Milosevic era, Serbian and Cyprus bank connections
Djordjevic, a Serbian businessman, is suing the bank to the tune of some 360,000 Deutschmarks (£105,000) for damages. He claims the bank illegally held his money in an account, and as a result of his inability to have access to the funds, he missed out on a number of business contracts.
In 1994, at the height of the Bosnian war, Djordjevic attempted to ship cotton into Yugoslavia with a United Nations permit. He says his Bulgarian trade partner deposited about £180,000 in Deutschmarks into his company account in Belgrade, and that the money was supposed to be transferred to Beogradska Banka in Cyprus.
However, the transfer was blocked. After a long legal wrangle with Beogradska, Djordjevic found his money had been moved into an account with the Popular Bank. A company he had never heard of, Antexol Trade Ltd, controlled the account
When the accounts were examined in court, Djordjevic discovered about $300,000 had been transferred to Antexol's Popular Bank account, which bore the same number as his account with Beogradska. Djordjevic, who finally received his money too late to save his cotton deal, then decided to take legal action against the Popular Bank and Antexol Trade Ltd.
His lawyers will be arguing that Djordjevic's company, Genemp Trading, stumbled into the web of Serbian cash laundering committed via a number of alleged front companies on the island. Yugoslavia was subject to a strict UN embargo at the time.
To build on their case, Djordjevic's lawyers yesterday summoned Batic, who provided background information on the siphoning of money from the former Yugoslavia to offshore companies in Cyprus during the civil war in that country.
From the outset, the Popular Bank's lawyer Kikis Tallarides objected to the testimony, saying it was irrelevant to the trial. But Judge Nicholas Santis overruled the objection, allowing Batic to continue.
According to Batic, in the early to mid-1990s a number of "phantom companies" - including Antexol - were set up in Cyprus. During this time, he said, hundreds of millions of dollars were transferred to these fronts, but the money was in fact controlled by the Cyprus branch of Beogradska Banka, the largest Yugoslav bank. Batic said he received much of his information from Carla del Ponte, prosecutor for the International Criminal Tribunal for the former Yugoslavia (ICTY).
During his term as Serbian Justice Minister, Batic had come to the island to meet with former Central Bank governor Afxentis Afxentiou for assistance in his investigations. Cyprus had endorsed the UN sanctions against the former Yugoslavia, and banking authorities here were fully aware of what they could and could not do with money from that country.
The former Justice Minister said couriers, some of them identified as employees of Beogradska, made regular trips to Cyprus from Belgrade, arriving at Larnaca airport with bags or suitcases full of cash. "Pilots and even passengers on these flights saw the bags," said Batic. The money was counted and then deposited into the Popular Bank accounts of the front companies, because, under the UN embargo, Beogradska could not legally receive the money.
The Cyprus branch of Beogradska was managed by one Borka Vucic who, according to Batic, was acting on the instructions of the late Serbian strongman Slobodan Milosevic. She was also the person who orchestrated the creation of the offshore companies, he claimed. The corporations were registered by the Tassos Papadopoulos law office, he said.
The court heard how Antexol was established in the name of Mrs. Ljiljana Radenkovic, who at the time was working in London for an Anglo-Yugoslav bank. She had never heard of Antexol and had no idea she was the company's owner until years later. Antexol was struck off the company registrar's record in August of 2004 as a defunct company, just months before a hearing in November of the same year.
However, Djordjevic's lawyers have secured the company's banking records from the year of its inception in 1992 until to 2004. According to Batic, the front companies carried out their transactions through the Popular Bank, without permission from the owners.
The flow of Batic's testimony was interrupted several times, with Tallarides raising one objection after another. Tallarides asked the witness how he could be certain the cash was dirty, given that it was cleared by Cypriot customs.
"Embargo or no embargo, when you have money being carried in plastic bags like that. well, it's easy to figure out the rest," Batic replied. The trial resumes on the 27th. The plaintiff's next witnesses are expected to be a customs officer and an employee of the Central Bank.