VZCZCXRO7057
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSQ #0086 0321016
ZNR UUUUU ZZH
R 011016Z FEB 08
FM AMEMBASSY SKOPJE
TO RUEHC/SECSTATE WASHDC 6986
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE 0181
RUEHNO/USMISSION USNATO 3747
RUEAIIA/CIA WASHINGTON DC
RUESEN/SKOPJE BETA

UNCLAS SKOPJE 000086 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
NOT FOR INTERNET DISTRIBUTION 
 
DEPT FOR EUR/SCE 
 
E.O. 12958: N/A 
TAGS: KKOR KCRM KJUS PGOV MK
SUBJECT:  MACEDONIA: MAJOR CORRUPTION PROSECUTIONS UPDATE 
 
REF: A. 07 SKOPJE 492 
 
      ¶B. 07 SKOPJE 615 
 
Summary 
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¶1. (SBU) The GOM's anti-corruption efforts are steadily progressing 
(reftels), including the on-going "big fish" trials of a prominent 
Macedonian businessman and a former National Bank Governor.  The 
government's corruption-fighting record shows it is willing to 
investigate and prosecute at least some prominent personalities and 
officials formerly connected to parties now in power.  End summary. 
 
 
Trial Of Businessman, Former National Bank Governor 
--------------------------------------------- ------ 
¶2. (U) The GOM has demonstrated since it took power in August 2006 
that it is willing to prosecute on corruption charges officials and 
businessmen who once were associated with the ruling VMRO-DPMNE 
party, including a former customs director and former executives of 
a state-owned company (ref A).  In July 2007, a Macedonian court 
also convicted on embezzlement and forgery charges prominent 
Macedonian business executive Metodija Smilenski, once a close 
associate of Ljubco Georgievski, the former VMRO-DPMNE Prime 
Minister (1998-2002). 
 
¶3. (U) In November 2007, an appellate court upheld Smilenski's 
conviction on the more serious counts of embezzlement, while 
ordering a retrial on the forgery charge.  The appellate court 
reduced Smilenski's prison sentence slightly, from four years to 3.5 
years, but confirmed a fine levied against him of two million euros. 
 Smilenski remains in prison pending his retrial on the forgery 
charge. 
 
¶4. (U) A separate trial on corruption charges against Smilenski, 
along with his co-defendant and former National Bank Governor Ljube 
Trpeski (ref B), is ongoing, with the prosecutor hopeful that the 
trial will conclude this March.  Smilenski, who in addition to his 
private business pursuits once served as director of Macedonia's 
Export Import (Ex-Im) Bank, and Trpeski are alleged to have colluded 
in engineering a fraudulent 30 million euro loan from the National 
Bank to the Ex-Im Bank in 2002.  The money was never repaid, and 
prosecutors say it ended up in various accounts controlled by 
Smilenski. 
 
¶5. (U) Due to the financial complexity of the case, the presiding 
judge recently asked outside financial experts to clarify certain 
legal and technical issues surrounding the transaction.  The 
experts' findings will be presented at the next session of the 
trial, scheduled for February 4.  Trpeski, who has family ties to 
Deputy Prime Minister Zoran Stavreski, has claims to have 
documentation showing that his approval of the loan was fully 
transparent and legal. 
 
Operation "Snake Eye" Nets Toll Collectors 
------------------------------------------ 
¶6. (U) Macedonians have long believed the road toll collection 
system is corrupt, with toll collectors often pocketing customer 
payments and sharing them with supervisors.  Starting in November, 
the police operation "Snake Eye" began targeting toll collectors, 
resulting in the arrests of 80 employees of the Public Enterprise 
for National Roads, including six managers.  The corrupt toll 
collection ring is estimated to have cost the government $18 million 
annually in lost revenues.  Although the police have not netted any 
"big fish" in the operation, the investigation is ongoing and the 
police continue to arrest suspects.  To date, however, no "Snake 
Eye" defendant has gone to court. 
 
Comment 
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¶7. (SBU) The government has shown in the Smilenski and Trpeski cases 
that it has the political will to investigate and prosecute 
prominent figures with close ties - past and present - to 
VMRO-DPMNE.  The GOM's handling of other corruption cases (ref b) 
also shows a willingness to prosecute officials who had ties to the 
governing party in the past.  The "Snake Eye" arrests demonstrate 
the GOM's willingness to go after a lucrative corruption ring that 
until recently operated freely, although the question still remains 
whether the government will prosecute top officials in the current 
government if they are found to have been involved in those corrupt 
activities.  End comment. 
 
Milovanovic