of Serbia’s electricity. EPS is advocating for increased lignite production with an eye to export profits and, given the company’s close connection to several of Serbia’s ruling parties [4], expanded coal production has become a core part of the Strategy for the development of the energy sector in Serbia until 2015. [5] Public financial institutions such as the EBRD should not further encourage locking Serbia into carbon-intensive and coal-dependent development.

For more information, contact:

Zvezdan Kalmar
Bankwatch Serbian national coordinator
zvezdan@bankwatch.org
+381655523191

Piotr Trzaskowski
Bankwatch energy coordinator
piotrt@bankwatch.org
+48509162988

Notes for the editors

1. Project Summary Document: http://www.ebrd.com/english/pages/project/psd/2002/27005.shtml

2. National television channel B92 aired a series of documentary films exploring the nature and extent of the misuse of financial and other resources at the Kolubara complex and the financial and political repercussions. Links available via: https://bankwatch.org/sites/default/files/Briefing-KolubaraLignite-20Jun2011.pdf

3. http://www.b92.net/eng/news/politics-article.php?yyyy=2011&mm=02&dd=02&nav_id=72487

4. See the composition of the EPS board: http://www.eps.rs/onama/boardofmanagement.htm

5. See the Serbian energy strategy until 2015: http://www.euractiv.rs/odrzivi-razvoj/1938-bela-knjiga-eps-a-predstavljena-u-beu.html