Know Your Drug Dealer
When opening accounts for new clients, banks are required by law to follow “know your customer” rules and obtain detailed records that confirm the identity of the person who truly owns or benefits from the account. The rules are in place to prevent banks from being used for money laundering.
First Bank routinely and in many cases systematically failed to collect the required information.
For example, when setting up accounts for Delaware-based Lafino Trade LLC and Seychelles-based Camarilla Corporation, the First Bank failed to obtain valid copies of registration records as well as copies of identification cards for people with access to the accounts. Both companies were controlled by Darko Saric and both were used for money laundering, according to prosecutors.
In May 2012, Dusko Saric, Darko’s brother was sentenced to eight years in prison for money laundering. It was through Camarilla Corporation’s bank account in First Bank that Saric’s brother laundered €7.4 million (US$ 10 million). Dusko Saric appealed and his sentence was changed to five and a half years in December 2013.
Reporters at OCCRP obtained documents from the Delaware business registry which shows that the Saric brothers are shareholders of Lafino Trade. This is confirmed by law enforcement records and court documents, which show the company was used to launder Saric’s drug profits to funnel them into legitimate businesses.
For instance, Lafino Trade showed up in an OCCRP investigation into Zoran Copic, a Serbian businessman sentenced in Bosnia and Herzegovina (BiH) in January to four and a half years in prison for laundering Saric’s money. Copic was also sentenced to six years in prison in absentia in Serbia in February. In December 2008, US$ 2.9 million was transferred from Lafino Trade to the account of Agrocoop, a company owned by Copic, which he used to purchase a sugar factory in Bijeljina, BiH.
Saric was an important customer but it is not clear how much money he had on deposit. In 2010, Montenegrin Central Bank examiners reviewed the accounts of foreign entities in First Bank. The company Lafino Trade was listed among the top 10 foreign accounts posting the largest number of transactions although the report does not mention exact amounts. It also had the 13th largest amount of money on long-term deposit. Lafino Trade deposited €6 million (US$ 8.25 million) as a 5-year deposit on May 6, 2008.
Lafino Trade was used by Saric when he sold the Serbian cigarette and news distribution company, Stampa System, to the German media concern WAZ for €29 million (US$ 40 million).
While all banks are obliged to report suspicious transactions to the Anti-Money Laundering Agency of Montenegro, First Bank never reported a single suspicious transaction from Lafino or Camarilla, according to testimony at the trial of Dusko Saric by Predrag Mitrovic, head of the agency at the time.
Nova Star CG, a subsidiary of another Delaware company owned jointly by the sister of Darko and Dusko Saric and Nebojsa Jestrovic, Saric’s close associate and best man, who was later indicted for money laundering for the drug dealer, channeled money through the bank. In April 2009, First Bank provided confirmation that the Saric company has at least €1 million (US$ 1.3 million) deposited in its account at the bank. The company was used in a land deal with the Budva football club Mogren.
But this was not the only business First Bank transacted with Saric. Despite poor financial returns, First Bank gave loans to two Montenegrin companies controlled by Saric: Mat Company and Trecom.
First Bank gave two loans to Mat Company, a company registered in 2006 for retail trade. The company was established by Dusko Saric but in 2009 Dusko was replaced by Darko Saric, then Darko was replaced in the same year by the company Mateniko LLC from Delaware. According to a Serbian investigation, Mateniko was heavily used for money laundering. Finally, in late 2009, Mateniko was replaced by Jovica Loncar, a front person for companies that Saric established in Montenegro and Delaware.
First Bank gave Mat Company a €5 million (US$ 6.87 million) 3-year loan on May 3, 2008 with a grace period of three months. The loan was secured with a mortgage on 266 square meters of land in Budva and the hotel Max Prestige (4-story, 1,014 square meters) estimated at €8.1 million(US$ 11 million). Additionally, the loan was secured with €5.4 million (US$ 7.4 million) worth of movable assets. The source of repayment was to be business income. A second 3-year loan in the amount of €300,000 (US$ 412,000) was approved in February 2008 with a 12-month grace period. The purpose of the loan was working capital for the company.
An analysis from Central Bank examiners showed that at the end of 2007, Mat Company had low profitability. It also had a low level of liquidity, according to a January 2009 report. A 2010 examination by the Central Bank along with an analysis of financial statements for 2008 and 2009 showed the company was chronically losing money. Because of the high losses, it had little cash and took out more short-term loans and at the end of 2009 had €500.000 (US$ 687,000) in losses.
Trecom, another company controlled by the Montenegrin drug trafficker’s network, also got a 5-year loan with a 12-month grace period. While it is not clear what the original amount of the loan was, at least €1.2 million (US$ 1.6 million) was outstanding as of 2010.
Trecom was founded by Radulovic, who worked with Saric. Radulovic later transferred Trecom to Dudic, another of Saric’s partners, who was under investigation by Serbian prosecutors for cocaine trading.
Lafino Trade helped out First Bank significantly. When it deposited €6 million (US$ 8.25 million) for five years in May 6, 2008, the deposit came at a very good time for First Bank, which was already struggling to pay its bills and depositors. Compared to other top depositors, Saric’s deposit had an unusual provision; while other depositors were paid interest of 5 to 8 percent, Lafino received only 1.5 percent. Normally, depositors who agree to leave money in a bank for a long time are paid higher rates. The only other depositors with such a low interest rate were bank owner Aco Djukanovic (1.5 percent) and Caldero Trading Limited (2 percent) a company owned by Milo Djukanovic’s close friend Zoran Becirovic.
While Saric may have been the biggest criminal working through First Bank, he is not the only controversial figure who used the bank. OCCRP has reported that indicted cigarette smuggler Brano Micunovic and his wife got very good deals from the bank including an unsecured line of credit. Montenegrin non-governmental organization MANS has reported that Albanian drug kingpin Naser Kelmendi was allowed to make large cash deposits at the bank.
Stevan Dojcinovic (CINS) and Dejan Milovac (MANS) contributed to this story.