1 Tuesday, 13 January 2009
2 [Open session]
3 [The accused entered court]
4 [The witness entered court]
5 --- Upon commencing at 2.15 p.m.
6 JUDGE ANTONETTI: [Interpretation] Mr. Registrar, kindly call the
8 THE REGISTRAR: Good afternoon, Your Honours. Good afternoon,
9 everyone in and around the courtroom. This is case number IT-04-74-T,
10 the Prosecutor versus Prlic et al [Realtime transcript read in error,
11 "Momcilo Perisic"]. Thank you, Your Honours.
12 JUDGE ANTONETTI: [Interpretation] Thank you, Mr. Registrar.
13 Today is Tuesday, 13th of January, 2009. I said 2009 because it seems
14 that it is 2008 on the transcript still, so we really have to keep a
15 tight watch on everything in this courtroom. I'll first greet the
16 witness. Good afternoon to the accused, the Defence counsel, Mr.
17 Stringer and all the Prosecution team, and good afternoon to all the
18 people assisting us.
19 We are going to continue with this witness's testimony. You may
20 proceed, Mr. Karnavas. Again, good afternoon to you.
21 MR. KARNAVAS: Good afternoon, Mr. President. Good afternoon,
22 Your Honours. Good afternoon to everyone in and around the courtroom.
23 WITNESS: MILAN CVIKL [Resumed]
24 Examination by Mr. Karnavas: [Continued]
25 Q. Good afternoon, Mr. Cvikl.
1 A. Good afternoon.
2 Q. As I understand it, we left off yesterday with slide 27. That's
3 when I cut you off a little bit because we were out of time, and so now
4 we are getting into slide 28, so without further adieu, if you could --
5 JUDGE ANTONETTI: [Interpretation] One moment, Mr. Karnavas. We
6 now have a new court reporter, and I see another mistake on line 6 on
7 page 1. This is Prlic et al and not Momcilo Perisic as you can see on
8 line 6. I'm not going to spend my time on spotting mistakes, but if
9 anyone does, they should tell me so that I could take a rest.
10 MR. KARNAVAS: Thank you, Mr. President. Well, at some point we
11 do know that the transcript will be cleaned up, and we know that these
12 sorts of errors do occur rarely.
13 Q. Mr. Cvikl, if we can now turn to slide 28 so we can complete this
14 section before we go on to the three phases, and you can begin.
15 A. Thank you very much, Your Honours, Mr. Karnavas. I would like to
16 make just one observation before we start. Last night, I went through my
17 testimony and I also the check of the report and especially of the
18 documents which have been listed under the previous slide, the slide 27,
19 and I would like just to confirm for the record that what I have seen for
20 the first time were English translations of those documents. However,
21 I've seen the original, the Croatian versions or the Bosnian version of
22 those documents before, but as we were preparing over the weekends for
23 the first time I have seen the English translation. That's all that need
24 to be said with this.
25 In regards to the slide 28. In this slide 28, I tried to
1 summarise what is actually one of my findings on activities of local
2 communities, and that is I have been asked to compare those activities,
3 and as we have seen yesterday when you were presenting many documents on
4 four major group of measures, measures to ensure defence, macroeconomic
5 measures, microeconomic measures, and measures to ensure government
6 services. Notwithstanding whether these were measures undertaken in the
7 local community with -- under the Bosnian control or with a Croat
8 majority, I have not been seeing what was happening in Republika Srpska.
9 But these were practically equal measures and those really equal measures
10 in practically all major areas. They were all based on the task of the
11 local communities as defined in the old constitution both of Yugoslavia
12 and Bosnia-Herzegovina. They were actually measures by local communities
13 to ensure logistic and the finance of defence, and then there were
14 measures were in the absence of the actions of the state authorities, the
15 central government authorities, they were undertaking macroeconomic
16 measures or they were undertaking measures to support and to provide
17 state and social services to the citizens. That's why I say that
18 situation in Tuzla
19 Siroki Brijeg, Posusje, they were measures were all equal.
20 Logically why these local communities have to do that, since
21 there was a practically complete loss of communications and they were cut
22 off from the republic level provision of funds for those services, they
23 had to ensure economic stability in the economic area that they
24 controlled, and they had to provide -- ensure fiscal revenues to provide
25 social services, and I mentioned some of them in the bracket in the
1 second bullet.
2 So to certain extent, local communities acted like sovereign
3 economies with a task to cover the basic needs of the citizens, to
4 provide material support to the defence forces, and, of course, that was
5 the basis, normalization of the life conditions for the people; once the
6 defence was assured, that was the basis for reactivation of economic
7 activities. I'm also saying in the report and would like to reiterate
8 here that these were urgent actions by local authorities and they were
9 actually done in the circumstances of war economy, and in that context
10 they acted as one would act in similar conditions, notwithstanding what
11 kind of the political intentions were behind. But I was looking into the
12 measures, and I can confirm these were the measures done in the interest
13 of all citizens in different local communities throughout
15 Q. All right. Unless there are any questions regarding this area,
16 we can now move on to slide 29, and hereinafter, as I understand your
17 presentation following your report, you describe what you came up with,
18 the three different phases of the Croatian community, Croatian Republic
19 Herceg-Bosna; is that correct?
20 A. That is correct. I have been, of course, asked to analyse, and
21 in order to somehow identify differences in the -- in the situation in
22 the Croatian -- in the Croatian community of the Herceg-Bosna, I actually
23 divided this into three areas. The first area -- the first period or the
24 first phase is really the phase when we have activities only at the level
25 of the local communities, and some limited activity by the presidency of
1 the Croatian community of Herceg-Bosna; the second phase is then the
2 phase when the executive authority had been established, the HVO of the
3 Croatian community of the Herceg-Bosna; and the third phase and last one
4 is the one when the parliament had been established and when the
5 executive authority had been renamed itself in government and where they
6 continue with the region-wide measures.
7 Q. Okay. Thank you, Mr. Cvikl.
8 Now, if we look on slide 29, there are some bullet points, and as
9 I understand that you wanted to draw our attention to certain documents.
10 So if we could begin, that is, if you could give us a -- some remarks
11 before we go into each particular bullet.
12 A. May I ask the usher to bring me my documents because they stayed
14 Okay. What was done in the first phase, what was done in the
15 first phase at the level of the local community of -- local communities
16 of Herceg-Bosna, there was, of course --
17 JUDGE ANTONETTI: [Interpretation] One moment, Witness. Sorry for
18 interrupting you. Let me go back to what you said earlier on, which was
19 absolutely essential and extremely relevant for the further deliberations
20 of judges as to the joint criminal enterprise. If I understand you
21 properly, you said that we must grasp a situation at three levels: First
22 level, that is the creation by local communities of some action plan in
23 this field; second level, the Croatian community or HVO has been created;
24 third stage, as you say, that would be somehow a parliamentary phase
25 because then the parliament has been established, which is to control the
1 executive authority.
2 And you seem to break down all of the events based on the three
3 levels, and that could account for a great number of things. The local
4 level, that's the first level of intervention; second level, that's HVO;
5 the third one being parliamentary control. Is that what you meant? I
6 just want to ask you this for everything to be clear for everyone because
7 this is a very intricate issue, and it really is worthy of comprehensive
8 examination and scrutiny without avoiding any misunderstanding to start
9 with. Can you indeed confirm that as far as you see, the measures
10 undertaken have to be seen from the point of view of these three levels?
11 THE WITNESS: Yes, Your Honour. What am I writing in the report
12 is that there were three phases of development, not three levels, one
13 above the other, but three phases, one after another. Why three phases?
14 My report, and I was asked to do -- to analyse the economic measures and
15 development in the area -- in the Croatian community, Croatian Republic
16 of Herceg-Bosna within the context of what was happening in the overall
17 Bosnia-Herzegovina. As we were explaining what was happening first at
18 the local community level, I have also seen that in the similar manner as
19 in Tuzla
20 community of Herceg-Bosna acted in a very similar manner in that first
21 very phase.
22 Once they were acting as explained in this light, which means
23 that they organised the defence, they organised economic sector, they, of
24 course, ensure protection of the state -- yeah, the state regional
25 assets, they collected new fiscal revenues, they allocated fiscal
1 revenues into budget. Then there was immediate negative results of them
2 acting independently because each of them acted in their own territory of
3 a local community or municipality.
4 So in the second phase of the developments, in order to assure
5 region-wide measures, in order to ensure that, also, those local
6 communities that were not -- maybe not backed so well off as some of them
7 would also benefit from the region-wide measures. I'll give an example.
8 The local communities at which there was physically a checking
9 cross-point of goods coming from Republic of Croatia
10 Bosnia-Herzegovina, they benefitted because they were collecting customs.
11 We've seen some of the measures yesterday undertaken in Capljina. So now
12 in the second phase, the executive -- the authority, the HVO of the
13 Croatian Community Herceg-Bosna has been established, and it had to
14 assure that not all funds stay in just one local community because there
15 were needs in other local community, you know, to undertake government,
16 social, and state services.
17 So in this second phase, HVO acted to ensure that there will
18 be -- we call economist economy of scale or we say that there will be
19 economic region-wide measures so that the balance of the economic
20 development and the benefit of economic development would be provided to
21 the whole region of Croatian Community of Herceg-Bosna. And so that is
22 then the second phase, and I've seen that there is a difference between
23 the first phase when you have only actions by the local communities, and
24 there's a different with the second phase where you have, you know,
25 executive authority, HVO, undertaking some measures and actually
1 fighting, "economically fighting," with local communities to take part of
2 that -- some assets collected locally into the region-wide budget.
3 And the third phase, time-wise, is the phase when this executive
4 authority have been strengthened because the Croatian Republic
5 Herceg-Bosna had been established, and as we have seen, especially the
6 second half of 1993 and early 1994, then you have government of these
7 Croatian Republic
8 like established budget, and, of course, undertaking some of the
9 measures. And I'm also saying, and we will see this down the slides,
10 that the reason why in the second phase and in the third phase
11 authorities, regional authorities appeared is also connected with the
12 realisation by the presidency of Republic of Bosnia-Herzegovina
13 already in August 1992 realised that unless local communities are grouped
14 in what they call districts or counties, the country would economically
16 So in the second and in the third phase, the activity which I
17 have seen in the Croatian Community and later Croatian Republic
18 Herceg-Bosna are actually activity vested into them both by the
19 constitution and by a decree of the presidency of the Republic of
20 Bosnia-Herzegovina on the work of the districts, and that is what I then
21 also comment in my document in one of the slides later that had been
22 done. But, yes, there are three phases down the line, one after another.
23 JUDGE ANTONETTI: [Interpretation] Witness, I can understand what
24 you say by the three phases based on economic reasoning, but if in my
25 mind, and possibly in any reasonable mind, there's always a connection
1 with a political factor because economics and politics, that's a couple;
2 that's a pair. This reasoning that you've just set forth in economic
3 terms, can it be applied to the political sphere, so there would have
4 been three phases in political terms. There would have been power vested
5 with the local communities, thereafter a second phase in which the
6 Croatian community was created with, as a third phase, the creation of
7 the Republic of Herceg-Bosna. So if you put together, if you link up the
8 political and the economics?
9 THE WITNESS: Well, I have been asked to analyse economic
10 measures. And so in that context, I cannot comment on the political
11 intentions. But, you know, I'm politician, and of course when I act
12 either as the minister or when I acted as a general secretary, we are
13 working under a particular programme; and the programme, if you want a
14 political programme in this very area, was ensure the survival of the
16 And in that context, the political decisions both at the level of
17 the Croatian Community of Herceg-Bosna as at the level of the Presidency
18 of Republic of Bosnia-Herzegovina have the same aim, ensure the survival
19 of the population, because otherwise -- I was surprised to a certain
20 extent but positively surprised seeing this presidency decree on
21 districts or on counties because it actually politically realised that if
22 central government is landlocked in Sarajevo, in order for the population
23 to survive, but not survive in 50 or 70, you know, small local economies
24 controlled by municipality, people would be better off if there would be
25 seven districts, seven counties established, and there would be rounding
1 of economic measures at the wider region. This is how I see this second
2 and third phase.
3 The second and third phase of development in the Croatian
4 Community of Herceg-Bosna was to round economic -- economic area to
5 further support economic developments and thus ensure not just the
6 survival of the people, because the military activities more or less were
7 over, but to ensure better economic conditions. And if I go one more
8 step, even later when the Federation of Bosnia-Herzegovina was
9 established following the Washington Agreement - there's a time when the
10 war loan was start coming in - we have seen a lot of legislation, which
11 was simply if you want legislation of then-Croatian Community or Croatian
12 Republic of Herceg-Bosna transmitted to the level of the Federation of
14 So even when one analyse those economic measures, these were
15 measures for the benefit of ensuring -- to the ensure the economic
16 benefits to the people in the wider region, not just the very small local
17 community. And that's why I'm saying, yes, there is a link between the
18 economics and the politics, but the economics and the economic needs of
19 the population were out there.
20 If I may, maybe for these people would be, you know, maybe even
21 better not to deal with these all issues. They would simply let, you
22 know, borders not being established and this would slowly economically --
23 this part would be slowly economically completely integrated with
25 Now, there were attempts to round economic economies of the local
1 communities in this Croatian Community of the Herceg-Bosna into an area
2 that later merged into the Federation of Bosnia-Herzegovina.
3 MR. KARNAVAS: Very well.
4 Q. All right. If we could stay -- staying with slide 29, and if we
5 -- we did discuss briefly the various bullet points, and we can start
6 with the first one, to organise the wartime finances, and as I understand
7 you wanted to draw our attention as a way of example to 1D 00558.
8 A. Exactly. This is the document issued by the Croatian Defence
9 Council of the Mostar municipality, an action of the local community of
10 Mostar to organise, establish a decision on the organisation and
11 functioning of wartime finances. And in Roman ii, in Article 3, it says:
12 "The following financial organisation shall continue to operate
13 in war."
14 And here, the public auditing service or the Social Accounting
15 Office is mentioned, the Privredna Banka Sarajevo with its basic bank in
16 Mostar. And in Article 4, it says that some of the institution shall
17 cease to operate because they did not have conditions, but what is
18 important, it says in Article 10, that revenues generated from profit tax
19 shall be deposited in a separate account of the municipality. And then
20 in Roman iii, Article 11, there was also a proposition that the Mostar
21 municipality HVO may float a war loan on the basis of voluntary
22 subscription. And on Roman iv, on page -- on the bottom, 1D25-0158, in
23 Articles 14, 15, et cetera, the financing of public services is
24 described. So this very decision of the Mostar municipality describes
25 what the local community of Mostar will undertake to provide, not just
1 for the defence but to cover basic needs of the population.
2 Q. All right. Now, if we go on to the next bullet point, to
3 organise economic sector, I understand there are three documents you want
4 to draw our attention to, the first one being 1D 00239.
5 A. Yes. This is -- just as an example of a very similar decision.
6 This is a decision of Tuzla
7 and financial institutions of special importance for Tuzla municipality
8 in conditions of war. And here it says in Article 1, Roman ii, point 1,
9 the term of power system, Kreka, socially owned enterprise, Tuzla
10 company which is of a special importance for Tuzla municipality in
11 conditions of war.
12 And in -- on the next page in Roman vii, it says under 1, that
14 point 2, that commercial banks Tuzlanska banka did it, Tuzla comerciana
15 [phoen] banka did it, Tuzla Union banka did it. Sarajevo, Tuzla
16 are companies, institutions important for a situation in Tuzla, just an
17 example how in a similar manner as in Mostar, also in Tuzla regions, same
18 type of institutions were recognised as important to organise economic
20 Q. Okay. Now, if we go on to the next document concerning this
21 particular bullet point, and I believe it's 1D 02991.
22 A. Yeah, that is a decision by Prozor municipality. It's a decision
23 on announcement of general mobilisation in the area of Prozor
24 municipality, but it's even more. In Article 2, it says that:
25 "All persons, men of the age 18 to 55 years and woman of the age
1 18 to 50, with residence in the area of Prozor municipality are obliged
2 to immediately be at disposal of Prozor municipality in order to be
3 deployed to the military forces."
4 That is, certain duties in civil protection or requisitioning of
5 workers. So there were military forces, but there were also logistical
6 activities of economic sector to support those forces. And second, what
7 is important in this article -- in this decision is at the end of the --
8 Article 3, that workers employed abroad are obliged to make a payment in
9 the amount of one-quarter of their salary, that is, at least 500
10 Deutschemark, if they are up to the period that they would, of course,
11 respond to the announcement of general mobilisation, meaning that, again,
12 a measure which is, yes, a wartime finances and organisation of economic
13 sector measure undertaken in the local community in a very similar
14 measure that we have seen in some other areas in Bosnia-Herzegovina.
15 Q. All right. And then, finally, if we go to 1D 00805, I believe
16 this is the last document for this bullet point you wanted by way of
17 example to explain to us.
18 A. This is a decision of Croatian Defence Council, Livno, wherein --
19 on first page, on the Roman i, in the first paragraph, it says that:
20 "Mobilisation and demobilization of assets..." and in the
21 bracket, "(vehicles, machinery, equipment, et cetera) shall be carried
22 out by the Defence office in accordance with establishment requirements
23 of the command of the HVO."
24 In the second paragraph, there is a request that:
25 "In order to effect more rational distribution and use of assets,
1 the HVO command of the units must coordinate and redistribute assets with
2 the Defence office." The Defence office being the one providing Defence
4 And then, second what I would like to point is if you turn to
5 page 2, that is the page marked in the bottom right 1D 15-0196, and then
6 in Roman iii it says that work organisations whose scope of operations
7 becomes considerably reduced as a result of mobilisation of their
8 resources shall prepare a business plan for operating with the available
9 assets and manpower, which means that the local community authorities
10 through its Defence council, through its HVO clearly undertake a manage
11 to re-organise the economic sector in the war circumstances when before a
12 lot of assets had been mobilised.
13 Q. All right. Now, if we go on to the next bullet point where you
14 talk about to ensure protection of state/regional assets. As I
15 understand it, by way of example you wanted to draw our attention to 1D
16 00579. 1D 00579.
