Aluminium Plant (KAP) State Guarantees - High-level corruption cases in the Western Balkans and Turkey

Abuse of official position

State Aid Law, State Audit Institution Law

Arrested suspects are Branko Vujović, former economy minister Dragan Kujović is former deputy economy minister, Zoran Martinović, Goran Nikolić from the Ministry of Economy, Damir Rašketić and Blagoje Miketić from the Ministry of Finance. Mitar Bajčeta, president of the State Aid Control Commission and other members of the commission Refik Bojadžić, Darko Konjević, Sonja Bećović, Irena Bokun and Vukica Perović.

Other suspects include Milo Đukanović and Igor Lukšić are former prime ministers. Radoje Žugić is former director of the Pension and Disability Insurance Fund and current governor of the Central Bank of Montenegro. Zoran Jelić is former director of the Employment Bureau. Branislav Janković is a Development Fund employee.

2010 to 2011

Public Finances

Đukanović's government made the first harmful decision in 2005, when KAP, the country’s biggest company at the time, was sold to a company registered in the offshore zone of Cyprus. Years later, the public learned that the buying company had a capital value of only €1,700. Now called the Central European Aluminium Company (CEAC), this firm is associated with Russian oligarch Deripaska’s companies hidden in offshore locations in Jersey and the British Virgin Islands (see here).

Đukanović' and his government were aware in the following years that the Russians made a profit from aluminium processing, did not invest in factory modernisation, falsified financial reports and falsely presented poor business results to ensure continued electricity subsidies and halve the number of employees.

Despite all this, the Montenegrin government concluded a settlement agreement with the Russian owners in 2009 approving €300 million of state aid for them, of which €131.6 million was from state guarantees for KAP loans. It is still not known what the loans were used for and where the money that the Russian owner borrowed from the parent company ended up (see here and here).

In 2016, Deripaska sued the government of Montenegro over the KAP aluminum plant's bankruptcy. In 2019, an arbitration court rejected Deripaska’s request for compensation.

In 2013, KAP fell into bankruptcy and in 2014 sold to a local company.

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in 2016, Deripaska opened a case before the Arbitration Institute of the Stockholm Chamber of Commerce seeking compensation from the the government of Montenegro. In 2019, the arbitration

court rejected the request.

investigation

In May 2011, members of the political party Movement for Change filed criminal charges against former prime minister and current president Đukanović and seven other people including Deripaska, government officials and KAP directors.

On 3 July 2013, the NGO MANS filed a criminal complaint with the supreme state prosecutor’s office against several government officials, including current and former prime ministers Đukanović and Lukšić.

The prosecutor’s office formed the case on 5 July 2013. The case is was at preliminary investigation stage.

In 2021, investigation led to arrest of twelve suspects, including former economy minister Branko Vujović.

The highest government officials and high-ranking members of the long-ruling political party in Montenegro are at the centre of the investigation. The political pressure put on the Montenegrin judicial system has made it impossible for the case to progress (see here).

This case exemplifies the effects of political pressure on the performance of the judiciary. It has been in the preliminary stage of investigation since a supreme state prosecutor’s office request in July 2013. The first arrests were made in April 2021.

High-ranking members of the ruling party and top government officials, including former prime ministers, the president of the State Aid Control Commission and a former economy minister, are involved. In April 2013, the Montenegrin State Audit Institution found that the government had issued state guarantees worth €135 million for loans made in 2010 and 2011 to KAP. The guarantees were given to KAP without adequate justification or counter-guarantees (see here).

Still ongoing as of June 2021

For Abuse of official position (Article 414 of the Criminal Code) sentence is from six months to five years (paragraph 1)

The supreme state prosecutor’s office filed an indictment charging 12 suspects with abuse of official position (Article 414, with regard to Article 49 of the Criminal Code)

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