ANALYSIS 

Eleven years after embracing capitalism, Belgrade has cancelled almost 30 per cent of all privatisation deals because of corruption or mismanagement. Yet the system remains open to abuse.

Stevan Dojčinović

 Valjevo, Belgrade, Podgorica and Warsaw

The now-abandoned Mašinoservis factory site is just one example of poor privatisation in Serbia (Photo: S Dojčinović)

Just two years after serving a prison sentence for attempting to kill four police officers during a gun battle in Belgrade, Milan Lazarević decided it was high time he cashed in on Serbia’s privatisation programme.

Seeing no reason why his criminal record should hold him back, Lazarević set his sights on buying a newly-privatised machine-parts factory, Mašinoservis, in his home town of Valjevo in south-eastern Serbia.

Turns out he was right his criminal past would be no hindrance to the sale. Serbia’s ownPrivatisation Agency signed off on the deal in November 2005.

In stark contrast to other former communist EU states such as Poland, Serbia was slow to introduce background checks on buyers to prevent criminals profiting from the sale of state companies.

This lack of state control created a perfect environment for widespread criminal activity, including illegal asset-stripping and money laundering.

The scale of corruption and mismanagement was such that Serbia has, to date, cancelled 629 out of a total of 2,281 privatisation deals because the new owners stopped production, stripped assets and failed to pay workers.

Thousands of Serbian workers have also lost their jobs as a direct result of mismanaged privatisation.

Milan Lazarević managed to buy a newly privatised company despite having a criminal record (Photo: Serbian Police)

While would-be investors are now required to obtain certificates stating they do not have a criminal record and are not facing charges, there are still loopholes in the system that allow criminals to profit from sales.

Lazarević, who secured state approval to buy Mašinoservis, is now back in a prison cell on trial for allegedly running a racketeering enterprise that extorted payments and favours from Valjevo’s bar and restaurant owners.

He is also accused of ordering the murder of a local underworld rival and has since been charged with tax-evasion, insurance fraud and misappropriating government funds.

‘Only Fools Talk’

Twenty-five years ago, Mašinoservis was a successful state-owned enterprise, employing 130 people in Valjevo, 100 km from the capital Belgrade. The factory once had offices throughout the former Yugoslavia.

Today, the building is locked up with heavy chains but it is just possible to peer into the courtyard. The factory is derelict and abandoned; the windows broken and set in half-crumbling walls.

Milivoj Savić, a former Mašinoservis employee, is one of many Serb victims of failed privatisations (Photo: S Dojčinović)

On paper, Mašinoservis continues to employ 12 staff, all of whom say they have not worked or been paid in nine years. Locals in outlying villages who once depended on the factory for work have been forced to scrape a living doing odd jobs whenever possible.

Milivoj Savić, 60, was the only worker brave enough to speak out. His wife protested throughout the interview at their home near the centre of Valjevo, angrily saying: “Only fools talk.”

Just mentioning the name Lazarević strikes fear in the hearts of people here.

Undeterred, Savić, nicknamed Bosanac, insists that talking to a journalist is pretty much his last option. Partially-paralysed after suffering a stroke, he can neither work nor retire because Mašinoservis never paid his salary or pension contributions after privatisation.

He says from the moment Lazarević arrived at the factory, there was little evidence the new owner intended to invest and try to turn the company around. Instead, the new boss met the workers and told them to go home.

“Lazarević said: ‘I have all your phones here in the company and when I find some work, I will give you a call.’ However, he sold all the machines and there’s nothing left down there [at the factory],” says Savić.

Desperate, Savić finally managed to meet Lazarević and pleaded with him to at least pay his pension contributions so he could retire.

“How do you want me to beg you, like a father, like a God, like a boss? He told me: ‘Bosanac, you are the age of my father, I’ll respect you for that and have no worries’… but he never paid,” says Savić.

He was the only worker brave enough to seek a face-to-face meeting.

The Deal

Lazarević bought the company in September 2004, paying the then owner, Vladan Krunić, €13,000 in cash. He was duly granted power of attorney, giving him full control of the company, until the sale could be officially approved by Serbia’s Privatisation Agency.

As the newly-privatised company remained subject to state supervision, only the agency could formally sign-off the sale, which it duly did on November 15, 2005.

Mašinoservis was originally privatised in December 2002 with Krunić paying around €40,000 for the firm. He says he couldn’t turn the company into a profitable enterprise and was unable to pay the workers, all of whom were on strike at the time of the resale to Lazarević.

During Krunić’s time as owner, the Privatisation Agency inspectors filed two critical reports over his management of the company; one in October 2003 and another in June 2004.

Both reports state Mašinoservis workers’ had not been paid since privatisation and that production had ceased, warning the company might have to be taken back under state control.

Extraordinarily, just five months later, inspectors revisited the factory that had been under Lazarević’s ownership for just a few weeks to find the workers unwilling to complain about anything at all, despite still not having been paid.

Asset Stripping

According to former owner Krunić and employees, Lazarević immediately set about stripping Mašinoservis’ assets.

Krunić claims Lazarević sold key machinery worth €10,000 within the first few months of taking control of the factory.

Lazarević also allegedly sold one of the factory buildings for €41,000 in cash, according to charges brought by Serbia’s tax office. They claim he sold the structure without declaring the sale, so evading paying tax.

BIRN has obtained records that show Lazarević mortgaged the factory site, although it has so far been impossible to establish exactly when he took the mortgage or the sum borrowed against the land.

Lazarević has not directly commented on any of the allegations or on his ownership of Mašinoservis, but his lawyer, Miodrag Đuričić, told BIRN that there is “no evidence against him”.

Regarding Lazarević’s management of Mašinoservis, Đuričić said that production and administration problems predated his client’s ownership of the firm.