17 A. Yes. This is a document issued on May 21st, 1992, by the Mostar
19 "A decision on the establishment and tasks of the Mostar
20 municipal HVO commissioners and setting up managing functions in the
21 socially owned companies and institutions in the Mostar municipality
22 under wartime conditions."
23 Why this decision is important. Local municipality, in order to
24 protect state regional assets that was vested in the local community by
25 the - at that time - Croatia
1 constitutions as we have seen yesterday, in Article 2 established a new
3 "A commissioner of the Mostar municipal HVO who is an authorised
4 person appointed by the Mostar municipal at the proposal of the head of
5 the department whose task is to review the organisation of the sphere for
6 which the commissioner is appointed..." et cetera.
7 What is important in Article 5 on the bottom of this, it is
8 clearly says that the Mostar municipal HVO commissioner shall be
9 appointed for the following spheres: elementary education, secondary
10 education, culture, traffic, telecommunication and information,
11 non-ferrous metals industry, metal industry - next page - agriculture and
12 food processing industry, et cetera. Even later, we have the hotel
13 management and tourism. These are all measures that provide two things.
14 First, assets, that I'm still socially owned assets, but of course for
15 which the local community had an authority to protect them, were taken
16 care of now by this commissioners, and these commissioners were not just
17 taking care of those assets, but they were ensuring, especially in these
18 spheres as mentioned here that are the spheres of ensuring government,
19 social and state services, to undertake those and that especially here,
20 education, culture, et cetera. And then, of course, they were also
21 responsible to take care what is happening in the industry manufacturing,
22 so a clear activity to ensure protection of state and regional assets.
23 Q. And if we go on to the next bullet point where you note measures
24 to establish and collect fiscal revenues, you wanted to draw our
25 attention to several documents, the first being 1D 00635.
1 THE INTERPRETER: The interpreters would be grateful if the
2 witness could read slowly. Thank you.
3 THE WITNESS: Yes, I will do that. Thank you for the warning.
4 First, I would like to, of course, emphasize that this bullet
5 reads to establish and collect new fiscal revenues, new fiscal revenues
6 that were not in establishment before, and the first document is Document
7 1D 00635, a decision of the Mostar municipality of June 5th, 1992, on the
8 war tax for workers from Mostar municipality working abroad and
9 pensioners whose pensions were earned abroad. A lot of people from
10 abroad -- a lot of people from Mostar local municipality worked abroad,
11 and in Article 2, it says that:
12 "Workers from Mostar municipality employed abroad must pay 300
13 German marks, Deutschemark, a month to the Mostar municipality HVO as war
15 And then in Article 3:
16 "For the pensioners who earned their pensions abroad, but have a
17 place of residence in Mostar ..." and this money was coming from abroad
18 into the country or it was -- it stayed on the accounts abroad, "... must
19 pay war tax to the Mostar municipality HVO every month."
20 And it defines that, of course, that tax shall be 15 percent of
21 the pension for all pensions up to 800 German marks, and for pensions
22 above 800 German marks it was set at 150 German marks. Again, a measure
23 by which, of course, this -- this -- this -- new fiscal revenues shall be
25 Then in Article 4, it says where this and how had war tax shall
1 be paid. Since there were no banking up and running, the Article 4 says
3 "These war tax shall be paid into the Mostar municipality HVO
4 giro account, non-residential account, at the Splitska banka, DD joint
5 stock company Split
6 HVO office for finance."
7 Again, a measure by which new fiscal revenues and, of course,
8 depositing of that had been undertaken.
9 Q. All right. Now, if we go on to the next document, 1D 02996.
10 JUDGE TRECHSEL: If I may just add a question to what you have
11 just said. Do you know by which ways, how foreign payments reached the
12 persons concerned in Mostar?
13 THE WITNESS: Well, before the war, that has been done through
14 the banking system. There were, let's say, Yugoslav banks having
15 branches abroad, especially in Germany
16 Now, with this decision, Mostar pensioners could instruct the pension
17 fund of, let's say, a particular either enterprise or German pension
18 funds where this money shall be deposited. And since they could not --
19 since the banks were not up and running in -- at that very period in
20 Bosnia-Herzegovina, the opening of the non-residential account was the
21 only way to do it.
22 After, and we would see later the first banks were
23 re-established, and the first, you know, foreign transactions were
24 undertaken, then -- you know, then it was paid via the normal
25 international transactions.
1 JUDGE TRECHSEL: If I understand you correctly, that means that
2 these monies were paid on accounts in banks outside of
4 THE WITNESS: Well, these monies, as says in Article 3 -- 4, they
5 were paid to a non-residential account of the HVO municipality in a bank
6 outside, a very normal situation which usually happens if you have within
7 the country a non-functioning banking system.
8 JUDGE TRECHSEL: Thank you.
9 MR. KARNAVAS:
10 Q. Okay. If we go on to the next document, which is 1D 02996.
11 A. This is a decision by the Prozor municipality on war tax to be
12 paid out the basic personal income, and in Article 2 it says that this
13 war tax is set at 80 percent of the net personal income.
14 Again, a new measure, not --
15 JUDGE TRECHSEL: Excuse me. I have heard you say, and I read, 80
17 THE WITNESS: 80 percent.
18 JUDGE TRECHSEL: 80, four-fifths?
19 THE WITNESS: Yes.
20 JUDGE TRECHSEL: Thank you.
21 MR. KARNAVAS: It's right on the document, Your Honour, Article
23 Q. If we go on to the next document, which is --
24 JUDGE ANTONETTI: [Interpretation] One moment. Witness, you are
25 an expert witness. This is quite a surprising document because we can
1 see that taxes levied on somebody who has personal income to the tune of
2 80 percent. I fail to understand. Is the tax rate 80 percent of one's
3 income, or is the individual to be taxed on 80 percent of what that
4 individual has earned based on a specific tax rate? How is this to be
6 THE WITNESS: Well, that had to be read as follows: When
7 somebody was employed with a company, he received 100 units as net, and
8 the company paid as a war tax 80 units of a war tax. So his cost to the
9 employer was 180. Employee brought home 180 was paid to the, that case,
10 war budget. So it's not what we know as a marginal rate of 80. It's --
11 as it says, Article 1:
12 "All taxes and contributions paid out of the basic personal
13 income shall be transformed into war tax out of the basic personal
15 And the way that is done is it is on top of 100 which he
16 receives. This is the time when there were no personal income taxation.
17 This is the way how employer had been additionally taxed for the net
18 income paid to the employee.
19 JUDGE TRECHSEL: Can you tell us, Mr. Cvikl, what this meant in
20 practice? It raises the cost of labour for the employer enormously to
21 almost double. Would that not then have as a consequence that the salary
22 is somewhat reduced so as to remain within a viable bracket?
23 THE WITNESS: Well, Your Honour, in old Yugoslav system, that was
24 the way that wages were taxed. So you have a net, and then on top of the
25 net there was so-called, so-called contributions that could go up to even
1 80 or above percent of the -- of the net income.
2 Now, of course, one has to be extremely careful here. In the old
3 time, there was a situation where companies were not able to pay the
4 contributions on a particular net income, but you should also note that
5 these gross wages or the difference between the net and the gross, these
6 so-called contributions on the base of the net income were the main
7 source of the financing, the para-fiscal funds which we were discussing
9 So since there was a very small sales tax in old Yugoslavia, the
10 really major source of income of the government at large, including the
11 para-fiscal funds, were these contributions. These were contributions
12 for the pensions; these were contributions for the health sector, for
13 education, et cetera. So this is a kind of a normal situation. Today in
15 42. But in the time of the hyperinflation, et cetera, for many reasons,
16 including the problem with the value of the money when the money is
17 really collected, could go up to 80 percent.
18 JUDGE TRECHSEL: Thank you very much. But what still puzzles me
19 is that you speak of taxes imposed on the workers, but you say the worker
20 received a salary of 100, and he continues to receive 100 except that the
21 employer has to deliver the double or whatever to the state, and it turns
22 out, looks more like an employer's tax than an employee's tax.
23 THE WITNESS: Yeah, but you have to be extremely careful.
24 JUDGE TRECHSEL: I am. I try to be. That's why I asked you.
25 THE WITNESS: Before the war, before the war, this was a
1 contribution which, as we discussed yesterday, employer paid to the
2 Self-Management Interest Community, to the Social Accounting Office. At
3 the start of the war, the Social Accounting Office at the level of the
4 whole country ceased to exist, ceased to operate. So employers was not
5 able to pay any contributions to the, let's say, pension fund of the --
6 Bosnia-Herzegovina with its account in Sarajevo, but at the same time,
7 you know, employee, if he worked, he still was receiving net wages. So
8 since with the decree which was -- which we discussed yesterday, local
9 communities were authorised to issue a new type of taxations. This
10 synthetic tax, this 80 percent war tax was a way how employer continued
11 to pay costs linked with the employer, but the employer had to pay this
12 now to an account of the Prozor municipality because Social Accounting
13 Office did not work out, and they could not transfer money to the -- to,
14 let's say, accounts of the pension fund in Sarajevo. Even more, I have
15 not seen any opening of the non-residential account of the pension fund
16 of Sarajevo
18 So there was an absence of a new legislation, I haven't seen it,
19 where they would eventually say, okay, you employers in Prozor and
20 elsewhere, give money that you would otherwise, normal circumstances, if
21 the communication would be up and running, paying to accounts of the
22 pension funds in Sarajevo
23 reaction by the Prozor municipality since they have to take care of the
24 people. They have to take care of the defence. They were not receiving
25 funds from Sarajevo
1 payments of the contributions and other -- yeah, contributions from the
2 -- on the top of the net wages to this -- into this war tax.
3 JUDGE TRECHSEL: I'm trying to be careful. That's why I -- I'm
4 not yet quite clear. These 80 percent, if I understand you now
5 correctly, do not really mean a new additional tax that is to be paid,
6 but it has the effect that what was due anyway, instead of going to
7 social funds, now goes to war effort funds?
8 THE WITNESS: Yes.
9 JUDGE TRECHSEL: Thank you.
10 JUDGE ANTONETTI: [Interpretation] Witness, to be clear because it
11 does seem to me to be rather complicated. I'll take two situations. I'm
12 a policeman at the Prozor police station in July 1992. Let's say that
13 I'm earning 100 Croatian dinars, just 100 for the sake of clarity. How
14 much will I pay by way of tax on that income?
15 THE WITNESS: If you are a policeman and your net wage is 100,
16 the police station as your employer would have to pay 80 dinars to the
17 Prozor municipality. Now, since the police function is a state function,
18 you could have a situation where they were netting this off. So there
19 were no real transaction because police station could only get money for
20 paying policemans from the Prozor municipality. But if you are shop
21 assistant in Prozor, and shop assistant makes 100, then of course an
22 owner of the shop assistant who makes money out of selling goods would
23 have to pay to Prozor municipality 80 dinars on top of 100 dinar of the
24 shop assistant's net pay.
25 JUDGE ANTONETTI: [Interpretation] Very well. That was the --
1 that was the second situation that I wished to put to you. You've
2 answered. If I am a shop assistant and I earn 100, according to what you
3 say, the owner of the shop will pay 80; I continue to earn my 100 dinars.
4 THE WITNESS: This is exactly. That time, there were no personal
5 income taxation, which is a follow-up development, so the shop assistant
6 would take home -- would take home --
7 JUDGE ANTONETTI: [Interpretation] Well, that's where there is a
8 mystery. How come, whereas we're in a period of war where everyone must
9 contribute to the war effort those who are not earning, those who have an
10 income, be they policeman or shop assistant, don't personally contribute
11 themselves to the taxes, to war taxes? Why was that not put in place?
12 THE WITNESS: For a shop assistant or -- the situation is same
13 before the war and once the war started. He paid -- he got 100 dinars,
14 and the owner paid 80. There were some other measures that we have seen
15 that they did not -- they were not increasing the wages, but him working
16 and him continuing paying -- receiving 100 wages, he was to a certain
17 extent contributing to the war effort. So that's, I mean -- I would not
18 -- I have not seen that now the shop assistant would receive less net
19 wage, less net wage. He would receive the same 100, but the shop owner
20 would continue to pay 80 - that's how it was defined here - to the Prozor
21 municipality to provide funds for the, you know, things that Prozor had
22 to undertake.
23 JUDGE ANTONETTI: [Interpretation] If I understand, because all
24 this is rather complicated, in fact, the citizen, whether he is a
25 policeman working in a barber shop or an employee for a company, doesn't
1 himself contribute through the tax to the war effort; it's his employer,
2 not him.
3 THE WITNESS: Well, we have discussed yesterday that most of the
4 socially owned enterprises practically collapsed, so these were what
5 really, you know, enable the survival of the population were, you know,
6 really private traders, private shops. So whether this shop assistant is
7 a son of an owner or a brother of an owner or he himself an owner, I
8 don't know. I mean, I didn't go into the test, but I did not have a
9 feeling that there would be, you know, a new personal income tax imposed
10 by which he would receive less of a -- less of a net wage. I mean, he
11 anyhow had to survive in this difficult circumstances. And I would even
12 claim that since, you know, for any economic area you need to have people
13 there, taxing them additionally would mean that, you know, they would
14 pack and they would go. So I don't see from an economic point of view
15 imposing additional person income tax by which shop assistants would take
16 home less would be beneficial. Most likely, this Bosnian dinars or
17 whatever he was earning, given the fact that there was a limited supply
18 of goods, did not actually buy the same amount of kilos of bread, litres
19 of milk, et cetera, than it was before the war.
20 So everybody was taking, you know, a hit. In what form, it's
21 difficult to say. I was not doing the analysis of particular households,
22 you know, looking to what was the so-called disposable income of a
23 particular family. But I don't see an economic instrument, the one you
24 are suggesting, as a useful measure in wartime circumstances.
25 MR. KARNAVAS: Thank you.
1 Q. If we go on to the next document, 1D 02997.
2 A. This is a document by the same Prozor municipality, which is a
3 decision on a location of funds by the workers employed abroad for the
4 needs of defence of Prozor municipality. And here, again, as in some
5 other, those who are employed abroad in Article 1st and have a permanent
6 residence in Prozor municipality are obliged to allocate 30 percent of
7 their monthly net salary for the needs of the defence. And then in
8 Article 3 says that those who do not want to allocate mentioned funds are
9 obliged to return to Prozor municipality immediately. So this was a way
10 how you requested from those abroad that were not paying any taxes into
11 Prozor municipality, they either report and they are mobilised, or they
12 pay 30 percent of their monthly salaries into Prozor funds.
13 And then what I think is also important here, in Article 4 it
14 says that payments of funds shall be done through Coordination Committee
15 Rama with head office in Munich or in Prozor municipality for the war
16 budget. Again, attempt by individual local municipalities to collect
17 funds and to even have an office in Munich, this Coordination Community
18 Rama to collect those funds. Certainly economically unviable measure,
19 but a measure which was adopted out of the needs.
20 Q. If we go on to the next document, 1D 02995. 1D 02995.
21 A. This is an early decision of April 7, 1992, passed by the
22 assembly of the Ljubuski municipality on obligatory solidarity allocation
23 for the needs of defence of Ljubuski municipality; and Article 2 is an
24 example of what Your Honour has suggested before, and it says:
25 "All persons employed in public and private companies and shops
1 are obliged to allocate solidarity funds. The amount of allocation is
2 1.000 dinars."
3 This is a kind of a new tax on top of their net salaries, a
4 special solidarity fund. Now, what was 1.000 dinars at that time, I
5 don't know, but most likely it was not a very big amount, but the
6 assembly of Ljubuski have identified that, you know, 1.000 dinar is what
7 people can pay. Then, of course, it says that those funds shall be done
8 to the account of funds for joint needs for Defence of Ljubuski
9 municipality - I'm reading Article 3 - and then the account number is
10 here, when the first salary is being paid, which means that it is active
11 as of now on, and here in principle, employer had been request to pay
12 that for the employees. Was he for that very reason reducing net pay or
13 he has just higher cost, I can't comment; I can't see that out of this
14 document. But, again, it is a measure of additional new fiscal revenue
15 to support the defence and to collect money for the social services of
16 the country.
17 Q. All right. And if we go on to another municipality now, and
18 let's look at 1D 01771.
19 A. This is a document of May 2nd, 1992, by Posusje, a decision on
20 obligatory financing of defence. And here, it says, similar as we have
21 seen before with another -- with - just a second - with Prozor
22 municipality, the Posusje municipality in Roman ii decided that:
23 "For the citizens from the territory of Posusje municipality who
24 are permanently employed abroad, the obligation is introduced to pay
25 monthly the amount of 200 Deutschemark or the value of that amount in
1 another currency for the needs of financing of national defence of
2 Posusje municipality."
3 When I visited Bosnia-Herzegovina in December of 2007, I talked
4 to people about these type of measures, and the notions that they were
5 telling to me is that they were, of course, identifying such measures,
6 and then more or less all of them, you know, tried to impose taxation on
7 those that worked abroad. But again, a measure, individual measure, new
8 tax undertaken by another local municipality, in this case, Posusje
10 Q. And, again, staying with the same municipality, if we could --
11 JUDGE TRECHSEL: Mr. Karnavas, excuse me if I interrupt. It
12 seems to me that this is very repetitious. We have I don't know how many
13 examples. They all go into the same direction. They illustrate the
14 point I think quite markedly. I wonder whether it is really necessary to
15 have such a huge amount of more of the same? You are not the one that
16 does not complain of lack of time, and I wonder whether this is really
17 the best possible use of it.
18 MR. KARNAVAS: Well, if I -- Your Honour, if you're making a
19 finding of fact on this particular issue for which I can count on in the
20 final judgement, fine.
21 JUDGE TRECHSEL: There is no charge on Ljubuski or other
22 municipalities collecting money, so I don't see which point of the
23 indictment alleges that as a crime. I don't see that.
