Thursday, June 24, 2010

Forming Opinions (I) (Protests against German media company WAZ in Serbia)
(Own report) - The German WAZ media company's efforts to expand to Serbia have been accompanied by dubious business deals. The company, headquartered in the western German city of Essen, which nearly nine years ago bought a 50% share in one of the two most prominent Serbian dailies, has, for some time, been seeking to also acquire shares in the other. The attempt, which had to be carried out through an intermediary because of legal difficulties, is likely to fail when the Serbian Cartel Office reaches its verdict. The WAZ's efforts to expand within the Serbian press market through political and economic pressure have been so far just as unsuccessful. The German company is now threatening to withdraw completely from Serbia - with negative consequences for Serbia in its relationship to powerful Germany. For its business deals in Belgrade, which were only possible after the overthrow of Slobodan Milosevic, the WAZ had the former Yugoslav Prime Minister, Zoran Djindjic, mediate contacts to dubious business circles. One businessman, who today claims to have discussed shady deals with WAZ manager Bodo Hombach (SPD), was described in the German media, at the time of his contacts to the WAZ, as one "of the kingpins of the Balkans mafia."
Door Opener
The WAZ media group has been present on the Serbian media market since October 2001. At the time, more than two years after the war over Kosovo and about a year after the overthrow of Slobodan Milosevic, the WAZ media group bought 50 percent of the shares in the Politika AD publishing house based in Belgrade, one of the most venerable newspaper publishers in all of Southeast Europe. Politika AD publishes the "Politika" daily newspaper, which, even today, remains one of the dailies that sells the most copies in Serbia, with a reputation of being the public opinion maker for the Serbian upper echelon. The circumstances in 2001, under which it was possible for the WAZ to buy into Politika, remain essential for understanding the conflict around the company's activities in Serbia. According to media reports, the Yugoslav Prime Minister at the time, Zoran Djindjic, used the WAZ as his door opener in Serbia.[1] Djindjic was elected to office in January 2001, immediately after Slobodan Milosevic was overthrown. Djindjic and the German SPD politician, Bodo Hombach were friends. In February 2002 - just a few months after WAZ had bought into Politika - Hombach was hired as the manager of that German media company. Hombach's previous activities remain unforgotten in Serbia. In the spring of 1999, during the war over Kosovo, he was Chancellery Director under Gerhard Schröder, coordinating the German aggressors' policy and in the summer of the same year, took on the job as EU Special Coordinator for the so-called Southeast European Stability Pact.
Under Hombach's aegis, the WAZ was by no means satisfied with its Politika shares. In 2003 WAZ bought a 55 percent share of the Novi Sad daily Dnevnik, which is incomparable to Politika, having neither its influence nor its circulation. The WAZ subsidiary, Mediaprint, is also publishing under license the Serbian edition of the German "AUTO BILD" magazine. With its takeover of the "Stampa" chain of newsstands, in 2008, the German company assured itself considerable control over press sales. From the beginning, WAZ had had its eye on acquiring the second most important daily paper in the country, the Vecernje Novosti (Evening News). Politika and Vecernje Novosti are the Serbian journals with the highest circulation and the greatest amount of influence. They are dominant in the formation of public opinion.
Dubious Business Deals
WAZ's attempts to buy into the Novosti AD publishing company, which published the daily Vecernje Novosti, has, from the beginning, been associated with dubious business deals. For example, according to news reports, through the mediation of Hombach's friend, Zoran Djindjic, back in 2001, contact had been made to Djindjic's close associate, the businessman, Stanko Subotic, whose services could be used, as long as the WAZ was prohibited by law from obtaining direct access to Novosti AD.[2] At the time, even WAZ functionaries could read in the German press that Subotic was considered one of the kingpins in Southeast European cigarette smuggling. A spokesperson for the Croat interior ministry even called him the "head of the Balkans' mafia."[3] Today, Subotic remembers that the WAZ has been seeking to buy shares in Novosti AD "since it has been present in Serbia."[4] Subotic recounts also how the company in Essen - and its manager, Hombach - had been engaged in dubious business deals to try to enter Novosti AD using a front man.[5] Hombach denies this. Fact is that today, an intermediary by the name of Milan Beko owns a substantial amount of Novosti AD shares - and is unwilling to sell them to the WAZ.