While extreme, the Lazarević sale is far from unique in Serbia. This was just one of thousands of small enterprises sold off by the state, many of which will have been subject to illegal asset stripping and other criminal activities.

Not to mention the many Serbs who lost their livelihoods in a country where the unemployment rate stood at 20 per cent in 2010. The number of jobless is expected to continue to rise in Serbia, as the global recession bites further.

Serbia has not yet completed the privatisation process and has another 435 companies to sell, according to Privatisation Agency records.

Fake Buyer Background Certificates

Diagram – How ruthless buyers scam privatisation checks

Despite introducing tougher measures to prevent criminals using the privatisation process to launder money or for other illegal purposes, the system remains open to abuse.

Although buyers have been required since 2008 to present certificates from the police or the courts stating they do not have a record, criminals can still circumvent the system.

Some bidders use proxy buyers who do not have any criminal past, many place bids via offshore companies and others even forge the certificates.

“If someone comes with a forged certificate, how could I know that it is counterfeit? These are criminal acts; it must be for someone else to investigate,” says Dušan Belanović, director of the Privatisation Agency’s communications centre.

Asked why they don’t send the certificates to the police for checks, Belanović says the agency doesn’t have enough staff to conduct these types of checks.

In addition, Serbia is unable to ascertain the origin of money used to buy businesses through offshore companies.

Fugitive Darko Sarić was charged in 2010 by the Serbian authorities on suspicion of running an international drugs ring, thought to have smuggled around 3.5 tonnes of cocaine into Europe, and of laundering as much as €30 million through Serbia’s privatisation process.

Documents obtained through the state prosecution service and business registers in the US and Serbia, show Sarić managed to buy Serbian firms through offshore companies registered in the US state of Delaware.

Because the Privatisation Agency did not attempt to establish the origins of the offshore company funds, the authorities claim Sarić could have freely laundered millions of euros earned by illicit means.

The importance of robust buyer background checks has been demonstrated time and time again in Serbia. This failure enabled Zoran Copić to buy more than 15 companies in Serbia and Bosnia since 2005, despite being tried for cigarette smuggling at the time of the purchases.

The trial opened in 2004 and is yet to be concluded. He was arrested in Bosnia this April and charged with money laundering offences and is expected to stand trial soon.

Copić was also charged by the Serbian police in late 2010 with illegally mortgaging and stripping assets from some companies.

Law ‘Riddled with Weaknesses’

“The Privatisation Agency is a government body without any accountability,” says Verica Barać, president of Serbia’s corruption council

At the heart of the problem lies badly drafted and poorly enforced privatisation laws.

“Privatisation is riddled with incomplete regulations, weaknesses, gaps and holes,” says Vladimir Goati, a politics and economics expert who is also director of Transparency Serbia.

“Dozens of companies were sold… without established conditions that the owner is obliged to act responsibly toward the company and its employees.”

Verica Barać, president of Serbia’s corruption council, agrees: “It enabled tycoons and criminals to formally, by buying companies, actually come into vast estates.”

But Barać says the biggest problem with the current system is that there is still no real external control over the privatisation process.

“The Privatisation Agency is a government body without any accountability. They create, implement and control the privatisation process, but they are not controlled by any one,” she says.

Branko Pavlović, a former director of the Privatisation Agency, says the law is also flawed because it allows buyers to pay for companies in up to six separate instalments, giving the new owner time to sell off assets before completing the purchase.

“After they get the money [from asset stripping] it does not occur to them to pay the rest of the purchase price,” he says. The state is then forced to take back a virtually worthless shell of a firm.

Barać and Pavlović say that the laws were effectively approved by the World Bank and both claim the bank put Serbia under pressure to get the privatisation process rolling quickly.

“[The law] is the concept of the World Bank, based on liberal economics. It was important just to privatise, which meant institutions were not important, the property was not important, the processes were not important, the origin of money was not important,” says Barać.

The man who drafted the privatisation legislation in 2001, Aleksandar Vlahović, failed to respond to numerous requests for an interview placed via his assistant at his private consulting company Eki Investment.

Privatisation Chief ‘Forced Out’

“I had pressure from all sides,” says Branko Pavlović, former head of Serbia’s Privatisation Agency (Photo: S Dojčinović)

Pavlović was director of the Privatization Agency for just four months between April and July 2004.

Initially appointed by Dragan Maršićanin, the then minister for the economy, he claims he was sacked because he tried to reform how the privatisation agency was run and to confront crime in privatisation.

Pavlović says that from the moment he was appointed director at the agency, he was immediately being pressured from all sides, “politicians, international organisations and domestic tycoons”.

According to Pavlović, shady businessmen would attempt to approach him through a front person.

“Tycoons do that, they find someone who you know and then that person tells you ‘hey Branko, this businessman just asked me, do you want to go to dinner with us’ and I would say not dinner but he can come to the agency and we can schedule a meeting,” says Pavlović.

But Pavlović claims that as soon as he tried to terminate a suspicious privatisation deal that he was certain involved corruption, he was immediately fired along with the economy minister who appointed him.

Today he works as a lawyer and adviser to minority shareholders of companies in the process of being privatised.

The situation is not much different in other Balkan states, where privatisation has offered a perfect opportunity for shady deals, as witnessed in Bosnia, Macedonia and Montenegro.

In Montenegro, it is almost impossible to gauge the level of corruption because the details of sales are shrouded in secrecy, since the state hasn’t made the records public.

Podgorica began its privatisation process back in 1997 and around 85 per cent of companies are now privately-owned. NGOs have claimed many of these deals have been subject to high-level, serious corruption.

