Chinese Money in the Pockets of Serbian Politicians and Businesspeople
Investigations suggest that the Serbian state may have lost far more than $115 million in the reconstruction and modernization of the railway line from Novi Sad to Subotica and the border at Kelebija. Only three domestic subcontractors engaged over 80 of their own subcontractors, inflating project costs. Experts indicate that a significant portion of Chinese funding never reached Serbia, instead ending up in offshore accounts controlled by Serbian politicians.
Complex Subcontracting Network
- Three main domestic subcontractors managed more than 80 secondary subcontractors, many without public tender participation, proper references, or licenses.
- Deko Tim, owned by Nenad Ignjatović, transferred funds from the company to accounts of his brother and unmarried wife, later using cash to purchase real estate.
- At least 14 people are under investigation for causing approximately $115 million in state losses.
The Role of Chinese Contractors
In 2018, then-Minister Zorana Mihajlović signed a commercial contract assigning the main construction work to China Railway International Corporation (CRIC) and China Communication Construction Company (CCCC). The number of Chinese companies eventually increased to at least six, while the number of Serbian subcontractors became almost uncountable.
Example: Deko Tim
- Deko Tim signed at least 22 contracts worth €4.1 million with three Chinese and three Serbian companies.
- The company also engaged at least 10 additional subcontractors, paying around €1 million.
- Ignjatović transferred money to MD Construction (owned by his brother) and his own private enterprise Mediterraneo Tim, using the cash for real estate in Inđija and Beška.
- Payments to his unmarried wife’s company were made without any services being provided, allowing cash withdrawals.
Overcharging and Inflated Costs
- Example: Installing one meter of marble should have cost €20, but Deko Tim invoiced €150 per meter.
- According to Professor Dušan Dobromirov, contracts were deliberately inflated, with only a portion of the money spent on work, some retained by the contractor, and the majority returned in cash to those controlling the contract.
- This cash often goes through “paušalac” entrepreneurs, who provide fictitious invoices and pass most of the money back in cash, making the flow untraceable.
Starting and Karin Komerc
- Starting, a major subcontractor, reportedly paid average salaries of 300,000 dinars, far above what workers likely earned, raising questions about misappropriation at the top.
- Starting engaged 40 subcontractors, often without proper licensing or capacity.
- Karin Komerc reportedly earned $162 million, signing 28 contract amendments worth $24 million with just one Chinese company and employing at least 32 Serbian subcontractors.
Offshore Companies and Money Laundering
- Offshore firms were used to funnel funds abroad, minimizing taxes and hiding the origin of money from corrupt deals.
- Fictitious invoices allowed “larger players” to receive payouts without trace.
- Experts suggest that international investigations could reveal the real owners of offshore accounts, including those set up in Hong Kong.
Potential Consequences
- The total planned cost of the railway reconstruction was originally €330 million, but actual project expenses rose to $1.25 billion, almost four times higher.
- Arrests include former ministers Tomislav Momirović and Goran Vesić, their assistants, state company directors, and owners of private firms.
- Authorities aim to uncover the full corruption chain, including cash for daily allowances for “students” and payments for political support at rallies.
