VZCZCXRO6269
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSQ #1144/01 3390742
ZNR UUUUU ZZH
R 050742Z DEC 06
FM AMEMBASSY SKOPJE
TO RUEHC/SECSTATE WASHDC 5494
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHVEN/USMISSION USOSCE 2087
RUEHNO/USMISSION USNATO 3644
RUEHBS/USEU BRUSSELS
RUEAWJA/DEPT OF JUSTICE WASHDC
RUESEN/SKOPJE BETA

UNCLAS SECTION 01 OF 02 SKOPJE 001144 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/SCE, DOJ/OPDAT FOR CARL ALEXANDRE 
 
E.O. 12958: N/A 
TAGS: PINR MK
SUBJECT: MACEDONIA: RENEWED ACTIVITY IN 45 MILLION EURO 
EMBEZZLEMENT CORRUPTION CASE 
 
SUMMARY 
 
¶1. (SBU) On November 15, Macedonia's special Organized Crime 
prosecutor issued detention requests for former Export Import 
Bank Director Metodija Smilenski, and former National Bank of 
Macedonia (NBM) Governor Ljube Trpeski. They are accused of 
defrauding the NBM of over 45 million Euros in 2004. 
Smilenski, whose financial schemes date back to 1993 is 
awaiting his final extradition hearing in Serbia. Trpeski is 
under police surveillance in the Skopje military hospital, 
where he reportedly is recovering from heart problems before 
returning to home detention while he awaits trial. End 
summary. 
 
 
METODIJA SMILENSKI - THE MASTERMIND 
 
¶2. (SBU) On November 22, the Macedonian Justice Ministry sent 
an indictment to Belgrade against Metodija Smilenski, a 
private Macedonian businessman with close ties to former PM 
Ljubco Georgievski. (Note: Georgievski formerly was the 
leader of VMRO-DPMNE, the current ruling party.) Smilenski is 
accused of embezzling over 45 million Euros through various 
fraudulent business schemes, mainly during his time as 
director of the Export Import Bank in Macedonia. On June 15, 
Smilenski was arrested in Belgrade on the basis of an 
international warrant issued by the Macedonian office of 
Interpol. His request for Serbian citizenship was denied by 
the Serbian Ministry of the Interior, and the Serbian Supreme 
Court recently gave the green light to his extradition. 
However, since Smilenski is a dual citizen (Macedonian and 
Austrian), the Serbian Ministry of Justice is still 
considering his extradition to Macedonia. 
 
¶3. (SBU) The current charges against Smilenski are related to 
alleged embezzlement, but there are a number of other cases 
pending against him on charges related to the abuse of his 
official position and having encouraged others to perform 
criminal acts of corruption. 
 
- In 1993 Smilenski invested in the "Centro" company, one of 
the largest trading companies in the former Yugoslavia, with 
1,200 employees and some 18 million Euros worth of real 
estate. Through fictitious contracts, forged documents and 
money transfers to off-shore companies, Smilenski allegedly 
bankrupted the company by 1996. 
 
- In August 2003, he was charged in Macedonia with forging 
documents. In November 2004, he was sentenced in absentia to 
a 5,000 Euro fine and 100 days in prison. 
 
- In January 2004, he was charged with encouraging the 
then-Director of the Bureau for Commodity Reserves, Vanco 
Pelovski, to abuse his official position and authority, 
allegedly causing a loss of 1.3 million Euros to the Ministry 
of Finance. 
 
- In September 2004, Smilenski was charged with abuse of his 
official position as Director of the Export Import Bank and 
the misuse of some 15 million Euros from the NBM. 
 
- Smilenski's name also is connected with illegal activities 
in the textile factory "Makedonka" in the city of Stip. He 
and his accomplices, some of them high government officials 
at the time (e.g. the former Minister of Transport, Ljupco 
Balkovski, the former director of the Public Enterprise for 
State Property, Ilija Kitanovski, and the former Minister of 
Economy, Besnik Fetai) have been implicated in money 
laundering and fictitious mortgage schemes as well. 
 
 
LJUBE TRPESKI - THE ACCOMPLICE 
 
¶4. (SBU) Trpeski, a former member of the Socialist Party and 
ex-governor of the NBM, granted over 15 million Euros to 
guarantee Export Import Bank credits fronted by the German 
Bank LHB and the Bank of Austria. Credits taken from the 
foreign banks allegedly were circulated through Smilenski's 
companies and, using fictitious receivables, were transferred 
to his Austria-based company "Makotrade GMBH Vienna." The 
charges against Trpeski are related to his misuse of official 
position to defraud creditors. Skopje Public Prosecutor 
Sterjo Zikov has convinced the other directors of the NBM to 
 
SKOPJE 00001144  002 OF 002 
 
 
cooperate with the prosecution and to turn state's witness 
against Trpeski. On November 22, Trpeski was detained in 
Skopje but was immediately admitted to the military hospital 
for alleged heart problems. He is currently under police 
surveillance and will then be held under home detention 
awaiting trial. 
 
 
COMMENT 
 
¶5. (SBU) The recent revival in the prosecution's efforts to 
detain Smilenski and Trpeski is an important step in the 
fight against corruption. However, judicial sources believe 
that the requests for detention have come too late, when some 
evidence is most likely already lost. It is believed that 
Lence Sofronievska, the outgoing President of the Judicial 
Council of the Republic, has close business connections with 
Smilenski, and may have exerted pressure on the judges 
involved in cases against him. Sources told PolOff that they 
believe Sofronievska's weakened position may be the reason 
the requests for detention finally have been filed. 
 
¶6. (SBU) At the same time, prosecutors are concerned about 
the appointment of Zoran Dimitrievski as the Presiding Judge 
of the five-judge panel in this case. Even though 
Dimitrievski is competent, he has limited experience, and 
prosecutors believe that he was appointed just for that 
reason, since many people in high positions "do not want this 
case to see the light of day." (Note: In Macedonia, court 
cases of such magnitude are heard by a panel of 5 judges; two 
are professional lawyers and three are lay persons who are 
selected by Parliament from a list of volunteers. In general, 
selection of judges is routine, but the Presiding Judge can 
influence the process. This is an important factor 
considering that the votes of the three lay judges have the 
same weight in the final verdict as the votes of the two 
professional judges.) 
MILOVANOVIC