Slow but Sure Sales in Poland

“If we have any doubts about whether it is a legitimate investor, we disqualify them,” says Krzysztof Walenczak, Poland’s deputy treasury minister (Photo: S Dojčinović

It couldn’t be more different in Poland, where the state has taken its time over privatisation. Warsaw has developed a system focused on rooting out corruption and organised crime over the two decades since its transition from communism to capitalism.

Twenty years after beginning its privatisation programme, five per cent of Polish companies are yet to be sold, says Ireneusz Jablonski, an economics expert and member of the Adam Smith Institute in Warsaw.

Krzysztof Walenczak, deputy minister at the Polish Treasury which oversees the privatisation process, acknowledges progress has been slow but underlines they put a great deal of effort into finding solid investors.

“When we are selling a company we go to 15 different countries. We go to every financial centre… we have our own internal services that track potential investors. If we have any doubts about whether it is a legitimate investor, we disqualify them,” he says.

Walenczak says that off-shore companies have been excluded from the privatisation process for some time in Poland, because they cannot track the origin of the funds.

Unlike in Serbia and many Balkan states, the work of the ministry is subject to constant review by various agencies, including the powerful Central Anti-Corruption Bureau (CBA).

The CBA targets high-level corruption and reports directly to the prime minister.

“We are a unique agency in the EU because only our bureau has such powers,” says Pawel Wojtunik, director of the CBA. “We can work like the police… and use all ‘special measures’ as the secret service does. We can check the highest officials in Poland.”

The CBA also investigates sales that seem suspiciously low priced, ensuring the state gets the best return possible and rooting out corruption. Offshore companies give Poland a wide berth as they often don’t want to attract the attention of the CBA.

“We had one such case involving the privatisation of shipyards,” says Wojtunik. “A firm from a ‘risky’ country was interested in the sale until the media published information that the CBA was looking into the case. The firm withdrew its offer.”

EU Demands Serbia Investigation

“Three to five per cent of GDP is from money laundering activities [in Serbia]” says Vincent Deger, EU ambassador to Serbia (Photo: Media Centre, Belgrade)

While it seems clear that the Poles see crime-free privatisation as essential for the state and the economy, looming EU membership appears to be more of an incentive for Belgrade to revisit its privatisation process.

In June last year, the EU demanded Serbia re-examine 20 deals suspected of either involving high-level corruption or of failing to comply to privatisation rules.

To sweeten the pill, however, the Serbian government also received in July a €2.2m EU grant to help the state more effectively combat money laundering.

Vincent Deger, the EU ambassador to Serbia, notes that countries in transition to capitalist economies are at greater risk of money laundering because of the privatisation process, but warned the situation was of particular concern in the Balkans.

“Three to five per cent of the gross domestic product is from money laundering activities [in Serbia]. It’s a high risk… it threatens the smooth functionality of the economy and affects the whole of society,” he says.

Despite making much noise over Serbia’s willingness to confront the criminalisation of its privatisation process, not everyone’s convinced.

Barać, the anti-corruption council chief, is particularly unimpressed and doubts that even pressure from the EU will make much difference.

“The council has shown a number of privatisation cases and delivered documentation to the prosecution, but so far there haven’t been any investigations,” she says.

As Lazarević sits in prison, facing numerous charges of continued criminal behaviour, he remains the official owner of the now devastated machine-parts factory.

While the man the state granted ownership made thousands out of the Mašinoservis by selling assets and mortgaging land, many workers have been reduced to scraping a living  and surviving day to day.

Serbs are wondering when their leaders will finally ensure companies, and their livelihoods, are not placed in the hands of ruthless criminals out to make a quick buck.

Stevan Dojčinović is a Belgrade-based journalist. This article was produced as part of the Balkan Fellowship for Journalistic Excellence, an initiative of the Robert Bosch Stiftung and ERSTE Foundation, in cooperation with the Balkan Investigative Reporting Network.

Balkaninsight – 02 NOV 2011

Employers across Europe have read workers’ private emails and chat conversations by illegally using secret computer surveillance software; in Romania employees claim bosses have used private information gained to blackmail and bully them.

Most workers across Europe seem unaware that bosses can read their private emails and chat conversations (Image: Partners for Serbia).

Most Romanian workers log on to their computers each morning oblivious of the fact their bosses can not only monitor what websites they visit, but measure exactly how much time they spend working or surfing the net.

Of greater concern, hardly anyone realises their employer can, with the right software, intercept private emails sent from personal accounts such as Gmail or Yahoo!

“Employees should be aware that the content of their emails could be read,” says LF, an executive at Netsec Interactive Solutions, a Bucharest-based IT security consultancy, who asked not to be named.

“Sadly, although initially designed to be used constructively, IT monitoring tools are used by some employers for personal rather than professional goals. We are talking about blackmailing or even harassment.”

Netsec estimates more than 40 per cent of multinationals and large companies operating in Romania use specialist software to routinely intercept and track all information flow – including what an employee might write in an email or download onto a memory stick.

Secret surveillance of workers, banned under EU law, has been hugely controversial in other European states too, particularly Germany where companies have been forced to pay multi-million euro fines and lawmakers are debating new workplace privacy legislation.

In Romania, many allege that bosses not only collected information about them by illegal, covert means, but then used it against them.

Blackmailed by the Boss

No Romanian employees would talk openly to BIRN about their experiences of illegal workplace monitoring, fearing speaking out would jeopardise their new positions and mark them out as troublemakers.

One woman claims she was forced to resign after her boss accessed private emails she had sent to a friend, in which she criticised her line manger.

After being called into the boss’s office, she was shown printouts of her private emails and told it would be best for her to leave. She accepted a small payout after her employers threatened they would make sure she couldn’t get work anywhere else.

