Energy Traders


The Power Brokers


Regional Agreement
Forms Blueprint



Anatomy of a Blackout


Albanians Take Power



British, American and Balkan authorities look at EFT


Living without Electricity



Bulgaria Losing Power


A Revolt Against Rising Prices



The World Behind the Plug


Romanian Prosecutors Open Inquiry in ALRO case


Lawsuit Gives Insight Into Power Industry


A Town Without Light





British, American and Balkan authorities look at EFT


By the Center for Investigative Reporting

Serbian businessman Vuk Hamović has parlayed skill in the complicated world of debt and energy trading into one of the biggest fortunes in Eastern Europe, but investigators in four countries are trying to determine if Hamović and his company Energy Financing Team used something more than business acumen to win so many contracts and earn such a fortune.

The results of two investigations, one in the U.S. and one in Britain, are expected to be announced shortly.

Hamović and his firm Energy Financing Team (EFT) have consistently denied any wrongdoing.

Besides the investigations of EFT by the UK Serious Fraud Office (SFO) and the prosecutor’s office of the Court of BiH, the Center for Investigative Reporting (CIN) has learned that the Inspector General of the United States Agency for International Development (USAID) is also conducting an investigation. In addition, a Serbian prosecutor has ordered a pre-investigation of EFT’s work with the Serbian national utility Elektropriveda Serbia (EPS).

Prosecutors from the Special Department for Organized Crime, Economic Crimes and Corruption of the Prosecutors Office of BiH are focusing on a number of irregularities including a series of purchases of debt made by Hamović in 1999 and 2000 in the name of GML International, a London-based investment company that specializes in trading debt, according to its website. Hamović served as a director of the company until March 2003.

Jonathan Ratel, international prosecutor for that BiH office, issued an Order for Conducting an Investigation in 2003 which targeted Hamović along with Slobodan Mrdić and Svetozar Aćimović, former director generals of Elektroprivreda RS (EPRS), and Boško Lemez, former Minister of Industry, Energy and Mining in the RS government. In the order, the prosecutor wrote that there was evidence the three officials may have committed crimes including abuse of office, signing damaging contracts, revealing business secrets and giving and receiving bribes.

Trading Debt

The investigation revolves around debt trading, a risky but potentially lucrative business in which a company buys the right to collect an organization’s debt. The cost of the debt depends on the likelihood someone will pay the money back. Thus, debt owned by a company on the verge of bankruptcy or very old debt might be bought at a steep discount – a few pfennig for every mark owed.


Vuk Hamović, a wealthy Serbian
businessman, has built a fortune from
first debt and then energy trading.

In the summer of 1999, Hamović through GML started to buy the debt that Elektropriveda Montenegro owed EPRS. The debt was bought directly from EPRS or through three party deals. For instance, in August of 1999, GML paid off suppliers of EPRS $2.27 million USD for the debt they were owed by EPRS. EPRS then assigned GML an equal amount ($2.27 Million USD) of the debt owed to them by EP Montenegro.

At the same time, it was common knowledge that USAID was providing financial assistance to help Montenegro. It was less well known that part of this assistance, $11.9 million USD, had been set aside to pay back EP Montenegro for electricity it had bought from EPRS.

On August 30, just weeks after the debt swap, USAID sent $3.7 million to EPRS to pay EP Montenegro’s bills. However, one week later EP Montenegro sent a letter to EPRS saying it owed them nothing and that the money should be redirected to pay off GML and several other creditors.

This pattern was repeated in 1999 and 2000 with GML obtaining debt prior to payments from USAID.

In all of these transactions, GML earned money by buying the debt at a 30% discount, according to an email to CIN from EFT spokesman Nenad Savić. Savić said the discount only applied to private firms, was a fair price for the market, and that EPRS was paid in full and suffered no financial losses. Ultimately, their loans helped by providing liquidity to the system, he said.

In the process, $4.3 million was repaid to GML through February of 2000 using USAID funds.

Ratel found the trades suspicious partly because of the timing.

“GML only began to purchase EP Montenegro debt right before the USAID transfers. This suggests that GML was aware of the timing of USAID transfers and that GML collected EPRS (debt) only when certain that the aid was going to be wired,” the order for investigation states. The order also states that EPRS and EP Montenegro did not have the authority to use the funding in this way.

