Newsroom
OSCE condemns financial mismanagement in Bosnia and Herzegovina canton
SARAJEVO 14 December 2000
SARAJEVO, 14 December 2000 - Widespread budgetary improprieties, waste, and financial mismanagement in the Una-Sana Canton (USK) government, much of it dating back several years, have been discovered in a report prepared by the OSCE Mission to Bosnia and Herzegovina with the co-operation of the USK Governor, Muhamed Beganovic.
Shortly after taking office earlier this year, Governor Beganovic requested OSCE assistance in the canton's restructuring and downsizing process with a view to improving the overall quality of public and financial administration. The most recent assistance to USK came in the form of a financial management assessment, which was conducted in November, to determine the fiscal state of the canton and the financial impact of the administrative downsizing.
While only a preliminary estimate, OSCE has determined that egregious financial mismanagement and negligence have contributed to an estimated deficit of 51 million convertible marks (KM), or 54.3% of the expected 94 million KM in collected revenues during the 2000 budget year.
The following have contributed to the essential bankruptcy of USK:
The Una-Sana Canton, through the power entrusted to the Office of the Prime Minister, has issued "guarantees" over the last several years that allow state and private enterprises to borrow money from the banking community. Should these state and private enterprises not repay the loans, USK is solely responsible for repayment. It is in no position to do this in its current crippled financial condition.
Over the last two years, due to various state and private enterprises' inability or unwillingness to repay these loans, USK has incurred significant financial burdens. In total, these are estimated to be 5.3 million KM. Examples of enterprises that loans were provided to include: Sipad of Kljuc; Elti Elrad of Sarajevo; Elti of Slovenija; Sana of Kljuc; Energoinvest Politilenka of Bihac; and the BiH Railway. In 2001, provided these and other enterprises continue to forfeit their obligations, USK will be obliged to repay approximately 2 million KM.
USK has also provided loans directly to state enterprises and other organizations under the assumption that these funds are properly returned. To date, no state enterprise has returned these funds. Examples of this include, yet may not be limited to, the following: Agrokomerc of Velika Kladusa; Saniteks of Velika Kladusa; Unatrans of Bihac; Biteks of Bihac; the SDA (5,000 KM); the Islamic Community Committee (5,000 KM); SO of Bosanska Krupa; and the Ministry of Internal Affairs. In total, these loans are estimated at 2.75 million KM.
The USK government also increased the payments made to political parties immediately preceding the General Elections, from 410,000 KM to 660,000 KM. Irrespective of the bleak financial state of the Canton, and of the other outstanding obligations, the Prime Minister explicitly requested that the transfer of funds be allowed to take place after a temporary block by the payment bureau.
OSCE Head of Mission Ambassador Robert L. Barry clarified in a letter to USK Prime Minister Avdic this week that the PEC had no legal authority to continue requesting the blocking of the disbursement of the funds from the payment bureau. However, Barry severely criticized Avdic for pressing for this irresponsible action at a time when the Canton's budget is in crisis.
"The OSCE is alarmed at the highly irresponsible acts of the Una-Sana Canton authorities, which have contributed to the gross state of financial affairs in the canton, and allowed primary social services necessary for a minimum quality of life to be ignored," said Ambassador Barry. "The government of the Una-Sana Canton must manage cantonal resources to serve the citizens of the canton, not for narrow political or short-term interests."
The OSCE is prepared to continue its work with the Una-Sana Canton, provided that the new government dedicates itself to transparency and fiscal responsibility and makes a break with the practices of the past.
For more information, please contact OSCE Spokesperson Luke Zahner at ++387/(0)33 292-449 or ++387/(0)66 144-311.
The OSCE established its present Mission to Bosnia and Herzegovina on 18 December 1995. In accordance with the General Framework Agreement for Peace (GFAP), the OSCE Mission activities are to: promote Democratization and the building of a vibrant civil society, foster the development of professional journalism and monitor the rights of journalists, monitor and advance the Human Rights situation, supervise the conduct of Elections, and encourage Regional Stabilization through arms control and confidence and security-building measures. The OSCE Mission continues to work closely with other international organizations and local institutions to implement the Dayton Peace Accords.