Another, a married man, claims he was blackmailed by his boss after she discovered he was having an affair with a colleague. The manager found out after accessing conversations between the two on Yahoo! Messenger that were recorded by computer surveillance software.

He claims the boss forced him to perform tasks he did not want to under threat she would tell his wife he had been unfaithful. When he finally refused and left his post, the boss rang his wife and told her about the affair.

Both say their employers never once informed them that their communications, both private and official, would be subject to surveillance.

While it is legal for employers to monitor their workforce and use computer software to do so, they are obliged by EU and national law to inform workers. In turn, employees must officially consent to the surveillance. In practice, this rarely happens.

Officially, not a single company in Romania subjects its workforce to surveillance. Employers are also obliged by the law to inform the Romanian Data Protection Agency (ANSPDCP) if they are monitoring staff, but not one has registered to date.

Software Sales Boom

WORKPLACE MONITORING AND PUBLIC AWARENESS

A survey by a Romanian monitoring software manufacturer suggests during an average working day, 20 per cent of employees spend between one and two hours playing computer games.

A 2008 Eurobarometer study looking at data protection and public awareness among EU citizens suggests:

Only 28% of respondents knew they had national data protection agencies

The level of trust in employers was low in Spain (34%), Cyprus (47%), Latvia (44%), Lithuania (39%) and Greece (37%), where less than half of respondents showed confidence in employers handling their personal data appropriately

Austrian and German citizens were most concerned about how their personal data was handled, with 86% stating they were concerned

In Bulgaria, the Netherlands and Finland, only one-third of respondents said they were concerned about data privacy (BG: 34%, NL: 32%, FI: 36%)

Around two-thirds of all respondents said they trusted banks and other financial institutions (66%) and employers (63%) to handle their personal data appropriately

The majority of respondents agreed it should be possible to monitor passenger flight details (82%), telephone calls (72%), internet and credit card usage (75% and 69%, respectively) when this served to combat terrorism

This appears to be rather at odds with estimates on surveillance software sales in Romania, where IT companies say business is booming.

The surveillance software market was worth an estimated €1 million in Romania in 2010 alone, according to Amplusnet, another software manufacturer, who stress it is a rapidly expanding business.

The Romanian Constitution stipulates that all correspondence is confidential but does not differentiate between private or official work-related communications.

Alina Savoiu, head of communications at ANSPDCP, says: “It is a violation of correspondence, which is a criminal act. All companies that are involved in such practices are infringing the law.”

The software manufactured by companies like Netsec track every activity on workers’ computers, not just their correspondence, private or otherwise.

The boss can see exactly which websites you visit, what content you view, and compare how much time you spend surfing the net rather than using Excel, Word or other office tools.

Lawyers who represent employers argue they need to ensure their workers are putting in their full hours and are not engaged in unproductive or unlawful activities – such as accessing porn sites or downloading illegal content.

Gay Worker ‘Asked to Leave’

But, as LF from Netsec says, bosses can use tools developed for lawful monitoring to gain information they can then abuse. Even the pages employees visit can reveal or suggest they may have personal problems, such as health issues, addictions or complex private lives.

Mihai Russu is a Bucharest-based lawyer who has represented companies involved in disputes with employees about privacy. He recently represented a medical firm that had secretly monitored its employees and in doing so discovered one of the directors, who was married, had been browsing gay dating sites. The director was asked to leave his job.

He initially refused, claiming the request was discriminatory. In the end, he gave up because he feared his family would discover he was gay.

Russu insists his sexual orientation was irrelevant and that he was asked to leave because “he was not working his eight hours”.

However, Russu acknowledges the company did break the law because it secretly monitored workers.

Savoiu says the ANSPDCP has not received any complaints about covert surveillance, but insists they would investigate if they did and seize equipment, including computers, if deemed necessary.

However, she admits they employ just one qualified IT expert who can track monitoring software.

Bosses Own the Evidence

Proving you have been the subject of unlawful workplace surveillance is no easy task, not least because the bosses own the evidence.

If the ANSPDCP was unable to investigate, employees can go to civil courts themselves but they cannot seize the bosses’ equipment.

“Can an employee bring to court all the servers and evidence on the employee’s computer that shows he was supervised? No. The state would only have the authority to seize this type of evidence, backed up by appropriate experts, in criminal cases,” says Cristian Driga, a lawyer specialising in IT crime.

“In civil cases, employees have to bear the cost alone… added to that, there is an acute shortage of certified computer experts available in the field,” he says.

On the other hand, employers argue they must monitor their staff to protect commercially sensitive information and safeguard their brand.

Russu quotes one case where an advertising firm he represented discovered, by means of covert surveillance, that one worker was copying confidential client databases that could have been financially damaging to the company.

She resigned after being challenged by the bosses and went on to set up a competitor firm of her own. The dispute is ongoing with the firm yet to decide whether to prosecute the worker.

Bogdan Manolea, a lawyer specialising in internet law, believes the Romanian government has failed to properly implement data protection laws and has not ensured the public is properly aware of their rights and responsibilities.

“The authorities did not do their job properly; they did not explain why it is important. People have a paranoid reaction – yes, we are all intercepted – but when you ask them what they are doing about it, they don’t know or don’t act. There are many who complain and few who act,” he says.

Asked if the ANSPDCP has done enough to inform bosses and workers about the rules, Savoiu says they have published the Romanian data protection law on its website.

The ANSPDCP site does not, however, carry an accessible summary or guide to good practice on monitoring that could be of use to both employers and employees.

Balkan Communist Legacy

Yet there seems to be little appetite among Romanians and Serbians alike to take on their bosses or the authorities – a legacy, in part, of communist rule.

