Investor subsidies: Widespread misuse

Programme Director of Transparency Serbia, Nemanja Nenadic said that his organization found out that there were many misuses of subsidies allocated to foreign investors, and that some subsidy agreements did not even reach the Commission for State Aid Control. Editor-in-Chief of Biznis and Ekonometar magazines, Radojka Nikolic mentions companies Zamber and Mura as the examples of this misuse.

Appearing on N1 TV, Nemanja Nenadic added that a total of 860 million EUR of state aid was properly documented, and this includes subsidies in agriculture and some other types of subsidies, in addition to those allocated to foreign investors. Transparency Serbia looked into the work done by the Commission for State Aid Control and questioned the purpose of subsidies.

What they found out was a series of infractions, like the one regarding the allocation of subsidies to Geox.

“It seems that they (Geox) got more state aid than allowed by the regulation at the time. We cannot claim this with complete certainty, because certain documents still need to be revealed”, Nenadic says.

“The second violation of law was found in the documents that we had an insight into. Although, the Commission for Control of State Aid deals with recent subsidies, we have found out that the same companies that got the subsidies only recently, were also given the same subsidies in 2010 and 2013 without anybody reporting about it”, Nenadic points out.

Radojka Nikolic says that although the work done by the Commission should be public, they work pretty much in obscurity. “Their activities should be made public because we are talking about public (state) funds which spending needs to be controlled by the public. The only way of finding out what they do is if you go to their website. If Transparency Serbia did not get involved, the Serbian public would be kept in the dark”, Nikolic explains.

She also claims there are plenty of cases of abuse of power in allocation of subsidies, citing two examples – subsidies for the Zamber Company in Vranje and Mura in Pirot.

In the case of Zamber, a businessman showed up in 2008 claiming he would open a factory and employ between 2,000 and 3,000 people. He even hired a local company to do some work, was given several million dinars in subsidies, and then simply disappeared. The whole case did end up in court, but nothing happened.

The second case is of AHA Mura which acquired the Prvi Maj Company from Pirot. “It is unheard of what happened there. Although, Prvi Maj used to be one of the biggest companies in the country, the company was sold for only $2.1 million to Mura which received state subsidies in the amount of 6.5 million EUR. Mura actually did not spend a penny on buying Prvi Maj. There is another trick that was played here. In order to be eligible for a subsidy, Mura had to temporarily fire all of the workers who then had to register with their local job centre and were re-hired as new employees at a later date. Nobody has even mentioned that Mura itself has been in bankruptcy for almost a decade”, Nikolic points out.

“My opinion is that the best thing is not to have any subsidies. Have you heard of France or Germany giving subsidies? No. But what is happening here is wealthy countries coming here to Serbia only to get subsidies and pay much lower salaries than in their respective countries. What we should do is to create such conditions for doing business that you don’t have to beg anyone to invest here but rather investors would come on their own accord because here they would have lower taxes, a fast and efficient judiciary, less red tape and expeditiousness”, Radojka Nikolic concludes.

(Blic, 14.06.2017)



This post is also available in: Italiano

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One Reply to “Investor subsidies: Widespread misuse”

  1. jj says:

    It would be nice if the writer would say where these companies were from and what they make.
    In any event, it sounds like total robbery of the Serbian budget by foreign countries designed by the Serbian government.
    “My opinion is that the best thing is not to have any subsidies.”
    He’s right. They are just an easy way for crooks and dishonest people to siphon money from Serbia.

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