VZCZCXRO3798
PP RUEHIK
DE RUEHVJ #1294/01 3241026
ZNR UUUUU ZZH
P 201026Z NOV 09
FM AMEMBASSY SARAJEVO
TO RUEHC/SECSTATE WASHDC PRIORITY 0999
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 SARAJEVO 001294 
 
SENSITIVE 
SIPDIS 
 
BELGRADE FOR REGIONAL PRM (MOORE); EUR/SCE FOR FOOKS, 
JUKIC, BRYANT 
 
E.O. 12958: N/A 
TAGS: PHUM PREL KREF BK
SUBJECT: CORRUPTION, ETHNICITY, AND POLITICAL FAVORITISM 
KILL RETURN PROCESS IN BOSNIA 
 
REF: SARAJEVO 804 
 
SARAJEVO 00001294  001.2 OF 002 
 
 
¶1.  (SBU) SUMMARY: Several weeks ago, Bosnia's State 
Investigation and Protection Agency (SIPA) launched an 
investigation into the work of the state-level Return Fund 
and the State Commission for Displaced Persons and Refugees 
(DPRE Commission), due to numerous reports of alleged 
irregularities and corruption in the work of these two 
institutions.  According to these reports, decision makers 
(all from leading political parties) are believed to have 
mishandled millions of dollars of state and entity budget 
assistance, which was supposed to go to the neediest 
displaced persons and returnees in the country.  Instead, the 
funds were largely used to support political election 
campaigns in the forthcoming 2010 general elections. 
Unwilling to further participate in this nationalistic and 
criminal diversion of funds, Assistant Minister of Human 
Rights and Refugees (MHRR) Mario Nenadic recently resigned, 
after being verbally (and, we assess, falsely) attacked by 
the ethnic-Serb Secretary of MHRR for favoring the return 
process at the expense of local integration.  Nenadic was a 
rare State official who was both capable and non-political 
(belonging to no party), and was one of Post,s reliable 
contacts for more than a decade.  These most recent 
developments are likely to further slow the already-fragile 
return process in Bosnia.  END SUMMARY. 
 
Politicians Devour Return Assistance 
------------------------------------ 
 
¶2. (SBU) SIPA recently launched an investigation into work of 
the Return Fund and DPRE Commission on the basis of numerous 
criminal reports on irregularities and corruption in the work 
of these two institutions. It is unclear who exactly 
submitted these reports, but some are believed to have come 
directly from the returnee associations in the field. One of 
the reports alleged that the Director of the Fund (which is a 
State-level operational institution responsible for payments 
for projects that have been already agreed upon by the DPRE 
Commission members) Mladjen Bozovic, used the Fund's money to 
pay for his studies in Serbia, to buy expensive gifts for 
colleagues, to buy a rotary cultivator for his brother, to 
pay USD 37,000 for an expensive SUV for the office, and so 
forth.  Bozovic didn't deny these claims, but according to 
local press, said that "others were doing the same thing," 
and called such accusations "political manipulation at the 
time when he was up for re-election to director,s position 
of the Fund."  Unfortunately, Bozovic isn't the only State 
level official responsible for Annex VII implementation who 
is alleged to have profited from funds intended for returnees 
who are in greatest need of assistance. 
 
¶3. (SBU) Responsibility for implementation of Dayton's Annex 
VII was transferred from the Office of the High 
Representative (OHR), in coordination with OSCE and UNHCR, to 
Bosnia's state and entity governments in 2002, though OHR 
continues to monitor Annex VII issues periodically.  NGO 
representatives and UNHCR told Post that the whole system of 
State level institutions responsible for Annex VII 
implementation in Bosnia has been in disarray for more than 
two years.  HRR Minister Safet Halilovic (a Bosniak from 
SBiH), Deputy Minister Slavko Marin (a Croat from HDZ-BiH), 
and Secretary of the Ministry Dragomir Kovac (a Serb from 
SNSD) have established three parallel, strictly ethnic/party 
based decision making channels in one ministry, which has led 
to a disregard for all objective criteria determining 
assistance needs in the field. 
 