An unwillingness to confront employers is also evident in neighbouring Serbia, an aspirant EU member that, in 2008, adopted European data protection laws.

Implementation has been slow and Serbians seem equally unaware, and disinterested, in privacy at work issues.

Aleksandar Resanovic, Serbia’s deputy information commissioner, believes people do not properly understand the concept of privacy after so many years of communism.

“We do not have complaints. People say ‘who cares if they monitor me?’ But it is not a question of whether you have something to hide or not. Privacy is something that belongs to you and you decide whether you disclose it [information] or not,” he says.

Together with the Partners for Serbia NGO, the commissioner is trying to make sure that at least employees responsible for processing personal data at large firms are aware of the law.

Serbia: Who Monitors the Monitors?

Blazo Nedic, president of Partners for Serbia, launched a campaign this year to raise awareness but remain concerned the law does not adequately check the people responsible for monitoring.

And there have been some eye-catching incidents that have made it to the press, including the posting on YouTube of Serbian police CCTV footage that captured a couple having sex in a car park.

Since then, the Serbian police have been required to follow new, strict procedures when collecting and processing CCTV data.

But confusion as to what remains private at work is certainly not confined to Belgrade and Bucharest; there have been numerous cases and campaigns across European countries.

The European Directive 95/46/EC does not spell out the limits of lawful employee monitoring but it does enshrine employees’ right to be informed that they will be subject to surveillance, grants access to the data and allows for workers to oppose data collection by the bosses.

Britons Trust the Authorities

Like their Romanian and Serbian counterparts, the British do not appear overly-concerned about surveillance either in or outside the workplace.

The reason why, however, might surprise Balkan readers who lived under communist rule.

“We never had a police state like Romania. In a sense, we trust our authorities more than most nations do and if something goes wrong, we have a very good legal system,” says Nicholas Lakeland, a partner and employment law specialist at London law firm Silverman Sherliker LLP.

But he warns workers should be aware of the sort of personal information bosses can collect and how it could be used.

“We had a case where the employer found out one employee had HIV. In the construction industry, employees using heavy machinery may be breathalysed… in that particular case they also found he had been using drugs which helped him with the HIV… the employer did nothing… but it was a [potentially difficult] situation,” says Lakeland.

EUROPEAN LEGISLATION: EMPLOYEE PRIVACY

Employees’ right to be informed about workplace surveillance is enshrined in Directive 95/46/EC, 2002/58/EC and 2006/24/EC

Bosses should not intercept even work-related emails if the company hasn’t set down clear rules and they did not get the employees consent

Across the EU, employers who suspect serious criminal activity among workers can ask the police to intervene, who are able to secretly monitor

Employers are banned from storing sensitive data, such as religious beliefs, political opinions, sexual orientation and racial/ethnic origin, under Directive 95/46/EC

Confusion over the law has led to scandals in Germany and a few privacy cases in the UK, some of which ended up at the ECHR in Strasbourg

In ECHR cases Copland and Halford vs the UK, a precedent was established setting down that employees are entitled to privacy at work while using the company computer or phone

Germany is the only EU country debating federal workplace monitoring laws

However, some British employees have taken privacy cases all the way to the European Court of Human Rights (ECHR), as demonstrated by the Halford and Copland cases.

In 1990, Alison Halford, a police officer in Wirral, accused her superiors of intercepting her phone and Lynette Copland, a secretary at a college in Wales, found out that her phone and office email have been intercepted over a six-month period.

The ECHR ordered the British state, which employed both, to pay damages on the grounds that they were entitled to privacy at their workplace.

However, despite the ECHR rulings little changed in Britain.

“A lot of employers do that [monitoring] without thinking. An employer comes to me and says ‘I find all these interesting things by looking in employees’ emails’. And I say ‘You did not tell them, there is no legitimate reason why you are doing it. You are just snooping, so stop it and destroy all the data you have’.

“There are a lot of small offices where employers are doing that, they don’t really know the law, people are curious and want to know what other people do. It is human nature but it is not legal”, says Lakeland.

This trust in the authorities will have been undoubtedly dented by the News of the World illegal phone hacking scandal that threw suspicion not only on unscrupulous journalists but also law enforcement and politicians.

Germans Keep State in Check

Germans are acutely aware of the importance of privacy and the need to keep state control in check.

They share a deep-seated distrust of authority figures with their eastern European counterparts – an unease informed by recent history including the Nazi era and the Stasi in what was East Germany.

Germany has had data protection laws on its statute books since 1970 and, although their legislation on monitoring does not differ from the rest of the EU, they have set down additional rules.

Unlike elsewhere, employers are forbidden from monitoring employees’ online activities if the company rules allow them to access private email accounts or surf the net for personal use from the firm’s computer.

Still there is unease about the scale of unlawful monitoring.

Bertran Raum, head of social services at Germany’s Federal Commission for Data Protection, quotes 2001 statistics suggesting that two out of three companies monitor their workforce.

“I think the number of employers who are monitoring their employees has risen since. I think that a lot of that monitoring would be illegal,” he says.

Workers’ Bank Accounts Accessed

The media heightened awareness of illegal workplace monitoring in Germany, says Jan Jurczyk at German trade union Ver.di

There was public outrage when it became known that Deutsche Bahn, the state-owned national rail company, had been secretly monitoring its employees for a decade.

In a bid to root out corruption, the company routinely accessed employees’ private bank accounts and checked payments against their supplier list.

In 2009, they were fined €1.2 million by the Berlin Data Protection Commissioner.

The LIDL retail chain was fined in 2008 a similar amount for employing private investigators to monitor staff, including video surveillance, by the data commissioner of North Rhine-Westphalia.

Their have been numerous other workplace privacy and surveillance scandals, involving high-profile companies, that have been covered in the German media.

