"Chinese affairs" of people from the American blacklist in Serbia

What do Požega, Lajkovac and Požarevac, three cities in different parts of Serbia, have in common?
In their vicinity, dozens of kilometers of roads are sprouting up, which are being built by Chinese companies based on a direct contract with the state, without a tender.
And on construction sites, machines of Serbian companies connected by the same people - Milan Radoičić and Zvonko Veselinović.
The two are under the sanctions of the United States of America (USA) and Great Britain due to suspicions of corruption and international organized crime. Kosovo authorities associate them with criminal activities.
However, Serbia, which does not recognize the independence of Kosovo, does not recognize the accusations of the Kosovo authorities either. Official Belgrade also decided not to apply the sanctions of the USA and Great Britain, because there are no international obligations for that.
In the Serbian public, Radoičić and Veselinović present themselves as business partners, businessmen originally from Kosovo.
Radoičić is also the vice-president of the Serbian List - a party of Serbs from Kosovo that has the support of the current government in Belgrade, led by the Serbian Progressive Party of Aleksandar Vučić.
Where did the Veselinović and Radoičić companies build?
Radio Slobodna Evropa (RSE) has established that three companies associated with Zvonko Veselinović and Milan Radoičić were subcontractors on at least three road sections in Serbia in the past two and a half years.
What these three roads have in common is that the main contractors are Chinese companies - Shandong and CCCC.
State institutions gave permission for companies connected to Veselinović and Radoičić to come to the construction sites, and two jobs were awarded to them after the introduction of American sanctions in December 2021.
The roads were built by the companies Inkop from Ćuprije and Novi Pazar-put, owned by Veselinović and Radoičić and on the US blacklist. In the third company, the Slovac quarry, the two were co-owners.
It was engaged in the construction of the Preljina-Požega highway section and the Iverak-Lajkovac and Požarevac-Golubac expressways.
Three road sections, Preljina-Požega, Iverak-Lajkovac and Požarevac-Golubac, where companies associated with Milan Radoičić and Zvonko Veselinović are engaged as subcontractors with Chinese companies.
The number of subcontractors of Chinese companies is measured in tens, but RSE only analyzed the operations of companies connected to Radoičić and Veselinović, because they are the only ones under foreign sanctions.

Government and Chinese bank loans
The business model looks like this: the state hires Chinese companies for the construction of roads on the basis of an agreement between Serbia and China, negotiates the work directly with them, and borrows from Chinese banks to secure the money.
Chinese companies then choose subcontractors, and for their engagement they need the consent of the state - public road companies and the Ministry of Construction.
The construction of three sections of the road, where Veselinović's and Radoičić's machines participate together with Chinese companies, cost Serbia 950 million euros.
The two largest loans were taken from the Chinese Eksim Bank in 2019 and 2021.
Due to borrowing and dealings with China, which are described in the reports of international organizations as non-transparent and leaving room for corruption, Serbia has also been the target of criticism from the European Union, which it aspires to become a member of.
"The European Parliament reiterates its concern about Serbia's growing dependence on Chinese investments and loan volume...and calls on the Serbian authorities to improve transparency and strengthen legal compliance for investments from Chinese and other foreign authoritarian regimes," reads the European Parliament's 2021 report.

Profits of sanctioned companies increased to a record
From the documents analyzed by RSE, it is not known how much Veselinović and Radoičić's companies earned from construction work with Chinese companies.
That is, what percentage of the contract goes to them as subcontractors.
The financial reports of those companies for 2022 are not available in the economic register, but the latest available data show record earnings on an annual basis.
Their construction company Inkop from Ćuprija earned 15.3 million euros in 2021. That is six million more than in 2020, when Inkop recorded a profit of 9.2 million euros.
During that period, Inkop was in business with Chinese construction companies, but these were not their only projects.
Novi Pazar-put has been a subsidiary of Inkopa since January 2020, when Veselinović and Radoičić bought it.

With the new owners, earnings have increased over 30 times. At the end of 2020, Novi Pazar-put welcomed 5.8 million euros in earnings, while in 2019 the amount of earnings was 179 thousand euros.
And then at the end of 2021, an even larger balance was recorded on the account - earnings of 10.2 million euros.
In addition to cooperation with Chinese companies, during this period, Novi Pazar-put also received contracts from Serbian institutions for the maintenance of local roads in several municipalities - Novi Pazar, Tutin, Vrnjačka Banja, Kraljevo.

