World

Bosnia's Billion-Dollar Caper

By CBSNews.com staff CBSNews.com staff

August 17, 1999 / 4:20 PM EDT / CBS

Shock waves continued to reverberate throughout the international donor community Wednesday in the wake of a report alleging that Bosnian leaders have socked away more than a billion dollars since their civil war ended in 1995. The West's top peace envoy to Sarajevo vowed to intensify efforts to fight widespread corruption and fraud in the impoverished Balkan country.

Â"Every single dollar, every single mark that is being spent on corruption is a crime and we are not going to tolerate this,Â" Wolfgang Petritsch, high representative to war-ravaged Bosnia, said at a news conference.

Petritsch was commenting on a New York Times report that nationalist Bosnian officials have stolen as much as $1 billion from public coffers through tax evasion and embezzlement.

Â"There are indications that some of the leaders are involved in this,Â" the Austrian diplomat said.

But Petritsch denied certain details of Times piece, particularly the existence of a 4,000-page report that the article said came from an anti-fraud unit set up by Petritsch's office.

He also could not confirm the estimate that $1 billion had been stolen.

However, Alexandra Stiglmayer, a spokesperson for the Office of the High Representative, confirmed the report.

"Most of the money that has been lost is local taxpayers' money. The money has been taken from the budgets. The figure is probably higher than $1 billion," Stiglmayer said.

The Office of the High Representative is the international agency responsible for carrying out civilian aspects of the Dayton peace agreement.

The Times, which cited the figure, said the anti-fraud unit had exposed so much corruption that relief agencies and embassies were reluctant to publicize the thefts for fear of frightening away international donors.

Petritsch, who this month took over from Spanish diplomat Carlos Westendorp, stressed that tackling corruption had been high on the West's agenda for some time.

Â"So for us this is not a surprise,Â" Petritsch said. Â"We have taken this seriously for quite some time and this is only a good opportunity to redouble our efforts to tackle this issue.Â"

Earlier, a Bosnian leader angrily rejected the Times report.

Â"Someone has made a big mistake here,Â" Alija Izetbegovic, the Muslim member of Bosnia's collective presidency, said in a statement carried by the Dnevni Avaz newspaper.

He said the aim of the article was to portray Bosnian leaders as thieves by using Â"false and secretÂ" reports.

Many key Bosnian leaders were said to be on vacation and could not be reached for comment. The Croat member of the three-member presidency, Ante Jelavic, had seen the Times article but had no comment, his aide Zeljana Zovko said.

Donor nations have poured in $5.1 billion since the end of the war in 1995 to reconstruct infrastructure and try to stitch togeter a viable government on all levels.

According to the Times, the OHR's anti-fraud unit is investigating 220 cases of alleged fraud and corruption. The pilfered funds were meant to help rebuild Bosnia's roads, buildings and schools and to provide municipal services in towns across the country.