Employees who suspected they were being illegally monitored talked to the press and the resulting coverage forced the authorities to take action on the issue.

Jan Jurczyk, press officer for Ver.di, the second largest German trade union, says that “we have more to thank journalists for than the authorities”.

Alexander Dix, Berlin Information Commissioner, admits: “It takes a lot of courage in Germany to complain about an employer. You cannot rely on the German courts, as it takes several years… and sometimes you don’t win.”

More Power for Bosses?

After so many scandals, the German parliament is debating a new federal law to regulate workplace monitoring which they are expected to vote on by the end of 2011. No one is happy with the proposed changes.

Currently, companies have to seek permission both from the unions and the labour courts before installing surveillance equipment. Under the proposed new law, they would only have to ensure they notified employees and secured their consent.

“Now the judge keeps the balance between employees and employers, but in the new project, the employer is the one who decides when to monitor. He is the judge,” thinks Sarah Thomé, lawyer for the human rights NGO the Humanist Union.

She believes that the focus on consent is misleading, as the employee could agree to all types of monitoring out of fear that not doing so would prevent them from getting the job in the first place.

For their part, employers say the rules do not address their key concern: corruption.

Thomas Prinz, a lawyer at the Confederation of German Employers’ Association, believes there is no need for a new law, just because some companies illegally spied on their employees.

“The draft has no clear provisions for preventing corruption. This is the main point for any German company,” he says.

Raf Jaspers, a Belgian lawyer and author of Big Brother in Europe, is convinced only public awareness and action will combat state and employer privacy intrusions.

“It will be a long struggle to convince the masses. Privacy is not like work or food, which you miss immediately if you don’t have them,” he warns.

Back in Romania, IT specialist LF offers workers some simple advice: “Do not forget that when you switch on your computer you are no longer alone and no password, no matter how complex, can block monitoring software.”

Dollores Benezic is a Bucharest-based journalist. This article was produced as part of the Balkan Fellowship for Journalistic Excellence, an initiative of the Robert Bosch Stiftung and ERSTE Foundation, in cooperation with the Balkan Investigative Reporting Network.

The ECS letter indicates that the GoA had assigned exclusivity rights for 75 per cent of the country’s interconnection lines to the wholesale public supplier – a function assigned to the state-owned generation company KESH – and to the distribution system operator, OSSH/CEZ Distribution.

The ECS letter doesn’t report on who had complained or what might be the consequences if GoA fails to fulfill its obligation under the treaty.

The deputy minister of Economy of Albania Enno Bozdo commented for the Daily “Shqip” in Tirana that his government will start to “gradually reduce” the exclusivity of KESH in the next year, but didn’t offer a concrete timeline.

EU rules indicates that the interconnection lines in the Balkans must be open for use for all interested parties, a clause that in the past had caused disputes in several countries, including Bulgaria, Kosovo and Serbia.

Albania’s interconnection lines had been improved this year after the inauguration of the Elbasani-Potgoritza 400 kV line, which had opened the possibility for a Western Balkan line of supply toward Greece that is the most lucrative electricity market in the region.

Albania started to unbundle its energy market in 2008 by dividing the production, transmission and distribution network in three different companies and by legally opening the market for private operators in the wholesale supplying. In practice the market had remained the same.

- The Prime Minister Berisha visits New York: Albania vote on Palestinian membership bid remains unclear

- Opposition regional councilors switch sides

- Miners strike continues with no end in sight

- Bribery in Albania and Bosnia the highest in the region – UN reports

- Albania sovereign bonds priced at 9.6 per cent

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- The Prime Minister Berisha visits New York: Albania vote on Palestinian membership bid remains unclear

The Prime Minister Sali Berisha visited New York between 19 and 22 September in the occasion of the yearly meeting of the General Assembly of the United Nations Organization. Mr. Berisha used the event to meet leaders from various countries in order to forward the cause of Kosovo Independence recognition and for advertising Albania as an investment destination.

Some of the Tirana’s newspapers stated that the diplomatic activity of Berisha this year was weaker than in the same occasion in 2010 and that the Prime Minister had much fewer meetings with head of states and prime ministers. Tema newspaper in opposition claimed that the Prime Minister is largely isolated now as the result of its democratic backsliding during the last two years. Pro-government media published informal photos that show Mr. Berisha embracing the US Secretary of State Hillary Clinton.

On the issue of Palestinian UN membership bid, Berisha said that he fully supported the existence of Palestine as a state, but also the US stance on the issue, but did not indicate straightforward how Albania will vote.

Sources: keshilliministrave.al, Shqip, Tema, Koha Jone, VOA.

- Opposition regional councilors switch sides

Opposition Socialist Party lost its majority in the regional council of Berati in south of the country and won a hardly fought battle to keep its majority in the regional council of Fieri, after some of the councilors elected in 8 May elections decided to switch sides and join the government coalition. Newspapers suggest that the event reflects bigger troubles for the weakened opposition, which is also suffering internal fights among different groups.

The Socialist Party held the power in Albania between 1997 and 2005 and its officials had a reputation for corruption. But the money seems to have gone with the power lost six years ago and the Socialist Party seems to have lost also its ideology and structures, according to Servet Pellumbi, a retired SP official.

Shqip, Gazeta Shqiptare

- Miners strike continues with no end in sight

Miners in the Bulqiza mine complex started a second indefinite hunger strike this week after the Union failed to reach an agreement with the Austrian owned Albanian Chrome company (ACR) who operates the mine through a concessionary agreement. The miners had requested higher wages and better working conditions along with full payment of the salaries for the last three months when they were on strike, plus the dismissal of the ACR appointed director of the complex. The Company had accepted all the conditions except the director dismissal but the Union said that its conditions were non-negotiable.