24 MR. KARNAVAS: Okay. I'll spell it out with three simple
25 letters: JCE. It goes to the JCE. This is the whole problem, Your
1 Honours. I mean, I did not draft the indictment. I certainly did not go
2 ahead and put the imprimatur of the ICTY on it, but I have to live with
3 it. And we're trying to show that measures were taken everywhere; the
4 same measures are going on all over the place. Why? Because the
5 Prosecution is alleging that there is an attempt to Croatise; there's an
6 attempt to create a state within a state. Here, we're showing that all
7 these municipalities are doing the same thing under very difficult
8 circumstances. They're taking reasonable and necessary measures. It
9 goes against the JCE. That's all I'm trying to do.
10 JUDGE TRECHSEL: Of course. Of course. I understand that
11 perfectly, and I think you have done a lot of it, and I do not see the
12 added value of added examples because this is all -- as far as I can say,
13 so far it's quite -- this point, I think you have really well made.
14 MR. KARNAVAS: Very well, Your Honour. I'll go to the next
15 bullet point, and I'll try to get the other documents in by way of
17 JUDGE ANTONETTI: [Interpretation] Yes, I agree with my fellow
18 Judge. You have amply demonstrated with all these documents that a high
19 number of municipalities were -- whatever they were, they were doing the
20 same thing. We can see that.
21 But just by way of curiosity, Witness, we see that all
22 municipalities will tax the workers who are abroad. Here, for instance,
23 we've seen 200 Deutschemarks. Now, let's imagine that in a Muslim
24 municipality this text is implemented; but the dweller, the inhabitant
25 living there who is working abroad, he is a Croat. That means that the
1 Croat will pay 200 Deutschemarks for the needs of the Muslim
2 municipality. Let's do the opposite now. We are in a Croatian
3 municipality, that of Mr. Topic, say, and does the same, and he requests
4 200 Deutschemarks from the Muslims working in Munich. Did you address -
5 in my view - not to determine whether there were remittances of monies
6 coming from other ethnic groups?
7 THE WITNESS: Well, we have show yesterday and, I mean, the
8 documents were -- there were these taxes also imposed in Jablanica and in
9 Tuzla region. What I have none not seen in these documents, I have not
10 seen that the -- Posusje, for example, requested that these war tax shall
11 be paid only by the Croats or the other way around. I have not seen
12 this. I mean, gastarbeiter is gastarbeiter with a permanent resident in
13 a particular local community, and they were of a different nation, but
14 they were all at that time Yugoslav citizens or Bosnia-Herzegovina
15 citizens. So I have not seen any of the, quote, "differentiations" by
16 the -- what is a nationality of particular -- everybody was trying to,
17 you know, defend the house he owns in Posusje, and by, you know, paying
18 this into it, if he could not, you know, be mobilised and go into it,
19 that's what he contributed to so that his house he had built with, you
20 know, his savings or in Tuzla for the same sake. So that's what they
21 were doing. And yes, they were -- I mean, the local municipality have,
22 you know, invented these taxes both because they were authorised to do it
23 and because there were no other means from the central government to
24 ensure defence.
25 JUDGE TRECHSEL: Could you tell us more precisely until what time
1 this system operated? Throughout until March 1994?
2 THE WITNESS: The way I see that is that throughout the
3 Bosnia-Herzegovina, you have those measures practically up to the point
4 that there were some other region-wide measures implemented, and from
5 what I could see later on is that once the -- in the Croatian Community
6 of Herceg-Bosna, region-wide taxation was imposed, and this slowly had
7 been, you know, vanishing out. But in the case of, as we had seen
8 yesterday, Zenica and Travnik and even Tuzla, because the situation in
9 Tuzla, from what I understand to discussing then, was much more difficult
10 in 1993, some of these taxes were imposed once in the area of the
11 Croatian Community of Herceg-Bosna were already given up. So the type of
12 the measure was in place practically throughout the war, but in different
13 areas in different times, and that's why it was so difficult for the
14 executive authority once established to really go with region-wide
15 measures because if a particular municipality was well off because they
16 have a lot of gastarbeiter, they will say, No, this is our money; we
17 don't want to share it.
18 JUDGE TRECHSEL: Thank you.
19 MR. KARNAVAS:
20 Q. Okay. If we could skip the next three documents in your binder,
21 and we'll just go to the next bullet point rather quickly, which deals
22 with -- to allocate fiscal revenues into the budget. The next document,
23 sir, is 1D 00561.
24 A. Yes. This is the document by the Mostar municipality where it
25 says in -- on -- it's the decision of June 5th, 1992, and it's a decision
1 on the allocation of basic and special sales taxes on goods and services.
2 And in Article 1, it says that:
3 "All legal and physical entities and all legal and physical
4 persons conducting business in Mostar municipality and liable for tax on
5 sales of goods and services are obliged to calculate and pay the basic
6 and special taxes to the giro account of the war budget of Mostar
7 municipality." Which means that they have not just collect fiscal
8 revenues, but they were allocating these revenues not for their own needs
9 but into the war budget.
10 Q. All right. If we can look on to the next document, which refers
11 to as a way of an example to your bullet point to collect revenues for
12 particular social services. The next document is 1D 02990.
13 A. Yes. This is a document which tried to -- which, of course,
14 proves what I, you know, put in the bullet, that they organised
15 themselves for -- that they collect funds and -- or later, we'll talk
16 about organisation, to collect revenues for particular social services.
17 Here, what we see is a decision of August 21st, 1992, document 1D 02990,
18 of the Ljubuski municipality where in Article 1 it is defined that the
19 health centre Ljubuski is allowed to introduce participation payment for
20 health services pursuant to proposed lease as follows, and then it says
21 that 100 dinar shall be paid for the general practitioner check-up. Just
22 for your information, such a measure was imposed in Slovenia only once we
23 you know, undertake the reforms of the health sector in 1994, 1995; but
24 here it's a measure to collect revenues to ensure that the healthcare
25 centre shall continue to operate because the health care centre Ljubuski,
1 which would have to be financed by the Self-Management Interest Community
2 for health care from the level of the country of Bosnia-Herzegovina, was
3 not receiving funds. People need to go to the general practitioner; they
4 had to pay.
5 What I think is important, that in Article 2 there are
6 exemptions, who is not to pay this participation, which means that the
7 economic situation of a particular individual is taken into account and,
8 of course, it says the -- that the army member shall not be being paid,
9 pregnant woman shall not paid these contributions, pregnant woman,
10 children under 14 age, person with chronic diseases.
11 Q. All right. And finally, the last bullet point, there's one
12 example that you wanted to share with us, and that's 1D 00544 --
13 JUDGE ANTONETTI: [Interpretation] Mr. Karnavas. Witness, on this
14 last document, I have the following question for you: In terms of a
15 possible discrimination, let me take the theoretical example of an
16 inhabitant of this locality, Ljubuski, has a wife and two children. That
17 individual is aged 24 years, and as he knows that he belongs to the
18 Republic of Bosnia-Herzegovina, he has decided to enroll in the Army of
19 Bosnia-Herzegovina and he's gone off, I don't know where, perhaps to
20 Sarajevo or to some Territorial Defence unit because he wishes to defend
21 his country, in particular because there's Serbian aggression. His wife
22 and children still live in Ljubuski. He's gone off to do his military
23 duty. If we apply this text in this situation, he will not be exempt
24 because he is not -- doesn't belong to the HVO army. His neighbour, his
25 neighbour who has joined the HVO is exempt, but he isn't. Isn't there a
1 problem there?
2 THE WITNESS: No. I think that he would fall under the last
3 category: persons of poor material status. It is known that the Army of
4 BiH was not being paid, so he will not have funds. The same manner, his
5 wife would, of course, most likely be under that term. So I don't see
6 this situation. So he would -- I mean, there are six lines, HVO army
7 members, pregnant woman, and then there's the last one, persons of poor
8 material status. I also kind of, you know, was trying to see whether
9 that would be the case, but, you know, given the last line, and he would
10 certainly be of a poor material status because he -- from what I
11 understand and looking to the war budget of Republic of
12 Bosnia-Herzegovina, the wages were not really paid to the army members,
13 and he was not employed; he would be mobilised; he would be of a poor
14 material status.
15 JUDGE ANTONETTI: [Interpretation] But if he owned his house, he
16 would have money because six months prior to that he was earning a good
17 living in Germany and he has returned to Ljubuski and that, in fact, he
18 has a Mercedes parked outside the house, his wife has a television, a
19 fridge, and they have no difficulty whatsoever.
20 THE WITNESS: Here, I could explain that even today in the, let's
21 say, countries that transited from the former Yugoslavia, we only look
22 into the incomes. We are not yet able to look into the - what you call
23 it - the assets of a particular individual. So if he would show that he
24 does not have income, nobody would say, Okay, you have to sell the house
25 or you have to sell the Mercedes parked or the TV, and then, you know,
1 you show up with this for the doctor. I mean, this is the situation
2 which had had been -- one could say economically is not right, but this
3 is the way the system works even today. In Slovenia, if you have a, you
4 know, very low income, you are, of course, authorised to have the
5 services and pay lower contributions. We don't look into the assets,
6 real assets or net wealth of an individual.
7 JUDGE ANTONETTI: [Interpretation] Very well. Thank you.
8 MR. KARNAVAS:
9 Q. It's not like the Registry of the ICTY, Your Honour, when
10 determining the ability of an accused to make contributions.
11 If we go on to the very last document, 1D 00544, which is to
12 organise for particular social services, and there was one example, and
13 we'll finish up with this slide.
14 A. This is example where on May 21st, 1992, Mostar municipality
15 issued the -- adopted the following conclusion, to proclaim the hospital
16 in Mostar a war hospital. In that context, it says in Article 2 that all
17 the capacities and activities of the hospital must be put in the service
18 of liberation of the town, which means that they, of course, re-organise
19 their ordinary programme of operation, et cetera, to support the
20 activities of the liberation, which is, again, the way municipalities
21 organise themselves to cover the social services.
22 Q. All right. If we could move on now to the next slide, and if we
23 could move at a quicker pace so we could wrap it up as expeditiously as
25 A. Yes. What was the result of these independent actions by local
1 municipalities in the territory of the Croatian Community and also
2 elsewhere? Well, clearly, local municipality only took care of their own
3 economic area. But they could not -- or they were not interested in
4 undertaking some of the measures that one would of course like to see
5 that would help those local communities that were of a lower level of
6 income generated. Especially, that became problematic as far as the
7 infrastructure is concerned. If a breach was down, and that breach, of
8 course, was a bridge important for not just one local municipality but
9 for the other, as well, a particular local municipality in which maybe
10 there was that bridge only took necessary care to make, you know, a path
11 around it; but, of course, they were not concerned about undertaking
12 region-wide repairs, telecommunications, local communities collecting
13 taxes, either in cash, et cetera. They were not very much interested to
14 support development of the infrastructure, telecommunications, by which
15 their local Social Accounting Offices would start to need paying funds
16 into the wider region budgets.
17 So I'm also mentioning in the report that once in the fall of
18 1992, kids were about to return to schools. Situation in particular
19 local communities were different. Some of local communities have
20 sufficient funds to ensure, you know, teachers' pay, books, notebooks,
21 et cetera, for the kids. Others were not. If you want to send students
22 back to university, you need to collect funds at the region-wide level to
23 re-open university of Mostar, and that's why for this very reason, in
24 this first period, the Presidency of the HZ had been established as the
25 coordinator between the local community, and the presidency have started
1 to undertake some of the measures that would -- at the region-wide level,
2 at the region-wide level to somehow provide good economic environment.
3 And that's why I say that already in this first phase it was good that
4 the presidency already adopt some of a decision like a decision on the
5 public enterprises in the Croatian Community of Herceg-Bosna where it
6 says which are, and here I would like to refer to document 1D 02018.
7 Q. That's correct. Okay. Go ahead.
8 A. Where in Article 1, it says that interest -- in the interest of
9 socio-economic developments and the protection of nature and the natural
10 resources of the Croatian people and other peoples in the Croatian
11 Community of Herceg-Bosna, the presidency of the Croatian Community of
12 Herceg-Bosna has adopted a decree establishing public enterprises in the
13 following areas: First one, A, production, transmission, and
14 distribution of electrical energy.
15 Q. Slow down. Slow down.
16 THE INTERPRETER: Could the witness please slow down when
18 MR. KARNAVAS:
19 Q. Slow down and enunciate.
20 A. Im' sorry. A, production, transmission, and distribution of
21 electrical energy; B, water management activities; C, forestry
22 activities; D, mining activities; E, postal, telephone, and telegraph
23 services, et cetera, all those enterprises that have region-wide
24 importance. I would like also to refer to Article 3 saying the public
25 enterprise shall be managed by a managing board appointed by the Croatian
1 defence council of the Croatian Community of Herceg-Bosna, or the -- for
2 the first time the Croatian Defence Council of the -- the Croatian
3 Defence Council -- the Croatian Defence Council appearing, and it says
4 that the presidency of the Croatian Defence Council in Article 4 shall
5 appoints an acting director for the public enterprises, clearly measure
6 that was positive and, of course, enable normalisation of the region-wide
7 -- or the wide region than just one local community.
8 Q. All right. Now, if we could -- I think we are ready to go on to
9 the next slide, which would be slide 31, and for this we have two
10 documents, and we have approximately 7 minutes before the break. Perhaps
11 we could finish both the slide and the two documents. So -- go ahead.
12 A. In this slide, we are still in the first phase, but already in
13 the first phase it's positive that the presidency adopted decrees
14 regarding reactivation and re-establishment of the Social Accounting
15 Office, and here I would like to refer to Document 1D 0003 [sic]:
16 "Decree on the establishment of public auditing service..." or a
17 proper English translation would be Social Accounting Office, brackets,
18 "... in the event of a state of war or imminent threat of war in the
19 territory of the Croatian Community of Herceg-Bosna."
20 Article 1 establishes this office, and Article 3 gives an
21 authority that a separate decree, which would be subsequently issued by
22 the Croatian Community of Herceg-Bosna, Croatian Defence Council shall
23 prescribe more closely the internal organisation, powers, and tasks of
24 the SDK, Social Accounting Office, of the Croatian Community of
25 Herceg-Bosna, a measure important because if you want to implement the
1 region-wide measures, you need accounting office. You needs tax
2 administration. You need -- again, re-establishing cashless society, you
3 need to ensure that there will be there government institution helping
4 you in recreating economic environment.
5 MR. KARNAVAS: To make sure that the record is correct and
6 accurate, Your Honours, it's 1D 00003, so there's four zeros plus 3. I
7 notice earlier it was three zeros. We have four zeros plus 3. Now, if
8 we could go on to the next document. As I understand, it's 1D 00 --
9 JUDGE ANTONETTI: [Interpretation] Witness, this Document 00003 is
10 interesting because there's a preamble that sets out the reasons why this
11 decree is adopted, this aggression, the breakdown of the economy,
12 suspension of legal transactions, the use of dinars, et cetera, et
13 cetera. All is very well explained, and then the decree establishes or
14 re-establishes the SDK, but from your standpoint - because you are a
15 Defence witness, but given your Slovenian origin, you are neutral - if
16 you had to deal with such a decree, would you have automatically
17 mentioned the Croatian Community of Herceg-Bosna, or would you have
18 mentioned the Republic of Bosnia-Herzegovina but given the degradation of
19 the state apparatus at local level it was necessary to establish this?
20 So as a technical practitioner, how would you have drawn up this decree?
21 But you don't have to answer. If you wish to answer, please do so.
22 THE WITNESS: I have no problem answering because I'm -- I try to
23 be here as an expert. This measure should have been undertaken by
24 Republic of Bosnia-Herzegovina. It had not been undertaken. The Social
25 Accounting Offices ceased to operate. Once the territory of Croatian
1 Republic of Herceg-Bosna -- sorry, the Croatian Community of Herceg-Bosna
2 has been liberated, an authority had to reconnect those Social Accounting
4 So in the way, the decree is of course written, especially the
5 introduction where it says that, of course, that obviously other province
6 in the Serbian Republic, the use of dinars of the federal republic, I
7 think is the way to do it. It is to reconnect the economic area of not
8 just one local community. If they would hereby establish the SDK for the
9 whole Republic of Bosnia-Herzegovina, that would be beyond their
10 responsibility, right? This is the -- I understand issued by the
11 presidency of the Croatian Community of Herceg-Bosna, which is a group of
12 local community. Perfectly, perfectly, given the presidency decree here,
13 it would be -- says legally perfectly would be, while the district of
14 Mostar as entitled to do that by the presidency decree of the Republic of
15 Bosnia-Herzegovina on counties hereby issues and establishes Social
16 Accounting Office of the district of Mostar. But I don't know whether
17 they knew that at that time.
18 But it is a logical reaction to go and create Social Accounting
19 Office and even more, in the next document, 1D 00013, to establish
20 customs administration on the territory. Why is this even more important
21 document? Because with the establishment of customs administration, they
22 establish a border between Republic of Croatia, and what used to be
23 administrative border of Bosnia-Herzegovina, which now becomes, of
24 course, a border of Republic of Bosnia-Herzegovina where the control
25 checkpoints of the customs administration that has been established was
1 up and running, all in order to normalise economic activity in the area
2 of not just one local community, but many local communities.
3 JUDGE ANTONETTI: [Interpretation] Well, you've just said two
4 important things in your answer, and as part of the cross-examination,
5 the Prosecutor might return to these points, but it must be on record.
6 You have just said that Mate Boban, who signed this document, was in fact
7 acting as the head of a group of local communities. That's the first
8 thing you said; and then, but this has been also mentioned with other
9 witnesses, you have just said that the customs system that was set in
10 place was tantamount to creating a border between the Republic of Croatia
11 and Herzegovina, that is, the Republic of Bosnia-Herzegovina. These are
12 two essential points. Are these the points that you highlight in your
14 THE WITNESS: Both decrees are decrees on establishment of public
15 auditing service and the customs administration in the event of a state
16 of war or imminent threat of war on the territory of the Croatian
17 Community of Herceg-Bosna. I see this as a temporary measures, but they
18 were the temporary measures undertaken in order to ensure economic-wide
19 efficiency or region-wide efficiency. I never met Mate Boban. When I
20 was reading these documents, these are very similar documents that one
21 would undertake if you have or if you want, instead of connect and have a
22 control over one local community, have economic control over bigger group
23 of local communities. I have said earlier, Your Honours, reading the
24 presidency of Republic of Bosnia-Herzegovina decree on districts - we
25 will get to it - maybe it would be appropriate to put in the preamble,
1 also, this decree, but then of course that decree puts local communities
2 together in a different manner than it was done by the Croatian Community
3 of Herceg-Bosna and that the way the Croatian Community of Herceg-Bosna
4 local community were put together was really depending on what was the,
5 you know -- what were the military activities took place.