Who is bound by foreign sanctions?
Since the sanctions of the United States of America and Great Britain are not binding on Serbia, Radoičić's and Veselinović's companies operate unhindered.
In December 2021, commenting on the US decision to blacklist Radoičić and Veselinović, the President of Serbia, Aleksandar Vučić, stated that the competent authorities will investigate everything if there are "some serious allegations".
In the months after that statement, the public in Serbia did not find out whether the accusations had been investigated, nor did the Government and the Presidency answer that question to Radio Free Europe. Milan Radoičić appeared at official gatherings, next to Aleksandar Vučić.

Who are Veselinović and Radoičić?
Sanctions by the US Department of Finance were introduced in December 2021 against 13 citizens from Kosovo of Serbian nationality and over 20 companies associated with them, marked as being part of a corrupt network.
At the top of the list are Zvonko Veselinović and Milan Radoičić. Other sanctioned individuals and companies, established in Serbia and Kosovo, are linked to them.
Milan Radoičić is on the run from the Kosovo authorities due to accusations of corruption, and the Kosovo Police Minister Xhelal Svečlja labeled him as one of the leaders of the criminal structures in the north of Kosovo.
The Kosovo Prosecutor's Office linked Veselinović and Radoičić to the murder of Kosovo politician Oliver Ivanović. They were mentioned as the alleged organizers of the criminal group, but no charges were brought against them because they were on the run at the time. The law of Kosovo does not allow indictments to be filed against fugitives, unless they have been previously investigated.

The Serbian List rejected all the accusations about Radoičić, and Radoičić himself spoke out about the Ivanovic case, stating that he "wasn't the closest friend" of Oliver Ivanovic, but that he was "not a murderer" and that he "had nothing to do with the murder" of the politician.

In the report of the United States of America, which explained the sanctions, it is stated that Zvonko Veselinović is the leader of an organized criminal group, as well as that he is involved in a wide-ranging bribery scheme.
The corrupt scheme also mentions politicians whom Veselinović allegedly helped in the election campaign, and in return they would "reward him with the best infrastructure contracts".
It is not specified which politicians we are talking about. Zvonko Veselinović did not announce the sanctions of the USA and the United Kingdom, and he does not appear in public.
While there are no consequences in Serbia, the sanctions are legally binding for American and British companies and citizens, who are prohibited from doing business with persons from the black list.
"UK businesses would not be allowed to do business with individuals or companies that we have sanctioned and will be fined by our Department of Business and Trade if they are found to be doing so," the British Embassy told RFE/RL.
But, if they do business in Serbia with Veselinović and Radoičić, the laws of their home countries would not be violated by other foreign investors, such as Chinese ones.

Who didn't answer all the questions?
The Belgrade representative offices of the Šandong and CCCC companies did not respond to RSE's inquiry about business operations in Serbia, nor about accusations by a part of the domestic and international public that deals that were negotiated in a non-transparent manner leave room for corruption.
The Chinese Embassy in Serbia did not respond either.
While their machines and workers were on the construction sites together with Chinese companies, the companies associated with Veselinović and Radoičić did not participate in projects carried out in Serbia by companies from the European Union and the United States in the past two and a half years.
This can be concluded from the documents analyzed by RSE - the approvals for the execution of works issued by the public companies "Roads of Serbia" and "Corridors of Serbia" and the Ministry of Construction, Traffic and Infrastructure.
None of them answered RFE's questions about what qualified the companies associated with Radoičić and Veselinović to participate in road construction.

Neither the companies owned by Veselinović and Radoičić, Inkop and Novi Pazar-put, nor the company in which they were co-owners until 2022, the Slovac quarry, answered the questions.

What does the EU say?
In its response to RSE, the European Union did not comment on Chinese infrastructure projects in Serbia and the subcontractors they hire.
They said that Serbia has undertaken to apply the EU rules on public procurement and environmental standards when building infrastructure and that the European Commission monitors compliance with these obligations.
"Important discussions were held between the European Commission and Serbia within the framework of chapter 5 of the accession negotiations (public procurement), regarding the exemption from the application of the law on public procurement. Serbia undertook to solve the problems," the reply added.