The investigators said EP Montenegro and EPRS did not need to sell and trade debt when money from USAID was already available, according to the order.

“The payment scheme was an apparent attempt to misappropriate USAID donor funding for the apparent benefit of GML International, EP CG (Montenegro) and other EP CG (Montenegro) contractors,” the order says. If the facts are true, it may mean managers of the organizations are guilty of embezzlement and fraud, according to the order.

From August 1999 until the end of February 2000, USAID gave EPRS $8.4 million out of a promised $11.8 million for delivery of electric energy to Montenegro. A majority went to GML, who had bought the debt.

The Inspector General of USAID is conducting its own investigation.


Investigators are also looking at EPRS’s sale of surplus power to EFT in two cases in 2001 and 2002. In the tenders to sell electricity, EFT offered less money than competitors in both cases but won each time because of additional restrictions placed on the tender.

Ratel’s order asserts EFT allegedly drafted the tender itself and that it required bidders to respond in only a few days. This limited the companies that could bid. In these cases, EPRS may have sold the electricity at a price below what it cost to generate, according to investigators’ documents.

Investigators are also looking at other alleged tender manipulations, energy exchanges, and contracts that hurt EPRS.

GML claims no involvement

Steven Pinter, a director at GML, denies his company was involved.

In an interview with CIN, Pinter said, “I know that my former colleagues were involved in that business, but we, our firm, is not. I really don't wish to comment about things which have nothing to do with us. GML has never concluded any transactions in Bosnia-Herzegovina. Never. Never.”

However, company records show Hamović and fellow EFT director James Nye were both directors of GML International at the time of the transactions, all contracts were signed in the firm’s name, and the firm’s website says it has done business both in the Republika Srpska and in Bosnia-Herzegovina. In light of the comments made by Pinter, it is not clear whether GML authorized the contracts. Pinter refused to comment on these facts.

Clyde and Co., EFT’s UK legal council, in a letter to prosecutor Ratel, wrote “it is important to note that the management and directors of GML (apart from Mr. Hamović) played no role, nor received nor transmitted any funds.”

The letter says GML’s name was used because Hamović was an opponent of then Serbian President Slobodan Milosevic, which would have meant “difficulties might arise (for Hamović).” However, the letter does not say why this would be a problem for a contract in the Republika Srpska, then run by Milorad Dodik, who was not cooperating with Milosevic.

Other Troubles

This is not the first time Hamović or his companies have been scrutinized or left questions unanswered.

EFT’s energy trading has also been investigated by a Serbian parliamentary commission, which suggested in 2004 that independent audits be conducted of EP Serbia’s relationship with its contractors, including EFT. The full parliament has never acted on the suggestions.

Nor was any action taken on a 2004 report by the Anti-Corruption Council of the Republic of Serbia, based on records from the parliamentary committee, which questioned the “increasing share in the electrical power trade” that EFT controlled.

Finally, CIN has found out that a district prosecutor in Belgrade instructed police in February 2006 to conduct a pre-investigation into energy trading in Serbia. Since 2000, EFT has been the main business partner of Elektropriveda Serbia (EPS).

Many of the problems for EFT came about due to a 2003 audit of EPRS by the Office of the High Representative’s special auditor. The special auditor found that EPRS lost 166 million KM due to mismanagement, conflict of interest, theft and sale of power at below the market price. The auditor recommended the UK and BiH investigate EFT and EPRS management.

Hamović and EFT rejected allegations against them at the time and hired KPMG, one of world’s largest accounting firms, to audit the special auditor’s report. KPMG concluded that the original report was unfounded and full of “glaring errors” and that the special auditor “showed unfamiliarity with the region’s power energy market.”

Hamović refused to answer most of CIN’s questions on EFT and GML’s business dealings with EPRS, EP Serbia and EP Montenegro.

KPMG’s report failed, however, to persuade Ratel to call off his investigation. He asked the British SFO to help obtain documentation on EFT and GML. In May 2004, London police raided the offices of the two firms and took out 35 garbage bags full of bookkeeping records, bank reports dating back to 1998, money transfer receipts, business correspondence, minutes from meetings, and bank receipts.