6 I would claim that once the customs administration was put in
7 place, was put in place in order to prevent economic taking-over by
8 Republic of Croatia, the territory of the local communities north of
9 administrative border what was in the Republic of Bosnia-Herzegovina
10 because that's what they did. They established the customs, checking
11 points so that they knew what is coming in and what is going out. If
12 they were not acted, this would be economically very soon part of
13 Dalmatia. Economically. This is what I'm saying. This is -- the
14 analysis which I make is that these are logical economic measures one
15 does in order to reconnect local communities.
16 JUDGE ANTONETTI: [Interpretation] Very well. Mr. Karnavas, you
17 and I are looking at the clock. Did you have another document before
18 finishing with this point, or can we have the break now?
19 MR. KARNAVAS: I think we can have our break now, Your Honour.
20 MR. STRINGER: Excuse me, Mr. President. Sorry for --
21 JUDGE ANTONETTI: Yes, Mr. Stringer.
22 MR. STRINGER: It would assist us in organising ourselves during
23 the break to know how much time other Defence teams are planning for
25 JUDGE ANTONETTI: [Interpretation] Indeed. For the time being,
1 Mr. Karnavas has used 3 hours, so in theory, he has another one hour.
2 Maybe he won't need it. Based on the decision by the Trial Chamber, the
3 other Defence teams will have two hours. I don't know how they split it
4 up. Ms. Nozica, we haven't heard you in a long time. It was last year,
6 MS. NOZICA: [Interpretation] Good afternoon. Yes, and I'd like
7 to take this opportunity to wish everybody in the courtroom a happy new
8 year because this is the first time I've taken the floor. I remember
9 what Judge Antonetti said, that this will be the best year for us, and
10 before I begin my Defence case, I wish to believe that, and I wish to
11 tell you straightaway that the Defence of Mr. Stojic has no questions for
12 this witness. Thank you.
13 JUDGE ANTONETTI: [Interpretation] Very well. What about you, for
14 Mr. Praljak?
15 MR. KOVACIC: [Interpretation] I would like to consult with my
16 client. There might be some, but we will be certain after this break.
17 Mr. Praljak shall give me that he have some. I still don't know what
19 JUDGE ANTONETTI: [Interpretation] Very well. Ms. Alaburic.
20 MS. ALABURIC: [Interpretation] Your Honour, on behalf of the
21 Petkovic Defence, greetings to you all, and a happy new year to you. The
22 Defence of General Petkovic has no questions for this witness because I
23 think the witness was very clear and clear in his explanations and put
24 all the relevant facts before us.
25 JUDGE ANTONETTI: [Interpretation] And for Mr. Coric.
1 MS. TOMASEGOVIC-TOMIC: [Interpretation] Good afternoon, Your
2 Honours. Good afternoon to everybody in the courtroom. On behalf of the
3 Coric Defence, I would also like to wish everybody a happy new year. The
4 Defence of Valentin Coric has no questions for this witness either.
5 Thank you.
6 JUDGE ANTONETTI: [Interpretation] Mr. Ibrisimovic.
7 MR. IBRISIMOVIC: Mr. President, we didn't ask for any time for
8 the cross-examination; and therefore, we have no questions. Thank you.
9 JUDGE ANTONETTI: [Interpretation] It may be that Mr. Praljak and
10 his counsel need some time, but they will see. So this is the situation
11 now. Let's have a break, a 20-minute break.
12 --- Recess taken at 3.51 p.m.
13 --- On resuming at 4.17 p.m.
14 JUDGE ANTONETTI: [Interpretation] In terms of time, we are not
15 really under pressure, under any time constraint, because the other
16 Defence teams told us what they plan to do. I don't know what the
17 Praljak Defence intend to do. They may say this straightaway.
18 Mr. Kovacic.
19 MR. KOVACIC: [Interpretation] Yes. Thank you, Your Honour. I
20 can tell you straightaway. We consulted and Mr. Praljak would like to
21 ask the witness a few questions himself in view of the fact that he lived
22 in the area at the time, and so he can throw light on certain interesting
23 elements, particularly those having to do with the pre-war situation and
24 the things that the witness himself talked about.
25 JUDGE ANTONETTI: [Interpretation] Mr. Kovacic, the fact that he
1 lived there does not endow him with any particular expertise, as per the
2 Trial Chamber's decision and confirmed by the Appeals Chamber. He needs
3 to have some technical know-how. I don't think that -- I mean, I don't
4 think that he has that many degrees. Among his many degrees, I don't
5 think he has a degree in economics. I don't think that's the case. And
6 with regard to taxation and everything the witness told us, I fail to see
7 at all what would justify us sort of doing something else than what we
8 decided before.
9 MR. KOVACIC: [Interpretation] Your Honours, Mr. Praljak has no
10 specific knowledge about taxation or the monetary system or things like
11 that. However, Mr. Praljak at the very least has the general education
12 of an average citizen, and I think that is in keeping with the decision
13 that you mentioned where the Appeals Chamber stated that at the very
14 least where he has a special qualifications, then he can be allowed to do
15 so; and as a citizen, he does have those qualifications as somebody who
16 took part himself in the daily life of Croatia and later on
17 Bosnia-Herzegovina, and that is why he does know about these problems and
18 the kinds of problems that occurred and which the witness discussed here
19 in one way or another.
20 So the intention to highlight facts that happened at the time and
21 in that area as an educated citizen who did indeed take an active part in
22 economic affairs and events, he could see this and understand them as
23 relevant events, and these are certainly the same events that the witness
24 as an expert witness highlighted, too, so whether they had a direct link
25 or an indirect link to the collapse of the country and the further
1 economic development of the area.
2 JUDGE ANTONETTI: [Interpretation] I'm going to discuss this with
3 my fellow judges.
4 [Trial Chamber confers]
5 JUDGE ANTONETTI: [Interpretation] As you noticed, we discussed
6 the matter, and the Trial Chamber recalls that there was a decision, a
7 very clear decision by the Appeals Chamber. To intervene, you must have
8 some specific qualification. The Trial Chamber has always granted
9 military qualifications or, in terms of electricity or gas or water, of
10 public utilities to Mr. Praljak. But in economic matters, he doesn't
11 seem to have any specific qualifications. If the Trial Chamber were to
12 grant this, well, there would be no limit anymore. Mr. Praljak or
13 somebody else could then speak to anything. So this is the position of
14 the Appeals Chamber and also the majority position of the Trial Chamber.
15 I'm the spokesperson for the Trial Chamber. Personally, you know what I
16 feel. I don't have to say it again. So, Mr. Praljak, you are not
17 allowed to ask questions. Yes, Mr. Kovacic.
18 MR. KOVACIC: [Interpretation] Your Honours, with all due respect
19 to the ruling since it was a majority ruling, I will respect it, but I
20 have to say for the record, and if necessary we can come back to the
21 matter tomorrow, the Appeals Chamber decision was not correctly
22 interpreted. I haven't got it with me just now, but the decision was
23 that the accused does have the right to examine, and then it said in
24 particular when, and then after that the specificities were mentioned.
25 So it said "in particular." He has the right to examine and in
1 particular, et cetera, et cetera, when specific knowledge, circumstances,
2 and so forth exist.
3 So with your indulgence, think about your decision, and perhaps
4 we can carry on with this discussion tomorrow.
5 JUDGE ANTONETTI: [Interpretation] Mr. Kovacic, if what you say
6 about the Appeals Chamber decision is right, and I would be surprised,
7 you are saying that Praljak is entitled to cross-examine, examine, and in
8 particular in relation to this specific -- it would have a general right
9 to cross-examine. That's not my reading of the Appeals Chamber decision.
10 But we're going to have a new look at it. We're going to examine it
11 again. But your interpretation I think goes way beyond what the majority
12 of judges in this Trial Chamber said and was confirmed by the Appeals
14 MR. KOVACIC: [Interpretation] I apologise. Perhaps the
15 interpretation wasn't correct or perhaps I didn't speak precisely enough.
16 In your first decision before the appeal, the words "in particular" were
17 used in the paragraph which explains the circumstances under which the
18 accused Mr. Praljak would be allowed to cross-examine. So that's what
19 you said, whereas the Appeals Chamber just pointed that out, indicated
20 that, and I remember the sentence full well because I read it word by
21 word, line by line, the decision of the Appeals Chamber and the ruling of
22 this Chamber too. And I'm quite certain that after the decision made by
23 the Appeals Chamber, the situation was cleared up. So your request, the
24 request of this Tribunal -- this Chamber stands that he must have some
25 specific knowledge, in particular when such and such is concerned. So
1 this does not exclude other areas of knowledge. It doesn't call for
2 specific knowledge that you said -- of the type you said military
3 criteria and so on and so forth. It requires certain knowledge of the
4 facts. Now, Praljak was there. That's a fact. He's an educated man.
5 That's a fact. You've already heard that. He did have the power and
6 capability of grasping certain developments in society including economic
7 developments, and he was a subject of those developments as a citizen and
8 partially as a businessman, so I do feel that he can ask relevant
9 questions and that that is in keeping with the decision that you are
10 referring to.
11 And ultimately, you do have the instruments in your hands, and I
12 don't think it would be proper to ban questions before they are posed.
13 Any one of us, even well-trained Defence counsel or counsel in general,
14 can put a bad question, by school definitions. It can be repetitive,
15 leading, or whatever. You are there to correct that as the Chamber, and
16 you did do so along the way. So I don't think it's fair to prohibit a
17 question before it is posed. I've tried to be brief. I have just
18 intimated the kinds of topics that he wishes to raise. If you would
19 like, he will be happy to tell you of the basic areas that he wishes to
20 discuss and cross-examine on, and he can explain why he wants to ask
21 those questions. So that is just my comment. Your ruling stands. I can
22 do nothing against that, but I wanted to comment on it.
23 JUDGE ANTONETTI: [Interpretation] All right. The Trial Chamber
24 has decided to stop this discussion, not to give the floor to
25 Mr. Praljak, but to ask Mr. Karnavas to proceed and continue. Let me
1 just observe this, Mr. Kovacic. Mr. Praljak could easily have given you
2 the questions he intended to ask during the break and you yourself could
3 have asked the questions if indeed these were very essential questions
4 for your Defence. That's all. That's what should have been done. He
5 should have scribbled the questions on a piece of paper to say, You have
6 to ask about this and this document, and you as a counsel, you could have
7 said, Well, witness, as requested by Mr. Praljak, I'm asking you the
8 following questions, and the matter would have been settled.
9 MR. KOVACIC: [Interpretation] Thank you for that possible
10 solution, Your Honour. I would just like to mention that Mr. Praljak
11 yesterday, after this witness began his testimony or, rather, this
12 morning, he read some literature and some material on the subject to
13 remind himself of the substance of what he thought was relevant, and it
14 will be rather difficult, but I think that we will be able to do some of
15 that in the way in which you have suggested. Thank you.
16 JUDGE ANTONETTI: [Interpretation] One moment, Mr. Praljak. I
17 know you want to address the Judges and the Judges, my colleagues, don't
18 want you to. What can I say? I am forced to comply with a majority
19 decision of this Trial Chamber. That's all there is to it. I have told
20 you that through or by writing down something, you could have asked your
21 lawyer to put questions as part of the cross-examination on specific
22 points for specific reasons because last night I noticed this and that
23 and this document was interesting. And as your voice in this courtroom,
24 the counsel could have said, Well, as requested by my client, I'm asking
25 you, Witness, this or that question, or the counsel could also have said
1 exactly what you wanted to ask. He could have read your questions and we
2 would have avoided the problem. But my colleagues don't want you to take
3 the floor. I can't go against a majority decision. So, alas, you have
4 to sit down.
5 Mr. Karnavas, please proceed.
6 THE ACCUSED PRALJAK: Does that mean that I'm not able to address
7 the Court?
8 JUDGE ANTONETTI: [Interpretation] Well, if you want to address
9 the Court on another topic, I'm going to ask my fellow judges. But as to
10 this particular item, that has been settled.
11 [Trial Chamber confers]
12 JUDGE ANTONETTI: [Interpretation] Well, the Judges are telling
13 you and that the accused has to express himself through his counsel. If
14 you want to say that the detention conditions are unbearable, that you
15 can say through your counsel. But personally, you are not allowed to
16 speak. That's what my colleagues are telling you. But you are going to
17 testify in a few weeks, in a few months' time, so keep your energy until
18 then, until the testimony of which will be very relevant for you. If you
19 deem that there are topics that you are not allowed to address now, you
20 can deal with them when you testify, and then you will convey what is the
21 truth for you.
22 Please, Mr. Karnavas, with regard to time, you have one hour
23 left. Based on our calculations, you had 95 hours, but the hour has been
24 used, so possibly you might have 12 minutes for redirect. I wanted to
25 tell you that. I have to be the gamekeeper. You know, we have to look
1 into the situation, but let me tell you that once you have used up this
2 hour, you will only have 12 minutes left because you will by then have
3 exhausted your 95 hours.
4 MR. KARNAVAS: I understand that, Mr. President. Thank you for
5 reminding us on that. For some reason, the time got lost. In any event,
6 if I may be of some assistance regarding this particular issue between
7 now and the time I finish, perhaps Mr. Praljak could write out the
8 questions, and I'm sure that we'll take a break after I conclude, and
9 during that break he can consult with his attorney because I'm sure that
10 the Prosecution would like, perhaps, a break to set up before beginning
11 the cross-examination, so an offer of proof on the record can be made.
12 Now --
13 JUDGE ANTONETTI: [Interpretation] Yes, I think it would be best
14 for you to finish with the examination-in-chief and then we'll have a
15 break. Mr. Praljak can possibly talk with his attorney, pass some
16 questions to him. That seems to be a very sensible idea. Please
18 MR. KARNAVAS: Thank you.
19 Q. Now, prior to the break, Mr. Cvikl, there was a question that
20 came from the Bench based on one of the documents that we saw concerning
21 the customs administration, and I thought that I would show you one
22 particular document which is cited in your report on footnote 816. This
23 is 1D 03004.
24 MR. KARNAVAS: Mr. Usher, if I could get your attention.
25 Q. We will provide you with the document. It is cited in your
1 report, footnote 816, and we have provided copies to everyone. This is
2 just one additional document in addition to the ones that are -- have
3 already been provided, and this is a decision on border-crossing with the
4 Republic of Croatia
5 in light of the questions posed.
6 If you could look at Article 2. And if you could -- do you
7 recognise, first of all, those border crossings, more or less?
8 A. Yeah. I recognise them as the border crossings on the what used
9 to be administrative borders of Republic of Bosnia-Herzegovina before
10 the -- before its independence and at that time socialist Republic of
11 Croatia, so these are the, as far as I know, borders on the southern side
12 of the Republic of Bosnia-Herzegovina.
13 Q. And by looking at these border crossings, based on this decision,
14 can you tell us with any degree of certainty whether these border
15 crossings surround the area that was known back then as Herceg-Bosna, you
16 know, the Croatian Community of Herceg-Bosna?
17 A. I don't have a map here, but if I'm not -- if I'm correct, these
18 are the borders on the -- what I believe is the southern part of the
19 Croatian Community of Herceg-Bosna.
20 Q. So in other words, it's between the --
21 THE INTERPRETER: Would the speakers kindly not overlap for the
22 interpreters. Thank you.
23 MR. KARNAVAS:
24 Q. Yes. So in other words, it's between the Republic of Croatia and
25 the Republic of Bosnia-Herzegovina?
1 A. Yes.
2 Q. All right. Thank you. Now, if we can go back to your
3 presentation now, and I believe we were about to start with slide 32, if
4 I am not mistaken. If you could briefly look at the slide and give us a
5 small commentary -- or short commentary, I should say.
6 JUDGE ANTONETTI: [Interpretation] Witness, before we move on to
7 slide 32, you said something earlier on that I found interesting and I
8 mulled over during the break. Speaking about border or customs crossings
9 and customs tax, you said that some kind of a border had then, thus, been
10 created between the Croatia and Bosnia-Herzegovina, and then you
11 mentioned Dalmatia. I personally do not know Dalmatia. I do not know
12 the beaches in Croatia, so I am really unaware of this topic. But I
13 understood that with relation to Dalmatia, Croatia had the same sort of
14 issues because of customs duties or the absence thereof, there seems to
15 have been an absorption of Dalmatia into Croatia. Could you shed some
16 light? It might be interesting, and since you offered this information,
17 I suppose that you must have some reason for saying that. Could you
18 expand on this?
19 THE WITNESS: Yes, Your Honours. Before I expand, let me just
20 say one more important element with slide 31, and it has to do with
21 basically both activation and re-establishment of the Social Accounting
22 Office and of the customs office. I want to say this because I also read
23 over the break again this preamble, not just of the Social Accounting
24 Office recreation, preamble of the Document 1D 00003, but also the
25 preamble of the Document 1D 0013 [sic], and the preamble of the document
1 establishing the companies of customs administration in the territory of
2 the Croatian Community of Herceg-Bosna says starting from the fact that
3 the Republic of Bosnia-Herzegovina has delegated the --
4 THE INTERPRETER: Witness is kindly asked to slow down, please.
5 THE WITNESS: Has delegated the federal institution with its
6 declaration of independence, and the fact that due to the state of war,
7 it has not established a customs service in the territory of the Croatian
8 Community of Herceg-Bosna, and with the aim of protecting legal entities
9 and natural persons in foreign transactions, the Croatian Community of
10 Herceg-Bosna, pursuant to Article 8 and et cetera, issues the following
11 -- issues the following decree: A document signed by then -- or the
12 president of the HVO Croatian Defence Council, Dr. Jadranko Prlic.