¶4. (SBU) For example, for FY2009 (as in past years), the 
entity- and state-level governments have provided USD 27.8 
million in joint funds to support the return process in more 
than 30 municipalities across Bosnia.  Beneficiaries of 
assistance should have been selected on the basis of 
clearly-defined criteria, which stipulate that the 
municipalities with the largest number of displaced persons, 
returnees, and destroyed dwellings should take priority for 
projects.  However, nine Commission members (three from each 
constituent people) have entirely disregarded these criteria 
and instead selected municipalities in which they feel they 
could score extra political points in the 2010 general 
elections (as the projects approved now are likely to be 
implemented just before the elections). 
 
Mosques, Chapels, and Churches 
------------------------------ 
 
¶5. (SBU) Besides the use of the above-mentioned joint funds, 
Commission members have also agreed to add an additional USD 
 
SARAJEVO 00001294  002.2 OF 002 
 
 
2.25 million annually as "intervention funds" to support 
sustainability of returnees in the most critical areas of the 
country.  We have been provided documentation on the use of 
this intervention fund; more than half of 114 nominated 
projects on the list are intended to be used to repair or 
build religious objects, i.e. Catholic and Orthodox 
churches/chapels, mosques, and so forth.  Unfortunately, we 
assess this was not done to facilitate the needs of the 
believers in these communities, but to please religious 
officials who will, in return, use the pulpit to promote 
given parties.  Other listed projects have been directly 
proposed by municipal mayors, not returnee associations, or 
municipal return commissions.  Some projects were even not 
intended to support minority returns, but "local integration" 
instead (that is, assistance to those who do not wish to 
return to their places of origin, something that has never 
been funded and should legally not have been funded through 
this system).  Some returnee associations claim beneficiary 
lists for some municipalities were provided by the MHRR or 
DPRE Commission, while in principle the lists should be going 
from the municipalities to the Ministry and DPRE Commission. 
As a result of this, some associations have filed criminal 
reports to SIPA. 
 
"I'll Never Work Again for Bosnia,s Government" 
--------------------------------------------- -- 
 
¶6. (SBU) Irregularities in the work of the DPRE Commission 
and the Fund, and frustration in the work of addressing the 
needs of the remaining 130,000 displaced persons and refugees 
prompted MHRR Assistant Minister Mario Nenadic to resign 
after more than 16 years with the Ministry.  Nenadic was a 
long-time Embassy contact and probably one of the most 
professional and hardworking individuals in Bosnia's 
state-level government.  A State official with no party 
affiliation, he told us he could no longer stand the level of 
corruption and thievery that had become so obvious in the 
MHRR, the Fund, and the Commission.  Nenadic also was the 
central author and engine pushing for adoption of the 
much-needed revised Annex VII strategy, a document that had 
clearly spelled out what remained to be done in order to 
close the Annex VII chapter in Bosnia. 
 
¶7. (SBU) Nenadic was also the only person working on a 
regional approach to solving refugee issues, and had 
institutional knowledge about the whole process from the 
beginning.  He was verbally attacked by the Secretary of the 
MHRR Dragomir Kovac, who told him that he was intentionally 
promoting returns only, while disregarding the right of 
persons to local integration (something the Serb 
parliamentarians used as a reason to kill the adoption of the 
Strategy in Parliament in June), an option widely advocated 
and preferred by RS Prime Minister Milorad Dodik,s SNSD.  As 
a result of this incident, and the mounting stress of his 
work, Nenadic suffered a mild heart attack. On his way to the 
hospital, he told us, he decided to submit his resignation, 
telling us he would never again work for a government 
institution. 
 
Comment 
------- 
 
¶8. (SBU) Minority returnees in Bosnia struggling to survive, 
and those displaced persons and refugees who are still 
seeking reconstruction and return assistance, have once again 
been cheated by corrupt officials in the DPRE Commission and 
the Fund.  With the collapse of the Annex VII implementation 
process, it is illusory to expect that any greater progress 
would be achieved in the months to come.  We will continue to 
follow the SIPA investigation of the DPRE Commission and the 
Fund.  However, it seems now that the chances of reforming 
the system to promote meaningful continuation of returns are 
quickly dwindling.  Political recrimination for misuse of the 
Fund will likely follow, with political opportunists blaming 
competitors' parties and possibly the international community. 
ENGLISH