Officials have also asked for help from Luxembourg authorities to find out about transactions by EFT, GML, Hamović and EFT director James Nye through banks there. Luxembourg bank accounts were used for some of the electric energy delivery payments from EP Serbia to EFT, records show.

EFT tried unsuccessfully to keep the documents hauled out of its London office from being sent to BiH, but in July 2005 a London judge cleared the way for thousands of pages to be shipped to Sarajevo. The documents arrived in BiH this January. Three British SFO investigators were dispatched to BiH and Serbia as well.

Debt to Electricity

During 2000, in the midst of the EP debt trades, Hamović started to expand his business from trading debt to trading electricity. In June of 2000, Hamović along with Nye started EFT by registering the company in the Isle of Man.

Hamović approached trading electricity like he did trading debt. He set up complex three-way deals in which power companies might be left owing him electricity. The energy debt could be sold when needed to power thirsty countries, sometimes at higher rates than when the energy was purchased.

Electric energy is one of the most sought after commodities in the Balkans and the rest of Europe. BiH and Bulgaria are the only two countries in the Balkans with a consistent supply of surplus electrical energy. Other countries export occasionally but often must import during peak demand loads.

That is because surplus power cannot be stored for use when needed later. Frequently a utility can experience a surplus and then within a few hours a shortage of available power. The situation provides an opportunity for electrical energy traders who try to buy surplus energy at low prices and sell it to users who need the electricity at higher prices.


In October 2000, a second company named EFT was founded in London. Besides Hamović and Nye its co-owners were Svetislav Bulatović, an energy industry expert from Belgrade, and Vojislav Lazarević, a former counselor for the energy industry to the Montenegro Prime Minister, and also the president of EP Montenegro’s stockholder assembly.

EFT opened its branch office in Trebinje, the city where EPRS is based. EFT quickly became one of EPRS’s main partners in BiH, Serbia and Montenegro, winning most of the tenders for buying or selling energy.

Hamović and Bulatović told the media that their success stemmed from their readiness to wait a long period of time for payment for delivered electricity, while at the same time they were paying their suppliers in advance.

EFT’s patience tended to disappear, however, after deals were closed. Three contracts signed by EFT and EPRS between 2000 and 2003, obtained by CIN, show that payment deadlines agreed to when contracts were won were changed with annexes added to the documents later. With no reason given, payoff periods dropped from 180 days from time of delivery to just 15 or 20.

Business arrangements between EP Serbia and EFT attracted the attention of the Serbian Parliament, which created a parliamentary commission in March 2004 to review them.

At the center of the inquiry was concern about why EP Serbia was buying energy from EFT at all, when it had enough production to meet demand. Kori Udovički, a former Serbian minister of energy, told the board that the EFT deals were not benefiting Serbia.

But Serbian energy industry experts who testified before the commission could not agree about whether EP Serbia had been harmed by doing business with EFT. The only result of the inquiry was a suggestion that Parliament hire an independent auditor to review business agreements between EFT and EP Serbia.

So far, the Serbian Parliament has not acted on that suggestion.

Punishments and Rewards

BiH officials also have taken little action on the special auditor’s report.

That report fingered EPRS management for selling electric energy to EFT below market price and for non-transparent tenders.

Right after it was published, the High Representative removed Director General of EPRS Svetozar Aćimović and Boško Lemez, member of the EPRS Steering board and former minister of industry in the RS government, from their jobs.

The RS government asked that the Ministry of Finance and MUP RS prepare a report on EPRS business, and the ministry set up a commission of inquiry. Its members were Ostoja Travar, chief of the sector for prevention of money laundering, and two staffers from this sector, Željko Dragić and Drago Vujanić, both of whom are now EPRS employees.

Travar told CIN that the commission was only formed to check tender procedures for construction of the Fatničko polje tunnel, which was won by EFT. He says that commission did not find any evidence of law breaking.

The commission delivered its findings to Dragan Mikerević, prime minister at the time.

“I know that I had some meetings about that report and that commission members were visiting me, but I don’t remember the details,” Mikerević now says.

Though the ministry commission came up with only minor irregularities, the MUP RS investigation was later taken over by the BiH Prosecution.

EFT appears not to have been held back by the string of investigations. According to its web site, EFT has morphed from a single company into 16, with perhaps more on the way. There are plans for new companies in Albania, Poland and Croatia.

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