Case 1: Veselinović and Radoičić's company on the road Požarevac-Golubac
High-speed road from Požarevac to Golupac in the east of Serbia for 337 million euros.
This was agreed with the Chinese company Shandong (China Shandong International Economic and Techincal Cooperation Group Ltd) in August 2021.
The contract was concluded in the presence of the President of Serbia, who then declared that it was "an extremely fair offer from the Chinese partners", who "always take local workers as well".
Three months later, Vučić made the start of the works official. It was announced that the Danube Corridor, as the 70-kilometer-long road is called, will be completed by November 2024.
While machines and workers are dusting the east of Serbia, a domestic group of companies, the NI consortium, has appeared among the associates of the Chinese company.
And one member of the consortium is under American sanctions - the company Inkop from Ćuprija, whose owners are Milan Radoičić and the brothers Zvonko and Žarko Veselinović.
Another member of the consortium is the company Nukleus from Lazarevac, owned by Vladimir Jevtić, with whom Veselinović and Radoićić worked on other projects. Jevtić and his company are not under sanctions.
The documents state that the Ministry of Construction gave consent for them to be subcontractors in February 2022, two months after Inkop was placed under sanctions.
It is not stated what the consortium is doing on that construction site, nor what is the price of the contracted works.

Case 2: Two companies of Veselinović and Radoičić on the way from Valjevo to Loznica
From Belgrade to Valjevo in 35 minutes. This was announced by Serbian officials when the works on the Iverak-Lajkovac expressway began.
The works were made official in June 2020 by the President of Serbia, Aleksandar Vučić.
He promised that the 18-kilometer long section, which connects Valjevo with Corridor 11, will be finished by the end of 2022. However, it has not yet been put into traffic.
The contract for this section, worth 158 million euros, was signed six days before the start of the works by the then Minister of Construction, Zorana Mihajlović, with the company director of the Chinese company Shandong (Shandong Foreign Economic & Technical Cooperation Ltd).
The largest part of the business is financed by a loan from Eksim Bank, amounting to 134.3 million euros.
On the construction of the road from Iverk to Lajkovac, the Chinese company proposed in the summer of 2022 that its subcontractor be a company that was put on the American blacklist a few months earlier, Novi Pazar-put.
In June 2022, the public company "Roads of Serbia" gave its consent for Novi Pazar-put to be engaged as a subcontractor for the construction of asphalt, with the explanation that it meets the conditions.
After that, the approval went to a higher instance, the Ministry of Construction, which gave them the final permit in September 2022.
On the same construction site, before the introduction of sanctions, there was another company of Veselinović and Radoičić, Inkop from Ćuprija.
At that time, Inkop was part of the NCI consortium, which also includes Nukleus from Lazarevac and C&LC from Belgrade.
In October 2020, the public company "Roads of Serbia" agreed with the Chinese company's proposal to award the work to the consortium.
On the section from Iverk to Lajkovac, among other things, they were entrusted with preparatory and earthworks, drainage and dewatering, regulation of watercourses and arrangement of green areas.
From the documentation submitted to RSE, it is not known how much the NCI consortium profited from the works on the Iverak-Lajkovac road.
A little more than a year after Inkop was awarded this job, that company found itself under US sanctions, but continued to operate unhindered.

Case 3: Gravel from the Slovac quarry for the section Preljina – Požega

International Corridor 11, which should connect Serbia with the Adriatic Sea, is presented as a key project that the state has been building for more than a decade.
The construction of the highway to Montenegro, 269 kilometers long, is divided into stages.
The section in the west of Serbia, from Preljina to Požega, is being built by the Chinese company China Communications Construction Company Ltd (CCCC).
CCCC got the job, worth 450 million euros, through a direct agreement with the state. In order for Serbia to provide money for the construction of the road, it borrowed money from the Chinese Eksim Bank.
The Chinese company CCCC, by the way, was on the World Bank's blacklist due to suspicions of corruption and environmental destruction in the Philippines and other countries where they had projects. The USA blacklisted this company in 2020.
In Serbia, the Chinese company CCCC faced accusations of endangering the environment during road construction, but the case was not resolved.
And then in Serbia the CCCC company found a collaborator - a company whose co-owners will also find themselves under American sanctions a little later.
Two years after the start of the works, in the summer of 2021, the Chinese contractor turned to the institutions of Serbia - the public company "Roads of Serbia" and the Ministry of Construction to approve the Slovac quarry as a subcontractor.
The task of the quarry, which was then co-owned by Zvonko Veselinović and Milan Radoičić, was to provide tucanik - crushed stone used for road construction. The state gave them consent to be material suppliers in November 2021.
A month later, the USA imposed sanctions on Milan Radoičić and Zvonk Veselinović.
In the documents analyzed by RSE, it is not specified what quantities of material the Slovac quarry was supposed to deliver, nor at what price.
It is stated that the estimated value of the subcontracted works is 0.09 percent of the contract. In this case, that would be 405 thousand euros.
Meanwhile, Veselinović and Radoičić left the co-ownership of the Slovac quarry.
In July 2022, the company Nukleus from Lazarevac, Radoičić's and Veselinović's business partner, becomes the 100% owner of that company.