Meanwhile, in Tirana the opposition Socialist Party accused the government for managing a criminal organization in the mining sector in the expenses of the miners. The Minister of Economy Nasip Naço said in the parliament that the Union has a hidden agenda that aims to kick out of the country the company and to take the mine for some local businessmen. Naço did not explain whom the local businessmen behind the Union are, but in the last three months, the Union doesn’t accept to give up to any of its request and that if the company agrees on their terms, then, they add new requests.

Top Channel, News 24

- Bribery in Albania and Bosnia the highest in the region – UN reports

An UN Office on Drugs and Crime Report on Corruption in Western Balkans unsurprisingly discovered that Albania and Bosnia on the top on bribery followed in a long distance from Croatia and Kosovo. In Albania, the majority of bribes ends up in the pockets of medics and paramedics and is paid by citizens to receive better treatment. In the majority of cases officials ask directly or indirectly for money in exchange for their service. The UN report was co-financed by the European Commission and used structured interviews with citizens as method. The interviewed citizens were randomly selected from the adult population. Macedonia is the least corrupted country in the region according to the report.

Bribery prevalence and purpose

Macedonia: 6.2 per cent of the adult population paid at least one bribe in the last 12 months. Speeding up official procedure was the main reason. 50 per cent of the bribes were paid for this.

Serbia: 9.3 per cent of the adult population paid at least one bribe in the last 12 months. 38 per cent of bribes were paid to Speed up procedure and 18 per cent to receive better treatment, mainly in public hospitals.

Montenegro: 9.7 per cent of the adult population paid at least one bribe in the last 12 months. Speeding up procedures 31.9%, receiving better treatment, 18% and avoiding fines, 17%, were the main reason for bribing officials.

Kosovo: 11.1 per cent of the adult population paid at least one bribe in the last 12 months.

Croatia: 11.2 per cent of the adult population paid at least one bribe in the last 12 months.

Bosnia and Herzegovina: 20.7 per cent of the adult population paid at least one bribe in the last 12 months. Avoid fines was the main reason with 25 per cent.

Albania: 19.3 per cent of the adult population paid at least one bribe in the last 12 months. The majority of bribes were paid in public hospitals to receive better treatment. In 50 per cent of the cases the need to pay was after implicit request from the officials and 14.5 per cent the request was explicit.

For further information: http://www.unodc.org/documents/data-and-analysis/statistics/corruption/Western_balkans_corruption_report_2011_web.pdf

- Albania sovereign bonds priced at 9.6 per cent

Yields on Albania’s euro denominated bonds jumped to 9.6 per cent during the last few months, the highest ever, reported this week Bloomberg.

“Yields on Albania’s 300 million euros ($409 million) of 7.5 percent bonds due in 2015 jumped 69 basis points, or 0.69 percentage point, in the past month to a record 9.6 percent, according to data compiled by Bloomberg,” the agency said. Albania sold its ever sovereign bonds last October to pay for the Durres-Kukes highway that links Albania with Kosovo and is dubbed “The Road of the Nation” or “The Patriotic Highway”.

Xhentil Demiraj the country’s debt management director, said to daily “Shqip” in Tirana that the yield increase is not related to the economic development of Albania but is rather result of the increased risk related to the European debt crisis.

Albania doesn’t intend to issue new bonds in the near future and can wait up to 2015 to return to the international market.

Bloomberg, Shqip

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The Serbian president said that “better days and new investments are ahead for Serbia”. According to Tadic, with the deal signed on Tuesday, the Italian firm is “also becoming a Serbian company”, while new investments in Serbia will help create new jobs and raise the living standard.

The contract on the sale of Nitex was signed by Minister of Economy and Regional Development Nebojsa Ciric and Benetton Group Executive Director Biagio Chiarolanza. Tadic and Benetton then visited the Nitex factory, which is undergoing restoration. Benetton bought Niteks in May for just over €3 million. At the time, Benetton announced it would employ 2,700 people and invest €43.2 million in the Nis factory over the next four years.

Source: Balkaninsight

“The program aimed at restoring fiscal sustainability and safeguarding financial stability, by exercising restraint on current spending and bolstering the government’s deposits with the CBK. Elements of the 2011 budget—in particular the large increase in the wage bill—deviated from program commitments. As a result, no program review could be completed. During this mission, staff and the authorities reached staff-level agreement on a Staff Monitored Program to establish a track-record that could lead to an IMF-supported arrangement in 2012”, – the Fund declared in a press release.

Since 2008, the government has adopted an increasingly expansionary fiscal stance, financing deficits from cash buffers, asset sales, and donor support. The general government balance shifted from a surplus of more than 7 percent of GDP in 2007 to a deficit of 2.6 percent in 2010. Capital spending has been the expansion’s main driver. In 2010, construction started on a highway linking Pristina with the Albanian border. Costs are estimated at more than 20 percent of annual GDP. This year, spending pressures spread to current expenditures, with large increases in public sector wages and war related benefits.
“The outlook is subject to large downside risks, from both domestic and external sources. Domestic risks include economic policy missteps and political disturbances. External risks include weaker growth in Europe. This could reduce incomes of Kosovars living abroad, thus limiting remittances and capital inflows, and forcing a contraction in domestic demand. Lower remittances could also affect the banking system by reducing deposits as well as debtors’ capacity to service their debts” the IMF noted.
The Stand-By Arrangement was approved in July 2010 with total value of 108.9 million euro. The first tranche of 22.1 million had been disbursed.
Kosovo enjoyed robust economic growth in the 2000s, with the structure of growth tilted toward domestic demand. Remittances from Kosovars living abroad boosted consumption, while foreign direct investment fuelled construction activity. By contrast, the export sector has remained small. GDP per capita remains among the lowest in Europe. Social challenges loom large, with unemployment estimated at about 40 percent of the workforce.