The reason given in Serbia: the Cartel Office has refused its approval of the sale. This is quite comprehensible, considering the leverage that would be obtained through the appropriation of the two leading dailies Politika and Večernje Novosti. According to reports, WAZ manager Hombach tried "everything" to buy into Novosti AD. But since the approval of the Cartel Office has yet to be given, he wonders "if the government in Belgrade is really ruling the country."[6] It has been reported that in his efforts to acquire Novosti AD for the WAZ group, Hombach sent "half a football team of supporters" onto the field: former German Chancellor Gerhard Schroder, the Austrian, Alfred Gusenbauer (currently a WAZ-advisor), the German ambassador to Serbia, EU commissioner Günther Oettinger and Klaus Mangold, Chairman of the German Committee on Eastern European Economic Relations. All these "supporters" have intervened with Serbian President, Boris Tadić - to no avail.
An Alarm Signal
At the beginning of June, the WAZ media group launched a final offensive. In a letter to President Tadić, WAZ manager Hombach wrote that "the reception has been quite positive" in "other Southeast European countries."[7] Only in Serbia, has the group had to put up with "financial losses and public calumny." This is why it will withdraw from that country. Soon afterwards, the Chairman of the German Committee on Eastern European Economic Relations, Klaus Mangold, expressed his hope "that the announced withdrawal is understood as an alarm signal" and that the WAZ group will be able to continue its activities in Serbia.[8] Mangold also emphasized that Germany is Serbia's most important trading partner and has expanded its direct investments from 278 Million Euros in 2004 to currently 1.2 Billion. German businesses are "prepared to significantly increase their engagement" [in Serbia]. But the Chairman of the Committee on Eastern European Economic Relations left no doubt that it is very important for German businesses that Belgrade heed their demands, including WAZ's demand to buy into Novosti AD. Mangold's remarks carry weight because impoverished Serbia is dependant on business with powerful Germany. WAZ manager Bodo Hombach is a member of the presidium of Mangold's Committee on Eastern European Economic Relations.
Legal Action
The future development remains uncertain. The WAZ group has announced its takeover of the Salzburg-based Ardos Holding GmbH owned by intermediary, Milan Beko. Even though this provides the WAZ group with 23 Percent of Novosti's shares, held by Ardos, WAZ maintains its intentions to withdraw from Serbia.[9] But according to Večernje Novosti, in its alleged takeover of Ardos in Austria, the WAZ had been incorrect in the form and operated "fraudulently". Večernje Novosti considers the transaction to be invalid, undermining Serbia's legal system and reserves itself the right to take legal action.[10]
Only one Part
In its expansion drive toward East and Southeast Europe, the WAZ group has not only waged these power struggles in Serbia. Since its expansion into that region began in 1990, the German company has succeeded in acquiring - partially or completely - 26 daily newspapers and numerous magazines in Southeast Europe alone, sometimes under questionable circumstances. will report on the WAZ expansion in other South East European countries tomorrow.
[1], [2] Hombach, Hitler und die Oligarchen; Süddeutsche Zeitung 19.06.2010
[3] Die Belgrad-Connection; Financial Times Deutschland 13.08.2001
[4] Subotić expands on recent remarks; 23.03.2010
[5] "'I spoke with WAZ, with Mr. (Bodo) Hombah, about the information I received and he said it was alright, if they can get that done, as far as they are concerned, it was acceptable. I met with Mišković and Beko, we spoke about the details and they asked me for EUR 26mn, adding that with that money they could buy 60-65 percent of the Novosti shares, which would then naturally be given to WAZ,' Subotić said. 'I gave Mr. Hombah the details of the conversation, and he accepted that. I made a contract, I received a mandate from WAZ that gave precise details for the contract. I made the same agreement with Beko and Mišković through several of their companies, I can give you the names later so that you can get the documents from them. I paid them EUR 26mn and they bought the shares. They paid EUR 8-9mn for the shares, which means that EUR 26mn minus eight or nine was their profit, the profit they took as people organizing a sale outside of the stock exchange, as mediators and practically sellers of state goods,' Subotić said. When B92 asked WAZ for a reaction, the company said in a written statement that all money for the purchase of Novosti was given directly by the company and that all other claims are false." Subotić expands on recent remarks; 23.03.2010
[6], [7] Hitler und die Oligarchen; Süddeutsche Zeitung 19.06.2010
[8] Ost-Ausschuss bedauert Rückzug der WAZ-Gruppe aus Serbien; 18.06.2010
[9] WAZ hält an Ausstieg aus Serbien fest; 22.06.2010
[10] Hombah pokušava da ukrade "Novosti"; 22.06.2010