China's pattern of business with Serbia
Officials of Serbia and China describe the relationship between the two countries as "steely friendship", which they confirm with a series of infrastructure and other projects that China has been implementing in Serbia in recent years.
Serbia is one of the countries of the "Belt and Road" initiative - a Chinese state project initiated by President Xi Jinping, with the aim of the country's penetration into the West.
Stefan Vladisavljev, a researcher at the non-governmental Belgrade Fund for Political Excellence (BFPE), points out that infrastructure contracts function according to an established pattern.
"It works according to the principle - the Serbian government takes a loan from a Chinese bank, and for that amount of money that was taken as a loan, it is obliged to hire a Chinese company that will perform the works," he explains. All loan agreements between Serbia and Chinese banks are publicly available, as they had to be ratified by the Parliament.
The problem is not in the availability of contracts, but in the lack of transparency in the negotiation process, Stefan Vladisavljev points out.
There are no tenders or other bidders, it is a direct contract.
"We don't know how the conditions contained in the agreements were reached, and we don't even know how the cost itself is distributed, because the total amount of the loan is shown. It is not known what belongs to the Chinese company and what belongs to the subcontractors," he adds.
Vladisavljev also assesses that the lack of transparency "leaves doubt that certain actions are not in accordance with the rule of law, and definitely not in accordance with the rules of the market and competition". The process of control and supervision of Chinese investments is the responsibility of the Government of Serbia and its institutions. Chinese companies, emphasizes the BFPE researcher, are not ready to communicate with the civil sector and independent experts.
"The question arises whether it is enough for the contractor to be responsible only to the state of Serbia, if there are no other control and monitoring mechanisms," he pointed out.
When it comes to the sanctions of the United States and the United Kingdom against companies and individuals, Vladisavljev emphasizes that Chinese companies and the state do not pay attention to it.
"On the one hand, there is no reason why China would have to implement sanctions implemented by another country, especially if it is a country that is seen as a systemic rival, in this case the United States of America," he added. But he points out that Serbia does not pay attention to these sanctions either.
According to Vladisavljev, the "active engagement" of companies that are on the blacklist of the USA, a country with which Serbia wants to build a partnership, especially in the field of investments, can potentially represent a problem.

"The USA can ask Serbia a question, if you as a country want to cooperate with us, you have to cut all ties you have with individuals and business entities that are on our blacklists," he concluded.

How does the state give approval for subcontractors?
Contracts on the construction of highways, which Chinese companies have with Serbia, oblige them to seek the consent of state institutions when engaging subcontractors. This can be concluded from the documents analyzed by RSE.
Consent must first be issued by the public company responsible for the work - in this case "Roads of Serbia" or "Corridors of Serbia".
When public enterprises give their approval, the final decision is made by the Ministry of Construction, Transport and Infrastructure.
By the way, until June 2020, the Ministry evaluated the work of construction companies registered in Serbia and published a "score list of suppliers and contractors" every three months. For almost three years, the updated list has not been published.

The list contains several pieces of information about the construction company - how many employees there are, whether inspections at the construction site found illegal workers, whether workers were more or less injured, and whether they have debts.
Companies with the fewest violations are at the top, the "white" part of the list. Those with the most violations are positioned at the bottom, that is, on the "black" part.
The list was supposed to help state institutions when engaging companies in construction work.
The recommendation was that before making a decision, they should check how the company is listed on the "black and white" list and to avoid assigning jobs to poorly ranked companies.
The ministry's "black and white" list, however, does not include all companies that build in Serbia.
In the last one published in June 2020, among 508 companies, China's Shandong is in 131st place, and negative points were given to them due to debt. The Chinese company CCCC is not on the list.
Of the companies associated with Veselinović and Radoičić, Novi Pazar-put has good ratings, while the construction company "Granit Peščar" was on the "black part" of the list, until recently co-owned by Veselinović and Radoičić.
The construction company owned by the brothers Veselinović and Milan Radoičić, Inkop from Ćuprija, was not scored on the ministry's list.