Marian Chiriac Bucharest

Romania is reconsidering its plans to adopt the euro in 2015 because the country’s economy is not considered healthy enough to meet the deadline.
Officials are reluctant to mull new timelines in public but the country’s leaders admit that the issue cannot be ducked for much longer.
“Talks will soon start between the central bank, the government and economists in order to see whether Romania is to re-discuss its [2015] euro-adoption target,” President Traian Basescu said on Tuesday.
“We have to decide whether it wouldn’t be a better idea to wait for further improvement of the country’s economic performance,” the President said.
In a previous statement, earlier this year, Basescu suggested that Romania might delay the 2015 target by a year or two, until it was clear the economy could handle the pressure of life in the eurozone.
Central bank governor Mugur Isarescu appears to agree. In a recent interview, he said the 2015 target ought to be “re-discussed but not postponed too much”.
The last report on Romania by the European Commission, issued late last year, said Romania has yet to comply with most of the criteria needed to join the eurozone.
The criteria in question were price stability, the state of the budget, the stability of the exchange rate and interest rates.
Furthermore, inflation in Romania last year was well above the 1-per-cent benchmark and is likely to remain well above that level in the months ahead.
Romania has been given until 2012 to reduce its deficit to 3 per cent of the GDP. The budget deficit was 8.3 per cent of GDP in 2009.
Analysts say Romania is not obliged to adopt the euro by 2015. “There is no compelling reason why Romania should join the euro, at least for the foreseeable future,” economic analyst Ilie Sernanescu said.
“When Bucharest joined the EU it was obliged to sign up for euro entry once certain economic criteria were met. But none of them is yet fulfilled and economic prospects are not good,” Sernanescu added.
In 2009, Romania turned to the IMF and the European Union for a two-year 20-billion-euro emergency loan. Today it is pushing through tough austerity measures to meet IMF demands.
The government says it has had no other option to keep the economy afloat.
Source: Balkaninsight

“These losses come as a result of technical problems of the grid but also from the rampant theft of electricity by consumers,” adds the report, recently filed with parliament.

According to Albania’s National Statistics Institute, in the first six months of 2010, losses accounted for 27.9 per cent of the electricity in Albania’s grid.

Nearly 90 per cent of these losses occurred in the electricity distribution system, meaning they were due to theft.

Power bills in Albania average 35 to 70 euros a month. Although electricity costs half the EU average, it is still expensive for most Albanians, as their purchasing power is only 25 per cent of the EU average, according to Eurostat.

To curb electricity theft, experts say government and utility companies should unpack costs and set up customer protection policies to help the poorest consumers.

“The government should apply a dedicated customer protection policy for those not able to pay the price of electricity in order to reduce theft, while those who drive a Mercedes and have three-storey villas should pay the full price,” Simon Uzunov, an electricity expert with the Vienna based Energy Community, said.

Uzunov also urged “unbundling” the costs, in order to help locate the sources and mechanism of losses.

“Data on the level and source of losses in the grid should be available to all interested customers,” he said. “These measures would certainly increase the ability to face this kind of issue.”
Source: Balkaninsight

The Pristina-based organisation GAP is calling for the creation of a regional tariff system, based on a successful EU-scheme, to lower costs.

According to GAP, “These charges simply do not have any reasonable economic base and are unbearable for most customers.”

Competition between mobile phone operators in the Western Balkans has pushed companies to lower prices for domestic calls but roaming charges remain extremely high, the GAP study says.

VALA customers have to pay 1.79 euro per minute to call Macedonia, which is 19 times higher than the price of a domestic call inside Kosovo, for example.

According to the study, IPKO’s customers pay 2.92 euro per minute for a roaming call to Macedonia, which is 29 times higher than the cost of a local call.

Although the prices are advertised on IPKO’s official website, the company has criticised the report, saying the quoted prices are no longer accurate. IPKO says it now applies EU roaming tariff ceilings although Kosovo is not part of EU.

Regional prices vary from country to country. In Macedonia, outgoing roaming calls vary from 1.6 to 1.7 euro per minute.

In Montenegro, according to the report, Telenor charges incoming calls at a rate of 0.5 euro a minute while the cost of an outgoing call jumps to 1.3 euro.

The GAP report states that such roaming tariffs are far higher than the tariffs in EU countries. In 2007 Brussels said chargesin the EU must not exceed 0.49 euro per minute for calls abroad and 0.29 euro for calls received from abroad.

Since  2007, roaming charges in the EU have fallen further, and they are expected to reach an average of 0.35 euro in 2011, the study reads.

GAP urges Western Balkans countries to establish a Balkan Regulators Group that should then try to join the Eurotariff zone.

“There would be objections from mobile operators as was the case in the EU, so there is a need for someone to tackle this issue,” Rudina Heroi, a GAP researcher, told Balkan Insight.

She added that Brussels had backed the idea of agreed Balkan tariffs when GAP presented the study and it had encouraged the institute to take part in forums that would promote the idea.

“We have met telecommunication regulatory bodies in Macedonia and Albania but they told us that they have no executive powers to deal with the matter,” she said.

In meantime, Kosovo’s Telecommunication Regulatory Authority, ART, said it would support such an initiative.

Ekrem Hoxha, head of ART, said: “It will be very difficult in the beginning because the regulators from the respective countries all have different working systems.”

He added that there are also political obstacles to reaching such agreed tariff in the Balkans. He noted that the next forum of regulatory bodies will be in Belgrade, and Kosovo cannot take part in it because Serbia does not recognise Kosovo’s independence.
Source: Balkaninsight