13 Why I mentioned earlier in my testimony the issue of Dalmatia,
14 because Dalmatia is, you know, the southern part of Croatia, and I have
15 said economically if there would be no borders, no customs, border
16 crossing established as defined in the document 1D 03004, economically
17 then Split as the biggest capital of Dalmatia would have economic
18 influence also all the way to the Croatian Community of Herceg-Bosna, and
19 that's why I said that creation of borders and creations of the border
20 crossings undertaken in the absence of activity by Republic of
21 Bosnia-Herzegovina as defined in the preamble of the Document 1D 0013 has
22 actually prevented that economically Croatian Community of Herceg-Bosna
23 would be integrated into area of Dalmatia, and with that, into the whole
24 Republic of Croatia. Because no borders would mean that economically the
25 Croatian Community of Herceg-Bosna would be dealing with, of course,
1 enterprises in the area of Dalmatia, which is, we all know, Republic of
3 And that's why I have said that authorities in the Croatian
4 Community of Herceg-Bosna were in a difficult situation. Why? Local
5 communities have undertaken measures, they could simply sit back and let
6 Republic of Croatia enterprises and economic power which was at that time
7 in area of Dalmatia, in Split, took over economically and economically
8 integrate Croatian Community of Herceg-Bosna local communities into, I
9 said, of course, region of Dalmatia, but legally speaking, this is
10 Republic of Croatia.
11 And measures of creating Social Accounting Office and measures of
12 the decision on border crossing and decision on establishment of the
13 customs office during an imminent threat of war or a state of war and as
14 said in the preamble because Republic of Bosnia-Herzegovina has not
15 undertaken its measure were measured against integrating Croatian
16 Community of Herceg-Bosna, economically speaking, into Republic of
18 I will give you another example from Slovenia. If you were not
19 establish upon independence our border crossings on our southern border
20 with Republic of Croatia, Istra, which is the most western part of --
21 peninsula of Croatia, would economically integrate western part of
22 Slovenia into its own economic territory. So establishing of the border
23 crossing in order to, as said, protect legal entities and national
24 persons in foreign transactions is an activity which is economically
25 appropriate activity if you want to connect local communities and for
1 those local communities to remain within Bosnia-Herzegovina.
2 MR. KARNAVAS:
3 Q. Let me ask a couple of questions based on your answer, and,
4 again, you were referring to, just to be precise, 1D 00013.
5 From your own experience, when Slovenia became independent, did
6 it establish a border crossing between Slovenia and Croatia, and did it
7 do so by way of implementing some sort of legislation?
8 A. Yes. We implemented this by the legislation. We have said that,
9 of course, the federal legislation is not any more valued on the
10 territory of Republic of Slovenia, and we imposed customs points,
11 cross-checks on the very border, and also at the airport of Brnik which
12 is, of course, international crossing checkpoints when you fly in
13 Slovenia. And for that very reason, we were immediately attacked by the
14 Yugoslav Army.
15 Q. That was my next question. How long did you wait, weeks, months,
16 years, to set up a border crossing?
17 A. Well, the Declaration of Slovenia was announced in the parliament
18 of Slovenia on the 25th of June. At midnight of that day, we established
19 and we renamed Yugoslav customs officers into the Slovene customs
20 officers, and we placed the Yugoslav flag and the title of the Socialist
21 Federal Republic of Yugoslavia with the title -- with the signs Republic
22 of Slovenia, customs point, and Republic of Slovenia border immediately.
23 Q. Okay. And now through your involvement in this particular case,
24 having also travelled in Bosnia-Herzegovina, did you come across any
25 legislation signed by the president of the presidency Alija Izetbegovic
1 at the time when Bosnia-Herzegovina was declared independent whereby he
2 established border crossings in a customs administration?
3 A. No, I have not. I have seen only delegation of the federal law,
4 but I haven't seen establishment of the customs administration of
5 Republic of Bosnia-Herzegovina, and I have not seen establishment of the
6 customs crossing points by Republic of Bosnia-Herzegovina I believe not
7 all the way up to 1995.
8 Q. Recognizing that you are here as an expert on economics, however,
9 you've told us your background, and you've told us that you were involved
10 during that transitional phase when Slovenia declared itself independent,
11 based on the questions that were asked by the Trial Chamber, can you
12 answer this particular question: Is that a particular activity that
13 should have been carried out by the president of the presidency or the
14 presidency of Bosnia-Herzegovina the moment Bosnia-Herzegovina declared
15 itself to be independent?
16 A. Yes, it should be. That's what I have said. It was
17 international-recognised state but did not take measures to become an
18 effective state. It did not establish custom points at their external
19 borders, at their former administrative borders of the Socialist Republic
20 of Bosnia-Herzegovina.
21 Q. And one last question. Looking back at 1D 00013 where you
22 mentioned that this document was signed by the president of the HVO, the
23 Croatian Defence Council, of HZ HB, Dr. Jadranko Prlic, if we look at --
24 above the signature, do you see where it says Republic of
1 A. Yes, I see it.
2 Q. Go ahead.
3 A. I see it then says, starting from the fact that the Republic of
4 Bosnia-Herzegovina has derogated the Federal institutions with the
5 declaration of independence and the fact that due to the state of war it
6 has not established a custom service.
7 Q. Yes, but I want you to go back -- I want you to go to the last
8 page, right above where we see Dr. Jadranko Prlic, and before we see the
9 Croatian Community of Herceg-Bosna Croatian Defence Council, what do we
11 A. Well, we see the whole title of the area, Republic of
12 Bosnia-Herzegovina, Croatian Community of Herceg-Bosna, Croatian Defence
14 Q. All right. And you being from the region, in reading that, would
15 you draw any conclusions as to whether the Croatian Community of
16 Herceg-Bosna is outside the Republic of Bosnia-Herzegovina or within and
17 subordinated to?
18 MR. STRINGER: Objection, Mr. President. This question is beyond
19 the scope of the witness's expertise.
20 MR. KARNAVAS: Your Honour, it's an invited response -- given
21 that the Trial Chamber, which is entitled to ask questions even beyond
22 the scope of direct examination and has indeed asked questions beyond the
23 scope of direct examination, this is an invited question based on what
24 came from the Bench; and therefore, having, again, if I may recall
25 yesterday, there were -- and today there were questions concerning the
1 gentleman giving opinions of a political nature, albeit he is here as an
2 economist, I think this is well within.
3 JUDGE ANTONETTI: [Interpretation] This expert witness is an
4 economist, but he's had a political function. He was a minister in his
5 country for European affairs, so I suppose that he has some extended
6 knowledge of quite a few points including political matters.
7 Witness, can you answer or not? It's up to you.
8 THE WITNESS: Yes, I can answer.
9 JUDGE ANTONETTI: [Interpretation] You can. Very well.
10 THE WITNESS: And my answer is as follows: Clearly, the
11 legislation the way it was set both as interim legislation and, clearly,
12 the way it was presented today me, it's a legislation that confirms to me
13 that the Croatian Community of Herceg-Bosna was always within Republic of
15 MR. KARNAVAS:
16 Q. If we can now turn our attention to slide 32, and if you could
17 briefly comment on this slide, and as I understand it you wanted to draw
18 our attention to a particular document, but first, if we could have a
19 brief explanation.
20 A. Slide 32 explains what was the -- what is phase 2 of the economic
21 developments. If in the first phase local communities provided logistic
22 support, in the second phase of economic developments, in this area with
23 -- known as Croatian Community of Herceg-Bosna, the Croatian Defence
24 Council has been established, and I understand it as a temporary
25 executive body. And in that context, now authorities, not just local
1 communities, authorities, but also the regional authorities started to
2 act; otherwise, hundreds of people, hundreds of thousands of citizens
3 would simply leave Republic of Bosnia-Herzegovina. Why I'm saying this,
4 they would not leave from the local communities where there was good --
5 where there was good economic situation, but they would leave -- they
6 would depart from those local communities of that Croatian Community of
7 Herceg-Bosna where the situation was not that good. And in that context,
8 the task of the Croatian Defence Council, the Croatian Community of
9 Herceg-Bosna, was to establish common regional-based financial and fiscal
10 system, simply note to undertake measures at the level of the Croatian
11 Community that would strengthen the economic area of those local
13 Q. All right. Now, if we could look at P 00128, and perhaps you
14 wanted to comment or draw our attention to a particular portion of this
16 A. Yes. I would like to point in this Document P 00128, English
17 translation first, to page --
18 JUDGE PRANDLER: I'm sorry to interrupt you, but really, you
19 always overstep the limits of the translation in a way that -- I'm sorry
20 to ask both of you to stop because, for example, now, the question which
21 was raised by Mr. Karnavas originally, the answer of our expert Mr. Cvikl
22 was also added there. Now, they have corrected this question and answer.
23 But, again, there are difficulties for the interpreters. Let me ask you
24 to accept whatever they have asked you to do. Thank you.
25 MR. KARNAVAS: Thank you, Judge Prandler.
1 Q. Mr. Cvikl, we do need to pause because we're both speaking the
2 same language, so go ahead.
3 THE WITNESS: Yes. I would like to point to the page 34 of
4 Document P 00128. And in the last paragraph before section F, there is a
5 statement, and this is the economic report of that Croatian Defence
6 Council. And the statement read: It should be stressed that with the
7 establishment of a Chamber of commerce, Croatia Osiguranje, insurance
8 company and Hrvatska banka, commercial bank, conditions have been created
9 for reviving the economy on the territory of the community. And this is
10 a proof of that they have worked on establishment of banking
11 institutions. Second, they have not just been dealing with economic or
12 banking sector; they were also dealing with social services. And on the
13 same page, 34 of that same document, there is a statement, the last --
14 the second -- one of the last sentences in the paragraph on the bottom:
15 "Some schools began classes on 7th of September and others
16 depending on conditions. It was the same with schools in central Bosnia.
17 We have no information about schools in the temporarily occupied areas."
18 From here -- from that, I understood that authorities, region
19 authorities, have taken care of ensuring that at beginning of the school
20 year, which in the countries of the Balkans were always September 1st,
21 school started classes.
22 I would like also to raise your attention to the page 35, the
23 second paragraph, at the bottom of that second paragraph, the last
24 sentence read:
25 "Efforts are being made in cooperation with municipal HVOs to
1 repair schools and ensure working conditions."
2 And last point. On page 32 of that document, they point to the
3 problems, but the last sentence on the page 32, the first paragraph on
4 the top read:
5 "Nevertheless, a total revenue of each year 1.188 million was
6 generated until 31st December, 1992, which has primarily been used as has
7 been said for Defence purposes but also on reconstruction and the work of
8 other institutions on the territory of the community."
9 All these were for me proofs that in phase 2, the temporary
10 executive authority of the HVO were making attempts to utilize government
11 tools of collecting revenues to undertake government expenditures but
12 expenditures that go across the whole territory, and especially what was
13 important there, of course, to start the school year.
14 Q. Mr. Cvikl, we talked yesterday and to some extent today about the
15 need for having banks because the SDK wasn't working, but here on page
16 34, it mentions insurance -- the establishment of an insurance company.
17 Why is that necessary, for those of us who are not from the region and
18 may not appreciate the need for an insurance company.
19 A. Well, from my understanding, the reason why you need to have
20 Croatia Osiguranje, insurance company, established on the territory is to
21 undertake an insurance agreement with other countries' insurance
22 organisations so that cars with plates from Bosnia-Herzegovina could get
23 an insurance green card, international transactions, so when they came to
24 the crossing points between Bosnia-Herzegovina and the Republic of
25 Croatia, the car were allowed to be driven into Republic of Croatia,
1 Republic of Slovenia, where they went to collect goods that were to be
2 imported in that territory. Without having insurance, you can't provide
3 logistics for the supply of goods and services in that territory.
4 Q. Thank you. I believe we can move on to slide 33.
5 A. On slide 33, I continue with defining what of course were
6 activity undertaken. We already talk about customs authority, tax
7 administration. And then, of course, I say that there was quite
8 difficult for the authorities to undertake because the challenge was to
9 establish a sound financial and fiscal system. I have said in one of the
10 earlier slides, they could opt that they would simply print the money,
11 but that would mean that they would have a hyperinflation generated by
12 themselves. Now, they have decided to raise taxes, to raise taxes to
13 undertake revenue generation from the collection of taxes, not borrowing,
14 from, you know, anyone. And furthermore, with the fiscal revenues
15 generated, they covered government expenditures that the population need.
16 And I'm also mentioning that why it was so important for the
17 temporary executive authority of the HVO to undertake that is because
18 there was a difference between local communities. If all local
19 communities would be equally well off, then there would be no need
20 eventually for the Croatian Defence Council to be active. But there were
21 some of them that were not well off, and they had to do in that manner.
22 And as we then comment on that very slide, the first results were
23 already achieved in year 1992 by limited collection of the revenues and,
24 of course, by undertaking first measure despite the fact that, you know,
25 they did not have all measures yet fully implemented.
1 Q. Now, I understand you want to draw our attention to two
2 particular documents, the first one being 1D 03003. If could you look at
4 A. Yes.
5 Q. And again, please speak slowly or read slowly so that we don't
6 have any problems with the translation.
7 A. The Document 1D 03003 is the decision on the war budget of the
8 Republic of Bosnia-Herzegovina for the period from April to September
9 1992, Official Gazette, secret strictly confidential 021. And here it is
10 important, and I would like to raise attention to you to page 3. The
11 page 3 says under the 778, then there's a total revenues 1 plus 2, it
12 says that the total revenues of the war budget are 41 billion dinars.
13 However, out of 41 billion dinars, 40 billion dinars are being financed
14 from funds, from loans from BH Navodna banka, National Bank of Bosnia and
15 Herzegovina, was by more than 98 percent financing the expenditures of
16 the war budget. So the total expenses, which on the bottom line equal to
17 the revenues, total expenses, 41 billion equal to the revenues were by 98
18 percent generated by printed cash. This was situation on the territory
19 of the Republic of Bosnia-Herzegovina as undertaken, as controlled by the
20 central government authorities.
21 The problem or the second what I would like to raise in this
22 issue is that on the expenditure side, I have not seen any meaningful,
23 meaningful transfer of funds to the local communities or to districts.
24 This is the period when the districts were already established, but I do
25 not see any meaningful funds being transferred down to the district. I
1 would -- only would like maybe to point to page -- to page 11. You have
2 section 34 on the top, and there it says that the Banja Luka lower court
3 should receive 6.439.000 dinars. There were only limited outlays --
4 outlies envisaged for lower -- in that case, lower courts, but I have not
5 seen any meaningful expenditures to cover activities of local communities
6 or provision of social services at the local level. And that's why I, of
7 course, point to this document because this document, which is the war
8 budget of the whole country, did not provide funds for the activities
9 needed to be undertaken at the local level.
10 Q. All right. If we could look at the next document --
11 JUDGE ANTONETTI: [Interpretation] Witness, I've been listening to
12 you carefully, and I noted that you said that looking at the documents,
13 you failed to find any trace of fund transferred from the central
14 government to local communities. Allow me to wind back a little to the
15 times of the former Yugoslavia. In terms of justice and judges that were
16 working in Mostar in the former Yugoslavia, as far as you know -- or we
17 could take an example of judges in Slovenia. That would be exactly the
18 same. As far as you know, during the time of the former Yugoslavia, who
19 paid the Judges working in Mostar? Were they paid by their federal
20 republic or by the Republic of Bosnia and Herzegovina, or were they paid
21 by local communities?
22 THE WITNESS: I have -- when we discuss the constitution, we have
23 presented that the republics were responsible to finance judges, the
24 judicial system. That's why I have pointed to the item when there was a
25 transfer for the Judges even to Banja Luka, Republika Srpska region. But
1 what was missing, what is missing in the war budget, the way it was
2 defined under the decree which we have seen, there should have been
3 expenditures for the local municipalities or districts if for the society
4 -- if the whole society should be, of course, benefitting from the
5 central government authority. Central government authority financed
6 these expenditures by borrowing from the central bank but have not
7 undertaken expenditures on the other side. That's why somebody needed to
8 act, and that was the lower-level authorities.
9 JUDGE ANTONETTI: [Interpretation] Well, you take the example of
10 Banja Luka. I prefer to stay with Mostar. So in the former Yugoslavia,
11 in theory, the Mostar-based judges were paid by the Republic of Bosnia
12 and Herzegovina. That is what you're saying. When the Republic of
13 Bosnia and Herzegovina became independent, I suppose that the republic
14 must keep paying the Judges. Is that so or not?
15 THE WITNESS: That is so, and that's why in the war budget that
16 has been envisaged. In the war budget, we also have a line for Mostar.
17 Was it exactly actually paid? I don't know. I haven't seen actual
18 expenditures. But what am I missing in the war budget, I'm missing
19 expenditures for other needs of the local municipalities.
20 JUDGE ANTONETTI: [Interpretation] Yes, but as to the Judges
21 working in Mostar, whether they be Croats, Serbs, or Muslims, if they no
22 longer get their pay once they do have work and -- work decided by
23 authority, and work of authority, for the pursuit of this work of
24 authority because without judges -- justice you just have chaos, so who
25 then has to pay for the Judges? Do the local communities have to pay
1 them if the Sarajevo government no longer pays the Judges for various
3 THE WITNESS: Well, I would assume that since the war budget
4 provided a very limited amount for the budget, for the Judges, the needs
5 of the judicial system was later covered by local authority, and we would
6 have an example on the slide 34 where we see that the local authority --
7 actually, in the phase 2 or the temporary executive authority, the
8 Croatian Defence Council has undertaken the repair of the high court and
9 basic common court of Mostar, which would be in normal circumstances a
10 responsibility of central government.