Shortly after taking office earlier this year, Governor Beganovic requested OSCE assistance in the canton's restructuring and downsizing process with a view to improving the overall quality of public and financial administration. The most recent assistance to USK came in the form of a financial management assessment, which was conducted in November, to determine the fiscal state of the canton and the financial impact of the administrative downsizing.
While only a preliminary estimate, OSCE has determined that egregious financial mismanagement and negligence have contributed to an estimated deficit of 51 million convertible marks (KM), or 54.3% of the expected 94 million KM in collected revenues during the 2000 budget year.
The following have contributed to the essential bankruptcy of USK:
The Una-Sana Canton, through the power entrusted to the Office of the Prime Minister, has issued "guarantees" over the last several years that allow state and private enterprises to borrow money from the banking community. Should these state and private enterprises not repay the loans, USK is solely responsible for repayment. It is in no position to do this in its current crippled financial condition.
Over the last two years, due to various state and private enterprises' inability or unwillingness to repay these loans, USK has incurred significant financial burdens. In total, these are estimated to be 5.3 million KM. Examples of enterprises that loans were provided to include: Sipad of Kljuc; Elti Elrad of Sarajevo; Elti of Slovenija; Sana of Kljuc; Energoinvest Politilenka of Bihac; and the BiH Railway. In 2001, provided these and other enterprises continue to forfeit their obligations, USK will be obliged to repay approximately 2 million KM.
USK has also provided loans directly to state enterprises and other organizations under the assumption that these funds are properly returned. To date, no state enterprise has returned these funds. Examples of this include, yet may not be limited to, the following: Agrokomerc of Velika Kladusa; Saniteks of Velika Kladusa; Unatrans of Bihac; Biteks of Bihac; the SDA (5,000 KM); the Islamic Community Committee (5,000 KM); SO of Bosanska Krupa; and the Ministry of Internal Affairs. In total, these loans are estimated at 2.75 million KM.
The USK government also increased the payments made to political parties immediately preceding the General Elections, from 410,000 KM to 660,000 KM. Irrespective of the bleak financial state of the Canton, and of the other outstanding obligations, the Prime Minister explicitly requested that the transfer of funds be allowed to take place after a temporary block by the payment bureau.
OSCE Head of Mission Ambassador Robert L. Barry clarified in a letter to USK Prime Minister Avdic this week that the PEC had no legal authority to continue requesting the blocking of the disbursement of the funds from the payment bureau. However, Barry severely criticized Avdic for pressing for this irresponsible action at a time when the Canton's budget is in crisis.
"The OSCE is alarmed at the highly irresponsible acts of the Una-Sana Canton authorities, which have contributed to the gross state of financial affairs in the canton, and allowed primary social services necessary for a minimum quality of life to be ignored," said Ambassador Barry. "The government of the Una-Sana Canton must manage cantonal resources to serve the citizens of the canton, not for narrow political or short-term interests."
The OSCE is prepared to continue its work with the Una-Sana Canton, provided that the new government dedicates itself to transparency and fiscal responsibility and makes a break with the practices of the past.
For more information, please contact OSCE Spokesperson Luke Zahner at ++387/(0)33 292-449 or ++387/(0)66 144-311.
The OSCE established its present Mission to Bosnia and Herzegovina on 18 December 1995. In accordance with the General Framework Agreement for Peace (GFAP), the OSCE Mission activities are to: promote Democratization and the building of a vibrant civil society, foster the development of professional journalism and monitor the rights of journalists, monitor and advance the Human Rights situation, supervise the conduct of Elections, and encourage Regional Stabilization through arms control and confidence and security-building measures. The OSCE Mission continues to work closely with other international organizations and local institutions to implement the Dayton Peace Accords.