Tycoons in Eastern Europe are well known not only for their lavish lifestyles (complete with yachts and private jets), but also for the power that they exercise through their cozy relations with those in government. The term "oligarch" is often associated with the group of Russian post-perestroika businessmen who made their fortune during Boris Yeltsin's tenure in the Kremlin. But such figures are no strangers to the Balkans, either. No man in Serbia (and perhaps in all of Southeast Europe) deserves the label more than Miroslav Miškovic, the owner of the Belgrade-based conglomerate Delta Holding.
There was a time, not that long ago, when Miškovic -- the country's wealthiest man and its largest private employer -- was considered to be virtually untouchable politically. But last week, in a stunning twist, Miškovic fell from the heights of Forbes Magazine's billionaire list to the crime section of the local press. On December 12, he was arrested, along with his son Marko and eight other people, on charges of abusing several privatization deals for road construction and maintenance companies. According to Serbian prosecutors, he is suspected of illegally obtaining more than €30 million, and has been remanded in custody for 30 days.
Miškovic's arrest on charges of corruption is a major coup for Serbia's new government, particularly for its forceful deputy prime minister, Aleksandar Vucic. A former hard-line nationalist, Vucic -- the head of the ruling center-right ruling Progressive Party, Minister of Defense, and secretary of the National Security Council -- is perceived by many to be the most powerful man in Serbia. A former MP for the Radical Party (whose leader Vojislav Šešelj sits in the Hague tribunal accused of war crimes), Vucic has successfully reinvented himself as a corruption slayer.
Miškovic's arrest is sure to be welcomed by many Serbian voters, who have waited for a long time for their government to take action against corruption. If the Miškovic case goes to court, and if the trial is perceived to be fair, this will undoubtedly bolster Serbia's effort to join the European Union. But if Serbian courts show no greater sense of political independence than their Russian counterparts, the trial of Miškovic might come to resemble the saga of jailed Russian businessman Mikhail Khodorkovsky.
Khodorkovsky, once Russia's richest man, has been in prison since 2003 after running afoul of President Vladimir Putin. Khodorkovsky, like Miškovic, was hardly an example of moral rectitude before his arrest. But because Khodorkovsky's trial was so clearly tainted by a political agenda, the oligarch's prosecution transformed him from a bad guy into a martyr.
Miškovic got his start in the business world in the early nineties. After a short stint in politics in 1990 (as a deputy prime minister in the era of Serbian strongman, Slobodan Miloševic), he launched the Delta M Company. The company soon became Serbia's largest conglomerate, holding a dominant stake in retail, agriculture, finance, and real estate.
According to a 2010 study by the German Friedrich Ebert Foundation, Miškovic is merely the most notorious of a number of Serbian oligarchs who made a fortune by closely guarding the country's retail sector from foreign competition while inflating prices for the country's impoverished consumers.
"One could describe [the oligarchs] as war profiteers," Michael Ehrke, of the Ebert Foundation's Belgrade office, told Radio Deutsche Welle. "Those who profit during a war are also interested in war itself. One could describe them as persons who certainly did nothing to stop this war."
In June 2006, the United States considered recommending that Miškovic be banned from entry into the U.S. under a provision targeting "individuals who engage in egregious corruption to the detriment of U.S. national interests." Three years later, in 2009, he was dining with U.S. Vice President Joe Biden, invited to a state dinner in Belgrade along with former Serbian President Boris Tadic. For many Serbs the invitation highlighted Tadic's cozy relationship with Miškovic.
If Miškovic prepared the way to his ascendency during the Miloševic era, he continued to flourish after its collapse by changing tactics -- specifically by buying influence through the financing of political parties. In 2007, Forbes Magazine named Miškovic as the richest man in Serbia, with a fortune estimated at €1 billion. According to a 2009 State Department cable released by WikiLeaks, Miškovic's operations may have accounted for more than five percent of Serbia's GDP.
Dozens of Serbian politicians are suspected of receiving monthly allowances worth tens of thousands of euros from the tycoon. Following Miškovic's arrest, Vucic has called on Miškovic to reveal his political backers for his own good.
"It's important to find out whom he financed," Vucic told the daily newspaper Politika, adding that at least some 20 senior politicians were on the take. According to Vucic, some politicians were getting a monthly allowance from Miškovic in the amount of €30,000 to €50,000.
Bringing a man of such wealth, resources, and political influence to justice would be hard even in more established democracies than Serbia's. The endless corruption trials in Italy against former Prime Minister Silvio Berlusconi attest to the challenges involved. Serbia is a country where, only a decade ago, Prime Minister Zoran Dindic was assassinated in the middle of Belgrade by a sniper. When he was detained, Miškovic allegedly told the police that Vucic would not live to see the evening.
Vucic's stand against the sleaze and corruption that oligarchs have cultivated in Serbia is commendable. The challenge will be to avoid making the case against Miškovic look like a political vendetta against the oligarch and the politicians he financed. The Khodorkovsky affair serves as the perfect cautionary tale: The trick is to bring down the oligarch without destroying the justice system at the same time.
Transitions is the group blog of the Democracy Lab channel, a collaboration between Foreign Policy and the Legatum Institute.