11 JUDGE ANTONETTI: [Interpretation] In your study, did you look at
12 budgetary documents of the time of the Republic of Bosnia-Herzegovina to
13 see whether in the -- as part of the preparation for the budgets there
14 was the inclusion of these republican budgets, be it justice, police, or
15 others, and that there was in that case and via the SDK in Mostar there
16 were payments from the budget of Bosnia-Herzegovina towards the SDK of
17 Mostar so that the SDK of Mostar could pay the Judges? Did you go and
18 check that?
19 THE WITNESS: I haven't checked the actual payments. I checked
20 the Official Gazette with this war budget, but I understood that the
21 telecommunications were down and that the Social Accounting Office based
22 in Sarajevo did not have connections with the Social Accounting Office in
23 Mostar to pay the Judge. So I do not know how much of these expenditures
24 which were envisaged in this budget had been really undertaken. However,
25 if as reported by the report of the economic department and the justice
1 department of the HVO as presented on slide 34 in my report, the repair
2 of the high court and basic communal court in Mostar have been undertaken
3 by them, means that they were not receiving funds to take care of their
4 own repair.
5 JUDGE ANTONETTI: [Interpretation] So I'll consider a theoretical
6 case with you. You're Slovenian; you have responsibilities, so it will
7 be easier for you to answer. Let's assume that at the time of the
8 aggression of the GNA
9 no longer exists, is -- no longer has the wherewithal to pay its judges
10 and policeman, and that in a remote region from your capital, that is,
11 there are policeman, judges, military personnel; no one is paid anymore,
12 whereas they have wives, families, children, et cetera. What would have
13 happened in Slovenia in order to avoid chaos? What would you have done?
14 THE WITNESS: We would most likely went with a very similar
15 matters. If, let's say, the war in Slovenia would not be just for two
16 weeks and during those two weeks' times we were able to utilize some of
17 the strategic reserves that were actually allocated throughout Slovenia
18 in, let's say, free territory of Maribor region, which is the eastern
19 part of Slovenia, most likely very similar measures would be undertaken.
20 I now can also say that attack on Slovenia, which, of course, was
21 a short war, two-weeks' war, was actually at one point in time close to a
22 situation where Ljubljana would be attacked, and in these very
23 circumstances, two things would happen: Central government would leave
24 Ljubljana to the, you know, reserve position, and most likely in Maribor
25 or northern part, similar type of measures that we have seen envisaged
1 under the decree on districts by the presidency of the Republic of
2 Bosnia-Herzegovina and the measures undertaken by the Croatian Defence
3 Council of the Croatian Community of Herceg-Bosna would be undertaken.
4 That would be done most likely in Slovenia at some 8 units, because
5 that's what kind of a number of the quote regions we have, but this is
6 the way the things would continue. We would see very similar measures.
7 Now, how and what kind of measures would that be depends on how
8 difficult the military situation would be. But, yes, one would in war
9 economy situation see similar measures on a particular area of Slovenia.
10 JUDGE ANTONETTI: [Interpretation] Well, still pursuing my
11 hypothetical assumption, so if Ljubljana had been under siege of the GNA
12 with the government blocked in Ljubljana with no contacts with Maribor
13 and that that lasted longer, one week, two weeks, a month, six months at
14 Maribor, what would have happened?
15 THE WITNESS: Well, what would happened, they would following
16 the, basically, military plans, undertaking their own mostly collection
17 of fiscal revenues, and then they would be paying policeman, army people,
18 hospital employee, teachers out of that proceeds in order, you know, to
19 keep people of Maribor, if this would be a free territory, continue to
20 live. They would do a very similar activity which we have seen first at
21 the level of local communities and later at the level of group of local
22 communities. And Maribor, of course, is a big city and a lot of, you
23 know, local communities kind of, you know, surrounded there, so you would
24 see them working together.
25 MR. KARNAVAS: Just a follow-up to this question.
1 Q. Of course, yesterday, you did talk about the self-management
2 mentality or culture that had existed, and I take it that that -- that
3 self-management culture was in place in Slovenia as well?
4 A. Of course. It was same system.
5 Q. All right. And going back to the one question concerning the
6 judiciary. Yesterday, on slide 26 you referred to a document, 1D 02047.
7 You will find that in the first binder. 1D 02047. And I'm sure you will
8 recall, this is the decree law on the application of the law on the
9 financing of general social needs, and you directed our attention to
10 Article 2. And then, again, you directed our attention to Article 3. So
11 when you find it...
12 A. Yes.
13 Q. If you look at Article 2, point 1 -- point 2, Article 2 begins
14 with: The general social needs of the socio-political communities during
15 an imminent threat of war and during a threat of war shall be... and
16 under 2 we can see the Constitutional Court of Bosnia-Herzegovina, public
17 Prosecutor's Office and public attorney's office, courts and penal and
18 correctional facilities, and so on. And then if we look at Article 3
19 that you pointed out where it says that based on Article 2 of this
20 decree, the needs shall be financed from the budget during an imminent
21 threat of war and during a state of war from the appropriate funds of
22 socio-political communities as required. So when I listened to you
23 answer before to His Honour, Presiding Judge Antonetti, it seems to me
24 that this particular decree dovetails the answer that you have given.
25 Can you comment on that?
1 MR. STRINGER: Object to the leading question, Mr. President.
2 MR. KARNAVAS: I can rephrase the question, but I'm sure that the
3 gentleman is capable of answering without me leading the question --
4 leading him. Here is the document, you heard the answer, and I'm asking
5 him to again refer to a document that was already in evidence that we
6 have already discussed.
7 JUDGE ANTONETTI: [Interpretation] Reformulate.
8 MR. KARNAVAS:
9 Q. To what extent, looking at this particular decree, and keeping in
10 mind the answer that you provided to us earlier, specifically to the
11 question posed by the presiding judge, Judge Antonetti, does this decree
12 in any way assist you in your answer, and if so, how?
13 A. Yes. First, decree law defines -- the law on the application,
14 the law on the financing of general social needs defined in Article 2,
15 number 2, that the central government should finance judges. But it also
16 says in point 4 that there shall be additional resources to municipality,
17 and in point -- it says in point 8 that it should be also the financing
18 of the work of public services and particularly of health and social
20 In Article 3, it says that all that has to be composed in the war
21 budget. The war budget, the way it was defined, and this is the Document
22 1D 03003, has revenues, has funds for judges, but it is missing
23 additional resources to the local municipalities, monies for public
24 services, in particular health and social welfare; and thus, local
25 communities were not receiving funds as defined in the decree law. So in
1 the absence of these funds not being there, local communities and later
2 regional communities had to act.
3 However, since this is a decree law on the application of the law
4 of the financing of general social needs and it's a general law and it
5 talks about that there shall be a war budget, the fact that the Croatian
6 Community of Herceg-Bosna executive authority have identified the war
7 budget is perfectly logical. I'm not a lawyer, so I couldn't say its
8 legitimate. But it's perfectly logical that they have undertaken because
9 central government have not financed the needs. So they went ahead with
10 creating additional resources and in the war budget of now wider region
11 of Croatian Community of Herceg-Bosna provide for the expenditures that
12 shall be covered during the war or the situation of the imminent threat
13 of war.
14 Q. Thank you. Now, if we look at the next document very briefly,
15 and this is a document that we saw yesterday staying with the slide that
16 we're on, and this document is 1D 02959. I believe you wanted to draw
17 our attention again to this document.
18 A. Yes. I will draw attention to page 1 of 2 of that document where
19 the IMF analysed in table 31, Bosnia-Herzegovina expenditure shares in
20 the year 1994, 1995. And of course, the most interesting for us is 1994
21 because this is the last year which I was looking to it.
22 And we have seen that in the third column -- in the second column
23 where the Bosniak majority areas is presented, in the second line, wages
24 and contributions, there are no funds undertaken in the Bosniak majority
25 area budgets to cover wages and contributions. This is connected with
1 this Bosnian -- or soldiers in the Army of Bosnia-Herzegovina. On the
2 other side, we see that in the Croat majority area, 11.2 percent of the
3 total expenditures had been wages and contributions. And the social fund
4 expenditures - this is the 1, 2, 3, 4, 5, 6, 7, 8 line - we see that
5 Croat majority area, percentage of the total expenditures was 18.2
6 percent while much lower expenditures at the level of the Bosnian
7 majority area.
8 Q. Let me stop you here. Whatever is on the screen certainly isn't
9 table 31, so just so everyone knows. But table 31 has been provided to
10 everyone with our documents.
11 A. Page 102 of that document, which is now on the screen. Page 102.
12 Q. All right. Well, let's move on. We can put this on the ELMO if
13 anybody wants it. Otherwise, we'll move on.
14 A. It's on. It's now on.
15 Q. Okay. There it is.
16 A. Should I?
17 Q. Okay. Continue very briefly.
18 A. Yes. This is now the table 31, percent of total expenditures,
19 and present that under the second column, Bosnian majority area, no
20 expenditures under the line registers and contributions. 11.2 percentage
21 point of the total expenditures were wages and contribution expenditures
22 on the Croat majority area, and under the social fund expenditure line,
23 much level higher of level of expenditures as percent of total
24 expenditures in Croat majority area, meaning that in the area of Croat
25 Community of Herceg-Bosna, with government expenditures all needs of the
1 society including the social fund expenditure and payments of wages and
2 contributions were undertaken for the government employees.
3 Q. All right. Thank you. We can move on to the next slide.
4 JUDGE ANTONETTI: [Interpretation] If you don't mind, we'll stay
5 on the previous table. Registrar, if we could return to the previous one
6 because I have a question to ask.
7 Yes, we have the previous table, and there's something that I
8 failed to understand and I'm sure you will be able to enlighten us. In
9 column 2, the Muslim majority area, we see that in the column of figures
10 under the title "Other," 58.2 percent, whereas in the Croat area it's .8.
11 Why this significant difference?
12 THE WITNESS: Well, this -- I don't know. I can't comment, but I
13 would assume that these are all goods and services, this all under goods
14 and services, and there seems to be -- military expenditures includes
15 only reported cash expenditures that were carried on the budgets, so
16 there could be some other expenditures under that very column. But the
17 issue which I wanted to raise is the social fund expenditures and the
18 lack of the wages and contributions in that report shows that -- and we
19 also have been observing that, that the government employees in the
20 Bosniak majority area were not paid or they were paid in kind, not cash.
21 And we also know from this discussion, then, and looking to this report
22 that the social fund expenditures in the Bosnian majority area,
23 especially the pensions, were extremely low, while in the Croat majority
24 area the pensions were paid out something like 60 Deutschemark per month.
25 So there were attempts in the both areas which were different, and I'm
1 only claiming that in the attempts in the Croat majority area resulted
2 into a more normal structure of the government expenditures.
3 JUDGE ANTONETTI: [Interpretation] Concerning military
4 expenditures, we note that in the Muslim majority area we have 25.4,
5 whereas in the Croat majority area, 55.8, so almost double; but in 1995,
6 however, we see that there's a reduction of expenditures in the Croat
7 majority area and, however, there is an increase in the Bosniak majority
8 area. Do you have any factor to explain that?
9 THE WITNESS: Well, these are the level of expenditures, so these
10 are the percentage of total expenditure. There could be two explanation.
11 One is that in 1995 there could be result of the fact that in the Croat
12 majority area you have a bigger economic boom, so with existing soldiers
13 costs, you have other -- you have more revenues being generated and so
14 the expenditure could drop down. The second possible explanation is that
15 in 1995 - this is already Dayton or post-Dayton - the need for military
16 was lower, so the people had been demobilized. But I have not been
17 really looking into what was happening in the military, so I can't
19 The only what is obvious from that picture and also from other
20 information in this IMF report is that the economic activity on the
21 territory the Croat majority area as envisaged by the revenues levels of
22 that territory and the revenues levels in the budgets was much stronger.
23 Practically the figure is twice the size -- that the revenues in the
24 Croat majority areas were twice the size of the revenues in the Bosniak
25 majority area, which had looked as a proof that there were the positive
1 effects for the well-being of all society if, you know, with all these
2 measures which I was describing. That is -- that was for me a positive
4 Also, when we were coming into Bosnia-Herzegovina in 1994, 1995
5 from the south, we could see this, you know, vibrant economy in the area
6 of -- around Mostar; not so vibrant economy or difficulties in the area
7 of Sarajevo; quite vibrant in the economy in the area around Tuzla; and
8 difficulties, economies difficulties in the area around Banja Luka.
9 JUDGE ANTONETTI: [Interpretation] Final question concerning the
10 roads. It's very surprising looking at the figures. We have the
11 impression that in fact no one is interested in the roads, that at the
12 outset the Bosniak majority areas had given some importance. We had 5.6
13 percent. The Croats were doing nothing. There's nothing there. And in
14 1995, that the Muslims declined quite significantly because we are down
15 to zero, and the Croats do a little something, 1.3, whereas we all know
16 that roads can be economic vectors. How do you account for that, for the
18 THE WITNESS: I would assume that since the road repair, and the
19 road maintenance is somehow linked with the road repair - I mean, it's
20 difficult to say what all it is - were a very strong share of the
21 post-war reconstruction programme; and actually, the first bridges on the
22 Neretva river, which were down, I believe 1992, were actually repaired
23 out of the war bank loans and other international donor institution, and
24 that only came up in 1996, 1997. So I don't know what is behind this
25 road maintenance figures in the Bosnian majority area, but I guess the
1 importance of the road construction really, you know, came out much
2 later. That's all what I could comment on that.
3 JUDGE ANTONETTI: [Interpretation] Final question because we could
4 spend hours here, but we need to move to essential. An interesting
5 sector, education, we see that through the figures that the Croats really
6 did focus on education, whereas the Muslims were doing less. Is there an
7 explanation for that or not?
8 THE WITNESS: Yes, there's explanation for that, and I have
9 mentioned in my report that one of the critical moment or one of the most
10 important moment when the society at large in the area of the Croatian
11 Community of Herceg-Bosna realised the value added, the importance of the
12 Defence council was actually in September 1992 when schools were
13 re-opened because of activity by the Croatian Defence Council of Croatian
14 Community of Herceg-Bosna, not just the elementary schools, but also from
15 the report I could read that the university re-opened its classes, first
16 in Neum and later, again, in Mostar. I do not know what was the
17 situation in -- in different local communities in -- on the area where
18 there were mostly Bosniaks, Muslims, but figures shows that, yes,
19 Croat-majority area budgets had a major impetus for the, you know,
20 education, and the first economic region-wide measures were linked with
21 that. And when people saw that, and as you know - at least I could read
22 it - there were a lot of fights internally between richer on poorer local
23 communities, when you present the richer local communities that you are
24 not taking the money which they were collecting just to spend it
25 somewhere else but to put it into schools, I believe the authority and
1 the authority of the Croatian Defence Council of the Croatian Community
2 of Herceg-Bosna has with debt being built up, and that authority was, of
3 course, needed later when also the Federation of Bosnia-Herzegovina had
4 been established.
5 I understood from discussion with my, you know, counterpart that
6 actually I don't know how much of, you know, really, elementary schools
7 and how -- whether the university operated in Sarajevo. I don't think it
8 did. But University of Mostar did operate, and students went to these
9 classes in Neum, and later, you know, they stayed home.
10 I also said in my report that that will not be done. People from
11 the region of Herceg-Bosna could simply depart to Croatia, to Slovenia,
12 and elsewhere, and these would be empty economic area, which of course
13 would be, for those that could not go, extremely difficult. So there was
14 a value added in focusing on provision of the state and social services,
15 education, health, social fund expenditures, pensions, mentioned here,
16 that actually was needed, and this is exactly what we would do in
17 Slovenia if the war would continue.
18 MR. KARNAVAS: Thank you, Mr. President.
19 Q. If we could go on to slide 34 very briefly because we do need to
20 get into the third phase. But on slide 34, if could you just give us a
21 few remarks, and then as I understand it, you wanted to redraw our
22 attention to P 00128.
23 A. Yes. This slide discusses really what were the -- some of the
24 expenditures undertaken by the funds collected at the area of wider
25 region of Herceg-Bosna; and you can see repair of government
1 infrastructure, rehabilitation and equipment of office, support to the
2 university, chamber of commerce, pedagogy institute, institutions of
3 culture, water-supply, police department, and last item, the high court
4 and basic communal court in Mostar. I'm saying this because two years
5 later in early 1996, when the first World Bank money was spent, the first
6 World Bank money spent in Bosnia-Herzegovina went for the repair of
7 courts of Sarajevo. Courts in Mostar had been already repaired by
8 activity of the Croatian Community of Herceg-Bosna.
9 Q. All right. Should we go to P 00128, or should we move on?
10 A. Well, this document just confirms, you know, just actually list
11 all this type of repairs that were undertaken, so we could move on.
12 Q. All right. Your Honours, I see -- I notice the time, and I
13 believe this is a time for the break.
14 JUDGE ANTONETTI: [Interpretation] Very good. Let's break. After
15 the break you'll have 30 minutes left, so we'll no doubt -- and I hope
16 the examination of Prlic Defence -- today. 20-minute break. We resume
17 in 20 minutes.
18 [The witness stands down]
19 --- Recess taken at 5.38 p.m.
20 --- On resuming at 5.58 p.m.
21 [The witness entered court]
22 MR. KARNAVAS: May I begin, Your Honour?
23 JUDGE ANTONETTI: [Interpretation] [No interpretation]
24 MR. KARNAVAS: Okay. Thank you.
25 Q. All right. Now, we have a half-hour left, so we'll have to go
1 through the remainder of your presentation, which I do believe is
3 MR. KARNAVAS: And Judge Trechsel, for slide 35, we have several
4 documents. If we get to the point of saturation, I'm sure you will let
5 me know.
6 JUDGE TRECHSEL: It's to assist you in your time management.
7 MR. KARNAVAS: I understand, but a hint would be welcome.
8 Q. If we look at now slide 35. If you could -- now we are into
9 phase 3. If you could comment on that.
10 A. Yes. In slide 35, we present the phase 3, which really started
11 with the establishment of institutions, mainly the decision of
12 constitution of the House of Representatives of the Croatian Republic of
13 Herceg-Bosna, and then there were a follow-up, monetary policy and
14 financial measures undertaken, all of them to strengthen economic system.
15 Very important, Deutschemark had been put in, into -- also, into domestic
16 payments, all linked with the fact that you wanted to really support
17 economic developments, and there was also further development in the
18 financial sector; insurance companies were, you know, strengthened to
19 provide -- for the authorities to provide much better functioning of the
21 In that respect, I also would like, of course, to say that the
22 budget policy and measures undertaken for the interim budget 1994, with
23 the documents that I could see, assumptions and basic data for the 1994
24 budget revenues and expenditures, they confirm that they have undertaken
25 everything what wider economic area need to do when preparing its budget
1 and its expenditures. So the phase 3 is a phase where the economy was
2 rounded, and thus, such Croatian Republic of Herceg-Bosna was
3 economically very easily to be integrated into the Federation of
4 Bosnia-Herzegovina once this agreement had been reached. And again,
5 these are measures that were expected given the war economy and expected
6 given the fact that local communities' independent actions would be
7 negative for economic developments.
8 Q. Thank you. Now, if we can go through some of these documents
9 that you have selected as examples. We can start with P 04589.
10 A. Yes. This is the Official Gazette of the Croatian Community of
11 Herceg-Bosna as of October 11, 1993, when the decision on the House of
12 Representatives is been defined, and that --while here, I would like to
13 point to Article 7, where it says that the house -- on the second page of
14 that English translation, where it says in Article 7 that the house of
15 representatives shall approve the republic's budget.
16 Q. Very well. If we go on to the next document, and again, I'm
17 going to ask you to have a little pause and enunciate. P 09551.
18 A. This is English translation of the document, which are the
19 reports of the government and of the Croatian Republic of Herceg-Bosna,
20 and on page 36, it explains under the Article -- under the title "payment
21 system" that the payment system in Croatian dinar was realised to payment
22 system office, which was established upon the transformation of SDK at
23 the end of 1993, and then explains the -- which municipalities were
25 Also it says in the last sentence, after founding the Hrvatska
1 banka company Mostar and LT comerciana banka company Livno, the external
2 payment system was established mostly with the Republic of Croatia. Then
3 it says in the third-from-the-bottom paragraph:
4 "As opposed to the first half of 1993, when only a limited number
5 of legal persons carried out payments through the payment system
6 organisations, in the second half, a large number of users had opened
7 giro-accounts either in HRD or in Deutschemark, so at the end of 1993,
8 there were over 1.300 active accounts." A sign of a vibrant economy.
9 Then I would like to point to page 42.
10 Q. Let's find it. Pause a little bit. Okay.
11 A. 42 out of 83. On that page, there are really two important
12 figures which I would like to point. Page 42, I don't see it yet on the
13 screen. English translation is the page 42, so there is information
14 about the budget revenue, and it says that 104 thousand million HRD are
15 the tax revenues, 52 are revenues from credits, and 57 are donations.
16 On the page 42 on the top, there it says that the total revenues
17 are 217 thousand million Deutschemark.
18 Q. This would be on page 43?
19 A. It would be on page - sorry - 43 on the top. It says that
20 217.000 is the total revenues, but only one-quarter, one-quarter compared
21 to 98 percent as we have seen in one of the previous slides is being
22 financed by credits, and then we --
23 Q. Let me stop you here. When you say 98 percent, you were drawing
24 our attention to a previous testimony. What are you referring to because
25 we need to have a very clear record.
1 A. Yes. 98 percent is the amount of the borrowings from the
2 Republic of Bosnia-Herzegovina to finance the needs of the war budgets in
3 1992, and here we see it only one-quarter, which means more ability
4 created out of the normalisation of the economic activity in the Croatian
5 Republic of Herceg-Bosna been undertaken, and thus higher tax revenues
6 and thus less needs for borrowing, quite normal or normalisation of the
7 economic situation.
8 And then we see on page 43 a list of budget expenditures as
9 defined for different ministries, and of course I think it is important
10 to say that practically all ministries are involved in the budget
12 Q. Before we move on, when we look at this particular document, the
13 way the budget is laid out in a rather transparent fashion, can you tell
14 us to what extent this would mirror sort of the -- another budget, say,
15 from the area, from that particular region?
16 A. Well, I have been deputy minister finance and secretary of the
17 ministry of finance in the republic of Slovenia, and we were preparing
18 before reforms in 1999 a very similar type of budgets. Of course, we are
19 more lucky that we did not need to borrow more than maybe 5 percentage
20 points, but, you know, this is because of the economic circumstances.
21 But on the structure of the budget, the pre-conditions for calculation
22 the needs, quite exact estimations of the number of people, wages,
23 et cetera. This is a type of the budget that one could expect in the
24 region before, of course, those reforms had to be undertaken as one
25 entire European unit, but that was not expected in the 1994 period yet
2 Q. All right. And just one final question because I'm not -- I'm a
3 little confused, perhaps. On page 42 where we looked at revenues from
4 credit, 52, and then donations, we saw 57, and then you told us that a
5 quarter, based on the total amount from page 43, you use that figure as
6 opposed to 98 percent, the 98 percent being from Bosnia-Herzegovina, the
7 republic, and are we to understand based on your testimony yesterday that
8 that's the 98 percent where the central bank was just basically printing
9 money with nothing to back that currency?
10 A. Yes, that is exactly true. The 98 percent referred to the war
11 budget of Republic of Bosnia-Herzegovina where the money had been printed
12 by National Bank of Bosnia-Herzegovina. Here, I understand these are the
13 revenues from credit mainly provided by commercial banks because we have
14 not seen and I have not seen any central bank being created on the
15 territory of Croatian Community of Herceg-Bosna, which means that, also,
16 these revenues from credits had been backed by some savings in commercial
17 banks, and I guess that were at that time mainly so-called Hrvatska banka
19 Q. All right. Thank you. And incidentally, that 98 percent that
20 you indicated, was that from the document that we saw earlier concerning
21 the war budget, which would have been 1D 03003?
22 A. Yes. This is the document of the war budget of the Republic of
24 Q. Thank you. Now, if we go on to the next document.
25 JUDGE ANTONETTI: [Interpretation] One follow-up question. This
1 document we have still on the screen about expenditures broken down by
2 ministries, mainly, we can see that for the Ministry of Defence, it is --
3 it represents just about 80 percent of the budget. Is that a classical
4 ratio in times of war, or is this something rather exceptional?
5 THE WITNESS: This is the budget expenditures for the
6 distribution for the January 1993 to December 1993, and given the fact
7 that this is the time of the war, I would say, yeah, it's quite logical
8 the highest portion of expenditures will be with the war. And as we have
9 seen later on -- before when represented 1994 and 1995 figures as
10 presented of the IMF document, that portion then dropped down to below 40
11 percent. But 1993, this is war, period. So it's logical that this was
12 that high level of expenditure. But from my economic point of view, what
13 was more important, there are other ministries there, and that's a
14 full-fledged -- I mean, that's kind of a -- all ministries that one would
15 expect to cover, you know, government needs, especially, you know,
16 customs, financial police, ministry of work and social services,
17 et cetera.
18 JUDGE ANTONETTI: [Interpretation] Well, in a period of war -- we
19 have 170 million here in this document. What kind of expenditures were
20 there? Are they connected to purchase of weaponry or -- well, it may not
21 be a classical budget by European standards. Well, you have operational
22 cost and investment costs. It's difficult to see what is devoted to --
23 earmarked to investments or to operations. But I suppose that out of the
24 170 million, most of it is devoted to purchasing weapons, while paying
25 the sole dues based on documents that we have had an opportunity to see,
1 that is done by local budgets, isn't it?
2 THE WITNESS: No. At that time - this is 1993 - the most of the
3 Ministry of Defence expenditures would go to finance defence units as, I
4 guess, developed at a level of Croatian Community of Herceg-Bosna, and I
5 believe the most of it would go either for the wages, for the outlays of
6 the soldiers, and for the ammunition, weaponry, and all that. But I have
7 no -- I did not have any detailed information into it. For me, reading
8 these documents was extremely important that as we present what other
9 departments were doing, and here I would like to refer to page 45 where
10 you have description of the department for economy, and in the bottom of
11 that there's a paragraph that there was the coordination and monitoring
12 of the operation of public enterprises has continued, which means that
13 they were making efforts to normalise economy situation. And this is why
14 I have said that this is a normal structure of the budget. It is not
15 just the, you know, war budget, military budget. This is the budget
16 where government, where authorities have undertaken necessary activities
17 linked with support of the whole economy. We have later on this case
18 what they were doing in the forestry, mining industry, water resource
19 management. These are all typical government activities.
20 JUDGE PRANDLER: Yes, thank you. Sorry. Thank you very much. I
21 would like also to have a follow-up question or questions concerning the
22 question which you raised, that is the lacking of support by private
23 banks, which were in a way used by the central budget of the Republic of
24 Bosnia-Herzegovina, and you mentioned the example, one of the -- one of
25 the banks of the Hrvatska banka in Mostar. Now, my question is for if
1 the Hrvatska banka was -- in Mostar, of course, belonged to the whole
2 chain of banks, private banks that within Hrvatska banka system, I
3 believe which was a bank, private bank in Croatia, is my first question;
4 or Hrvatska banka was a bank which had its headquarters not only in
5 Zagreb but elsewhere. That is the first question.
6 The second question is that if you have any more details
7 concerning the composition of that kind of loan provided by Hrvatska
8 banka to the central budget, if it was an important part of the budget as
9 far as percentage goes or it was in a way negligible.
10 And my number three question would be if you have any details or
11 any data as far as those people, either private people or firms which
12 contributed to Hrvatska banka, I mean by depositing money. Thank you.
13 THE WITNESS: Thank you, Your Honour, for your question. As far
14 as Hrvatska banka joint stock company Mostar is concerned, in my document
15 I also refer to the fact that this is a bank which was licensed by
16 National Bank of Bosnia-Herzegovina in 1992, I believe, and it was
17 composed of what used to be branches of Croatian banks that had their
18 headquarters in Zagreb. They had a branch in the territory of
19 Bosnia-Herzegovina, but in 1992, this bank was re-established so the
20 branches had to ask National Bank of Bosnia-Herzegovina for a licence to
21 operate on the territory as an independent legal entity. By accident or
22 by the fact that in 1997, 1998 period I actually worked in Nova
23 Ljubljanska banka, which is one of the banks in Slovenia, and we at that
24 time visited Hrvatska banka Mostar joint stock company, and we saw its
25 ownership; it was owned by -- it was a Bosnian bank. We actually -- the
1 Slovenia bank were even considering wanting to buy that bank, but it was
2 a bank which was relicensed. It was to a certain extent very odd why
3 they did it in the Croatian Community of Herceg-Bosna and why the
4 National Bank of Bosnia-Herzegovina did it. But it was logical, logical
5 legal act, because Bosnia and Herzegovina had become a new state, and a
6 new state has to licence a banking institutions. So it was very legally
7 appropriately that owners of Hrvatska banka, which were previous
8 branches, ask the National Bank of Bosnia-Herzegovina for relicensing,
9 and they got a licence.
10 Now, the depositors in this very bank were, from my
11 understanding, mainly those holders of - I mentioned before the figure -
12 1.300 accounts, which were the private and legal entities, small shops,
13 small traders, but also, I've seen that in 1995 and seen 1997 also some
14 -- or the re-activated manufacturing enterprises. They were those that
15 were actually holding -- you know, they were doing business with that
16 bank and they were doing the deposits.
17 On the financing, I did not have much details of the -- who
18 actually provided sources of financing to the budget, but since there
19 were no central bank on the territory of the Croatian Republic of
20 Herceg-Bosna, the only two other options, and that is that financing is
21 provided by the financial system which existed then, and that is Hrvatska
22 banka, Ljuna [phoen] bank, insurance companies, et cetera. That is all
23 what I can say on the base of the recommendation which I reviewed.
24 JUDGE PRANDLER: Thank you very much for the clarification.
25 JUDGE TRECHSEL: I have, first of all, a follow-up question or a
1 question regarding your answer. You said first a few minutes ago that
2 the Hrvatska banka Mostar was relicensed by Bosnia-Herzegovina, and later
3 on - and this is on the last line of page 83 and then 84 - I read: It
4 was to a certain extent very odd why they did it in the Croatian
5 Community of Herceg-Bosna. And you have also said that it was normal
6 when there was a new state, new licensing was required. Can you tell us
7 more about this relicensing by HZ HB?
8 THE WITNESS: Well, the relicensing was done by National Bank of
9 Bosnia-Herzegovina. But it was done in the period when the Croatian
10 Community of Herceg-Bosna already exist, and I would like here to make a
11 comment, which is like follows: If authorities of the Croatian Community
12 of Herceg-Bosna would do nothing and they would not relicense or request
13 that the branch of a bank based in Zagreb request a licence from
14 Sarajevo, National Bank of Bosnia-Herzegovina, in a much quicker manner,
15 economically, territory of Croatian Community of Herceg-Bosna would be
16 economically part of Republic of Croatia. And why I say odd? There --
17 of course, these banks in the pre-war time could operate throughout
18 Yugoslavia. Now, with the war they could not continue to do that unless
19 there would be an agreement reached between the Republic of
20 Bosnia-Herzegovina and the Republic of Croatia that banks licensed in a
21 particular country could operate across borders. Such agreement was not
22 reached, so it was logical that they have requested for relicensing.
23 And relicensing went against the economic interest of Republic of
24 Croatia, so the owners of those branches, you know, had to do another
25 effort. And of course, by getting a licence from the National Bank of
1 Bosnia-Herzegovina, this now became Hrvatska banka joint stock company
2 based in Mostar, and it could operate only on the territory of Republic
3 of Bosnia-Herzegovina, and I believe later on it was quite successful
4 bank, and I believe it's now owned by UniCredit in Tesa, one of the
5 Italian big banks. We looked into that bank in 1997.
6 JUDGE TRECHSEL: Thank you. The other question was, what we have
7 looked at as "budget," I take it that this is a very condensed excerpt
8 just taking the sums per ministries whereas the actual budget, which was
9 elaborated, would have been much more detailed.
10 THE WITNESS: Yes. The actual budget, if you want a more
11 detailed information of the budget would in principally be much more
12 detailed, and I'm sure that one would look to a particular section, could
13 get much wider information, but this is what I got. I did not have any
14 more information, and even that, when I was reading -- especially when I
15 was reading the Croatian versions of that and, you know, B/C/S versions,
16 I could see that this is, of course, a different approach, more
17 economically sensible, and the budget reflects the overall positive
18 economic developments in the territory of Croatian Community and later
19 Croatian Republic of Herceg-Bosna.
20 JUDGE TRECHSEL: Thank you very much. I had also understood it
21 this way, and of course I do not think the Chamber needs, actually, more
22 detail. I was just making sure. Thank you. Sorry, Mr. Karnavas.
23 MR. KARNAVAS: That's fine.
24 Q. Just a follow-up question to the questions concerning the bank,
25 and I'm going to be asking a couple of leading questions, but I'm sure
1 I'll be stopped if I get too far ahead of myself. In the course of your
2 examination in trying to prepare your report, you came across documents
3 that, as I understand, and we have seen here in court from the central
4 banker at the time from Bosnia-Herzegovina, Mr. Andrit [phoen]. Is that
6 A. That's correct.
7 Q. And it's based on those documents that you answered the questions
8 posed to you by His Honour?
9 A. Exactly.
10 Q. All right. Thank you. Now, we're going to skip some documents
11 so we can finish on time, and I'm going to direct your attention now to P
12 07628, so we'll skip two documents in your binder and go to P 07628.
13 This is another interim budget. If you could look at that.
14 A. Yes.
15 Q. And if you could kindly comment very briefly.
16 A. Yes. This is the document, interim budget of the republic from
17 1994, and on page 1 of that document, first there are basic principles of
18 the budget. I'm, you know, somebody who is dealing with the public
19 expenditures management issue, and just the first line reading: The
20 budget is balanced on the basis of gross principles. This is a very
21 logical, normal, but extremely high standard of preparing the budget,
22 which means that all revenues and all expenditures are to be presented.
23 Second line, it says that:
24 "Legal regulations on taxes and duties pertain to all state
25 organs, municipalities..." et cetera, is explicitly envisaged in the
1 legal regulation. Again, a good sign of a good public expenditure
3 Last line on that page 1: For all procurement, a tax on the sale
4 of products, et cetera, is to be paid, which means, again, no exemptions
5 from government expenditures as far as the paying of the taxes is
6 concerned. And I would like to refer to page 2, line - 1, 2, 3, 4, 5 -
7 5: The ministries and offices which needs to procure materials, fuels,
8 lubricants, equipment, and other needs exceeding 100 Deutschemark per
9 year are obliged to organise a unified procurement financial accounting
10 service, a good practice requesting good public procurement in order to
11 prevent fraud, negative effect, et cetera. So all these principles that
12 one would like to really see put in place in all countries of
13 transitions, which was of course not the case.
14 I would also like to refer, if I may, given the time constraint,
15 on page 4. There is chapter 2, data for the assessment of revenues and
16 spending. And there's some figures, population, employee, et cetera.
17 What is important, these figures are what usually one does when start
18 preparing the budget. So a very clear instructions and very clear
19 information given to whom? Most likely to the parliament of the house of
20 representative of the Croatian Republic of Herceg-Bosna on how the budget
21 had been prepared and had been adopted, which means these were for me all
22 clear signs that you can assess that the 1994 interim budget
23 expenditures, interim budget reviews are of a very similar type and
24 extent as in normal circumstances.
25 Q. Thank you. If we can go on now to the next document, P 08035.
1 This is, again, another budget.
2 A. Yeah. If we have seen before the interim budget, which is
3 usually prepared when the real budget is not prepared, here is the
4 document P 08035, which is the budget for the six months of 1994, already
5 approved, and it follows the same very good principle. The only
6 difference that the English translation does not have on page 1 and page
7 2 appropriate figures. But an important information which I would like
8 to present to the Chamber is that before the basic principle for the
9 budget, there are two lines on top of it, average salary and average
10 pension. And in the Croatian translation, that is presented as average
11 salary 150 Deutschemark and average pension of 60 Deutschemark. This is
12 1994. This is a very good result for the post-war situation. Again, for
13 me, a sign that by 1994 in the Croatian Republic of Herceg-Bosna,
14 economic situation had almost normalised.
15 Q. All right. Now, we're going to skip the other documents that
16 relate to this slide, and those would be 1D 00028, 1D 00026, 1D 0019, and
17 we already skipped 1D 00032 and 1D 00038. But as I understand it, these
18 were the sort of documents that you had selected in order to support your
19 presentation here today, which, again, these are just examples?
20 A. Exactly. This examples presenting what kind of measures could be
21 undertaken to put together the budget that we just presented, both on the
22 revenues and expenditures side.
23 Q. All right. With that, let's go to the very last document that
24 you have, and that would be for slide number 36.
25 A. Yes. The slide 36 talks about realisation by authorities, both
1 the presidency of Republic of Bosnia-Herzegovina as well as the regional
2 authorities, that there is a need to establish mechanisms for
3 coordination between local communities. And the document 1D 00509,
4 issued by the presidency of the Republic of Bosnia-Herzegovina on August
5 13th, 1992, and the document is decree with a power of law on
6 establishment and work of district, was for me a recognition by the
7 presidency that if in a country with around 4 million people, 100-plus
8 small ministates were to be -- were to create, the central authority had
9 to found an intermediate solution, and that is establishing seven
11 Now, the document read, and I have and analysed it extensively in
12 my document, what this decree -- what these districts have to do. And
13 these districts, especially as defined in -- on page 3 where there is
14 chapter Roman iii, rights and duties of the districts, and then it goes
15 Article 8, 9, et cetera, it explains that actually these responsibilities
16 of the districts are now from the presidency of the Republic of
17 Bosnia-Herzegovina vested authority down to the district that would be
18 normally a state function.
19 I would like to refer, also, to chapter -- to page -- to page,
20 just as an example, 10, Article 40. In this Article 40, the presidency
21 of Republic of Bosnia-Herzegovina said, that there will be seven
22 districts, and there will be seven District Secretariat of Economy, and
23 Article 40 reads:
24 "The District Secretariat of Economy shall perform tasks and
25 assignments namely..." and then it goes, in the field of energy supply,
1 mining, and industry, undertake and propose appropriate measures for
2 monitoring of accomplishment of production, et cetera. Then it explain
3 what will be the field of agriculture, et cetera. These are classical
4 functions of the ministries in any country. These are the classical
5 functions that are the functions, let's say, of the ministries, line
6 ministries in the republic of Slovenia.
7 So obviously, the central government authority and the presidency
8 of the Republic of Bosnia-Herzegovina could not out of besieged Sarajevo
9 control what is happening in the local communities; and thus, they have
10 asked by this decree for establishment of seven districts and for those
11 districts to really run economy on their own area.
12 And the way I see, what were economic developments in areas with
13 Croat majority over the 1991 to 1994 period, especially after, you know,
14 second half of 1992 and 1993, these were very similar developments, very
15 much in line with the authority vested in district by the presidency
16 decree with a power of law on establishment and work of districts.
17 Q. All right. Your Honour, I don't know how much time I have left,
18 but I do want to wrap it up, if I can. Five minutes? All right. Unless
19 there are any questions --
20 JUDGE ANTONETTI: [Interpretation] Mr. Karnavas, the Registrar
21 informs that you have five minutes left.
22 MR. KARNAVAS: Thank you, Mr. President. Unless there are any
23 questions concerning this area, I will move on.
24 JUDGE ANTONETTI: [Interpretation] Yes. Just returning to the
25 question of the districts. When on Monday you mentioned this point, I
1 asked myself what was the purpose of addressing this question, and now in
2 seeing the text before our eyes and particularly line 6 where we mention
3 the district of Mostar, et cetera, I'm drawing a parallel with the
4 Croatian Community of Herceg-Bosna, and I'm asking myself, and you may
5 well be able to enlighten me here, as to whether in fact the district
6 that was envisaged in Sarajevo in this text is not in fact give or take
7 what we have with the Croatian Community of Herceg-Bosna. What are your
8 thoughts on that?
9 THE WITNESS: Well, you are correct. The district of Mostar was
10 centred in Mostar, and the territories municipalities as they are
11 mentioned here, they are more or less those that compose the Croatian
12 Community of Herceg-Bosna, and presidency established in this district is
13 actually giving the District Secretariat for Economy authority to manage
14 the economy in this very area and, also, request other function -- there
15 are, you know, other -- this economy -- this secretariat for economy,
16 social affairs, finance, education, et cetera, all to do measures which
17 we have seen that were undertaken by the Croatian Defence Council of the
18 Croatian Community of Herceg-Bosna. It was just not titled district of
19 Mostar or whatever it would be.
20 I have analysed their economic powers vested in them. I was not
21 looking from the point of view of which local communities were, but
22 clearly, central government authority realised that instead of having
23 50-plus small local communities doing what they were asked to do with
24 this law on the financing of the social needs in the time of the war,
25 realised the need to coordinate and to have an organisation between the
1 republic and local communities, and they called them district. The way I
2 see economically Croatian Community of Herceg-Bosna, I see it as this
3 intermediate level. That later on merged into Federation of
5 MR. KARNAVAS: You have a question? Okay. I thought I saw you
6 on the ready.
7 Q. All right. I have five minutes left, and we have two slides
8 left, 37 and 38, and basically these concern your final remarks
9 concerning your presentation, which is a summary essentially of your
10 report, 200-page-plus report, with nearly a thousand footnotes. If you
11 could kindly wrap it up for us.
12 A. Well, in these two slides are my final remarks. With the war,
13 the provision of administrative social services was severely disrupted.
14 There was a vacuum created. Republic of Bosnia-Herzegovina did not have
15 an effective governance. Local communities and regional authorities had
16 not much choice but to react to this situation. To enable survival of
17 the people to ensure appropriate supply and demands, they have acted as
18 one state should act in war circumstances. And what then emerges, as I
19 was asked to look deeply into what was happening in the Croatian
20 Community of Herceg-Bosna, is that the Croatian Defence Council seriously
21 attempt to resolve the basic needs and services at the local and the
22 regional level. It could wait. It could do nothing. It could not
23 re-establish the border crossing with the Republic of Croatia. It could
24 not relicense Hrvatska banka or insurance company, but if they would not
25 do nothing then it would simply mean that the region would connect to
1 Croatia. They acted differently. They acted so that they were solving
2 the basic economic and social needs of the population.
3 And on the last slide, I say that these regional actions were
4 somehow based or they were a follow-up on the local actions, and I have
5 shown and was comparing the matters of the local communities; I have seen
6 no difference. Local communities and later regional authorities acted in
7 a very similar manner. Tuzla, Jablanica, Maglaj have same problem. And
8 yes, Bosnia-Herzegovina suffered an economic collapse with the war. If
9 that would happen in Slovenia and Slovenia would have one-year war, we
10 would most likely have such economic area being created.
11 I hope that my study and what we have been -- what we have been
12 presented is that you, High Court, got a good review of what happened on
13 economic front in the country. What needed to be done by local
14 authorities and later by regional authorities to ensure social and other
15 services and functions to be performed for the citizens was a logical
16 reactions once the federal and republican institution ceased to fulfill
17 their economic functions.
18 Q. Thank you very much, Mr. Cvikl. With that answer, I have no more
19 questions on direct examination. I appreciate your testimony. I would
20 hope that you would be as frank and forthright with the Prosecution or
21 anyone else who may have any other questions for you during the next
22 couple of days.
23 MR. KARNAVAS: Your Honours, that concludes my direct
25 JUDGE ANTONETTI: [Interpretation] Thank you, Mr. Karnavas. I
1 have just a very brief follow-up question, but taking advantage of your
2 -- the fact that you're Slovenian to put this question to you. Earlier,
3 I by chance looked at the map of your country because the Registrar maybe
4 just mishandled and in fact, your -- the map of your country appeared on
5 the screen. I noted that an important country bordered on your frontier
6 Austria, so if I'm mistaken don't hesitate to interrupt me. So Austria
7 shares the border with you now. At the time of the dismantling of the
8 former Yugoslavia and when your country acceded to independence, I assume
9 that Austria through its economic renown no doubt played some role in the
10 regions close to its border, but Slovenian regions. To your knowledge,
11 in those years, 1991, 1992, was there not in circulation Austrian
12 currency as there were Deutschemarks in Herzegovina?
13 THE WITNESS: Yes, but as far as the Austrian currency is
14 concerned, you should know that since early '60s, there's a fixed
15 exchange between Deutschmark and shilling that is 7:1, and since most of
16 the gastarbeiters were using -- were actually in Germany, Deutschemark
17 was more prevailed para-currency in territory either of Slovenia as well
18 as Croatian Community of Herceg-Bosna. Simply more gastarbeiters were
19 there, but I believe if anyone would bring a shilling, since there is a
20 fixed exchange 7:1, they would also take shillings.
21 JUDGE ANTONETTI: [Interpretation] So if I understand well, in the
22 areas, in the border areas there circulated in the years 1991, 1992, it
23 appears in addition to your own currency, there were Deutschemarks and
24 Austrian shillings in circulation?
25 THE WITNESS: Okay. In Slovenia, immediately after the
1 independence on the 25th of June, we only established custom borders.
2 Then there was a two-weeks attacks by the Yugoslav Army. Then there was
3 a peace, and with this peace agreement, we have agreed that for three
4 months we will not undertake follow-up measures. So only on 8 of October
5 1991, three months after the signing of the Brioni agreement, which was
6 on 8th of July, we replaced Yugoslav dinars with the Slovene coupons.
7 In the meantime, there were parallel currency, people were using
8 different type of cash, including, you know, shillings, Deutschemark,
9 dollars, et cetera. Once on 8 of October 1991, Yugoslav dinar was out of
10 the system and there were Slovene coupons we were doing our utmost to
11 reduce the inflation and to increase the backing of the Slovene coupons.
12 As we were also having up and running banking system and up and
13 running Social Accounting Office in Slovenia in 1992 to 1994, there was
14 no need to continuation of people using either on the black market or as
15 a parallel currency at the border crossing also Deutschemark or
16 shillings. So down the line Slovene dollar, as it was later renowned and
17 stamped, et cetera, became a strong convertible currency, and that lasted
18 up to 1st of January 2007 when it replaced dollars with Euro.
19 So the situation was we were not in war situation and we had a
20 strong currency because if you would look at the time in our budget you
21 would see that there were no financing of the central government budget
22 from the central bank, and thus currency which was utilized was
23 trustworthy currency.
1 JUDGE ANTONETTI: [Interpretation] Very well. But the shift to
2 the Slovenian tolar, which you said was a strong, hard currency, that
3 happened gradually. The Slovenian inhabitants, did they have fears or
4 doubts, and at that point did they prefer world-recognised Deutschemarks
5 and convertible, I mean, didn't that all take some time?
6 THE WITNESS: Well, that has to do with two factors. First, on
7 8th of October when we put in replacement the new coupons, we also have
8 established exchange rate which was a fluctuating exchange rate, which
9 means we did not try to attempt and steal from citizens holding Slovene
10 dollar some value to so-called inflation tax.
11 So, yes, it took some time but the most important for Slovene
12 independence and economic development was that our monetary and our
13 fiscal policy were prudent. We did not need to, it's true, have a lot of
14 expenditure on defence, but we did not have holes in our budgets so
15 people, you know, trusted Slovene tolar. Actually, in 1990s, bank of
16 Slovenia and Slovene tolar are among the most valued institutions in
18 JUDGE ANTONETTI: [Interpretation] Very good. I put that
19 question, you have understood it was to establish a link with the
20 circulation of the Deutschemark in Herzegovina at that time to see
21 whether there were points of convergence or divergence. Thank you for
22 answering my question.
23 Mr. Kovacic, have you been able to agree with Mr. Praljak to put
24 questions, if you have any?
25 MS. NOZICA: [Interpretation] Your Honours, with your permission,
1 I have made an agreement with Mr. Kovacic and I might need 15 minutes in
2 actual fact to ask the witness a few questions, and I'll tell you what
3 I'm going to refer to. Unfortunately, I can't do that this evening. I
4 can't start this evening, but it was on page 81 with your question that
5 this came to mind, which -- your question relating to a document on our
7 At that point in time on our screens we had a document which was
8 a financial report of the HZ HB, and you asked the question, you asked
9 whether it was that amount because the rest was financed by the
11 Now, the witness's answer followed, and I think there might have
12 been a misunderstanding rather than an imprecision because the witness
13 gave different conclusions in his report. So I should just like to show
14 the witness some documents, to put them to him, which he saw during the
15 preparation. This would last 15 to 20 minutes, but if possible I would
16 like to start tomorrow morning once I prepared the documents. Thank you.
17 JUDGE ANTONETTI: [Interpretation] Very good, we are close to 7
19 MR. KOVACIC: [Interpretation] Your Honours, let me respond to
20 your question. No, I have not had consultations with Mr. Praljak and
21 reached an agreement, but with your permission may I have five minutes
22 perhaps tomorrow morning, it's not a good idea to do that this evening,
23 but anyway I have your decision of the 24th of April here before me, your
24 decision of June and September, as well, and the Appeals Chamber's
25 decision dated September 2008, and I consider that my request was
1 completely in keeping with the decision of the 24th of April, which is in
2 force, and I, therefore, request that you give me five minutes before we
3 introduce the witness tomorrow to make a submission, bearing in mind your
4 ruling and referring exclusively to your ruling, your decision. And I'd
5 just like to remind you so that you can have a look at this yourself.
6 On the 24th of April was the date of your ruling, which set the
7 frameworks and certain limitations for cross-examination by the accused.
8 Afterwards, there were certain problems with the interpretation of that
9 ruling and in June last year you made a new ruling which you narrowed
10 down and gave a restrictive interpretation with respect to a particular
11 and special circumstances. And we appealed that ruling, and after the
12 Appeals Chamber's ruling, the only decision in force is your ruling of
13 the 24th of April. And that particular ruling, I don't want to present
14 my arguments about that now, we can go into that tomorrow, but anyway, it
15 provides for two specific circumstances, when in principle you will allow
16 the accused to ask questions himself.
17 In that ruling, at paragraph 3, you provided for the following,
18 and I'm going to read it out:
19 [In English] "Exceptional circumstances relate in particular to
20 the examination of events in which an accused participated personally or
21 the examination of the issues about which he possess specific expertise."
22 JUDGE TRECHSEL: Mr. Kovacic, Mr. Kovacic, you have misquoted
23 because you have omitted, and you always omit, the term "exceptionally,"
24 and I would suggest that you reflect on the term "exceptionally" in this
25 context before you address us tomorrow. It seems that you are already
1 repeating your arguments now. Maybe you do that tomorrow.
2 MR. KOVACIC: [Interpretation] Your Honour, Judge Trechsel, I'm
3 not sure there is a misunderstanding in the interpretation, but I read it
4 out word by word, the penultimate sentence of paragraph 3 of your own
5 ruling of April 24th, and it reads as follows: As I said in the previous
6 sentence that the accused can ask questions when there are exceptional
7 circumstances, and in this sentence you go on to explain what those
8 exceptional circumstances are, and those are the two situations, either
9 about events in which the accused took part personally, or has specific
11 And I feel, Judge Trechsel, that you are talking about the
12 decision of June, you went a step further, where you restricted -- you
13 gave a restricted interpretation, and that decision was rescinded by the
14 Appeals Chamber decision, but I suggest that you look at the third
15 paragraph of the 24th of April decision and I'd like to repeat my
16 submission tomorrow and explain why Mr. Praljak wants to cross-examine,
17 otherwise we'll go back to where we were in June. You're interpreting
18 your own decision in a different way. Thank you.
19 JUDGE ANTONETTI: [Interpretation] Very well, in the timetable --
20 I'll give you the floor, Mr. Stringer -- tomorrow, five minutes for
21 Mr. Kovacic, and 15 minutes for Ms. Nozica. Mr. Stringer, what would you
22 like to say?
23 MR. STRINGER: Thank you, Mr. President. Just to simply note
24 that so far the Prosecution has not taken a position or expressed a
25 position on regards to Mr. Praljak's request. If there are going to be
1 submissions tomorrow, we will be prepared to make our own submissions at
2 that time. We are strongly of the view that in this particular situation
3 the applicable decision of the Trial Chamber and Appeals Chamber, which
4 of course is still in effect, is not nearly met in respect of this
5 witness. And we will be prepared to make additional submissions tomorrow
6 should the Trial Chamber wish to entertain this yet again, despite my
7 understanding that it had in fact already ruled. Thank you.
8 MR. KARNAVAS: Mr. President, if -- I just wish to inform the
9 Trial Chamber that Mr. Cvikl is an extremely busy man. We are very
10 grateful that he was able to come here and devote a week essentially. He
11 will not be able to stay beyond Thursday, and it would be highly
12 inconvenient, and in fact unfair, to have to bring him back because we
13 are having these procedural disputes. So I would ask that that be taken
14 into consideration. If special hearings need to be held, they should be
15 convened, but Mr. Cvikl should be allowed to finish his testimony and go
16 back to his work and to the government of Slovenia who depends on him.
17 JUDGE ANTONETTI: [Interpretation] Mr. Witness, rest assured there
18 will be 15 minutes for Ms. Nozica, after which Mr. Kovacic will speak for
19 five minutes, the Chamber will take a decision. Even if there's a
20 positive ruling, it won't take hours, and the Prosecution will have four
21 hours for the cross-examination. So we will end Thursday and you won't
22 have to return, save events beyond our control such as a fire as happened
23 not so long ago where we had to evacuate the premises, or that the Judge
24 was struck simultaneously with a heart attack, but those are pretty
25 remote, extreme assumptions that I'm just mentioning. So we will meet
1 again tomorrow at 14.15. Thank you.
--- Whereupon the hearing adjourned at 7:01 p.m.
3 to be reconvened on Wednesday, the 14th day of
4 January, 2009, at 2.15 p.m.