{"id":52060,"date":"2022-10-06T10:00:13","date_gmt":"2022-10-06T08:00:13","guid":{"rendered":"https:\/\/www.krik.rs\/?p=52060"},"modified":"2024-04-15T11:21:31","modified_gmt":"2024-04-15T09:21:31","slug":"at-serbias-legalization-secretariat-developers-paid-cash-to-have-their-construction-violations-excused","status":"publish","type":"post","link":"https:\/\/www.krik.rs\/en\/at-serbias-legalization-secretariat-developers-paid-cash-to-have-their-construction-violations-excused\/","title":{"rendered":"At Serbia\u2019s \u201cLegalization Secretariat,\u201d Developers Paid Cash to Have Their Construction Violations Excused"},"content":{"rendered":"\n

The longtime head of the Secretariat stepped down in July, but is now under investigation for allegedly abusing his office. He has been accused by developers and builders of demanding large bribes in exchange for deeming buildings \u201clegal.\u201d<\/strong><\/p>\n\n\n\n

Authors: <\/em><\/strong> Milica Vojinovi\u0107 (KRIK) and Stevan Doj\u010dinovi\u0107 (KRIK\/OCCRP)<\/em><\/strong><\/p>\n\n\n\n

Nemanja Staji\u0107\u2019s former title sounds like something out of a Kafka story \u2014 \u201cSecretary of the Secretariat for the Legalization of Buildings\u201d \u2014 but it\u2019s a very real job here in Belgrade, where \u201clegalization\u201d has become a byword for corruption.<\/p>\n\n\n\n

Amid a frenzied construction boom in Serbia\u2019s capital, it has become standard practice to build first and ask permission later. The city is also home to thousands of so-called \u201cwild buildings\u201d erected amid the chaos of the 1990s and early 2000s, when war and U.S. sanctions destroyed the country\u2019s economy.<\/p>\n\n\n\n

That\u2019s where the Legalization Secretariat comes in.<\/p>\n\n\n

\n
\"\"<\/a>
Nemenja Staji\u0107 outside the Palace of Justice in Belgrade, Serbia, on October 6 ahead of being questioned by prosecutors. Credit:<\/strong> KRIK<\/figcaption><\/figure>\n<\/div>\n\n\n

If you have a building that was never formally registered or doesn\u2019t adhere to code \u2014 maybe it\u2019s too close to another structure, or lacks the requisite parking spaces \u2014 you can head to the Secretariat, pay a fee, and get the structure retroactively \u201clegalized.\u201d<\/p>\n\n\n\n

The system was supposed to help bring more structures into compliance with building codes and get them registered with the state, allowing them to be titled, taxed, and sold more easily.<\/p>\n\n\n\n

But in practice, it has let developers cut corners by embarking on projects that blatantly flout regulations, then get them \u201clegalized\u201d with the stroke of a pen \u2014 and a bribe.<\/p>\n\n\n\n

In May, OCCRP\u2019s Serbian partner, KRIK, published an investigation<\/a> showing how the legalization process benefitted corrupt officials and shoddy builders at the expense of ordinary Serbs. Several experts and construction industry insiders accused Staji\u0107 \u2014 who was head of the Secretariat until his nearly nine-year tenure in office ended this summer \u2014 of presiding over a corrupt system that had created powerful financial incentives for builders to flout the law.<\/p>\n\n\n\n

Now, Serbian prosecutors have launched an investigation into whether Staji\u0107 abused his position. The ex-official was questioned today by prosecutors, who confirmed the probe but declined to comment further.<\/p>\n\n\n\n

But experts say the damage has already been done in Belgrade, which is home to an estimated hundreds of thousands of illegal structures.<\/p>\n\n\n\n

\u201cIn the past five or six years, the fact that so much has been built [in Belgrade] is only because a huge number of buildings and construction sites have been illegal, without a single paper,\u201d said Goran Rodi\u0107, the vice president of the Serbian Construction Chamber of Commerce.<\/p>\n\n\n\n

He said the law passed in 2015 to promote building legalization, although well-intended, had signaled to developers that they could get \u201ca free pass for wild construction.\u201d<\/p>\n\n\n\n

\u201cBelgrade has been disfigured,\u201d Rodi\u0107 said.<\/p>\n\n\n\n

Blueprints and Money<\/strong><\/p>\n\n\n\n

In the 1990s, Serbia was battered by the wars that followed the breakup of Yugoslavia, and U.N. and U.S. sanctions that destroyed the country\u2019s economy. With the government focused on survival, and Belgrade forced to accommodate an influx of nearly 1 million refugees, illegal construction flourished.<\/p>\n\n\n\n

\u201cIt became a mess,\u201d said \u017deljko Simi\u0107, a lawyer who helps Serbians legalize their pre-2015 buildings. Construction permits were almost impossible to obtain, he said, and oversight was lax. Many new homes that went up during the war and post-war period were never legally registered.<\/p>\n\n\n\n

Illegal construction was even tacitly encouraged, since the state was struggling to meet demands for housing, according to a recent paper<\/a> in the urban policy journal Cities by researchers at the University of Belgrade.<\/p>\n\n\n\n

\r\n\r\n\u201cWhoever Builds Legally Is In Trouble\u201d: Why Illegal Construction is the Norm in Belgrade\r\n<\/strong>
\r\n
\r\nConstruction industry experts told KRIK and OCCRP that building illegally is so lucrative that making money doing things by the book is almost impossible. They listed many ways that builders can save by cutting corners. Here are some of the most common:\r\n
\r\n
\r\n– Every new building in Belgrade is required to have a parking garage. But garages are difficult to build and \u201ca complete loss of money,\u201d said one developer. Pre-2015 buildings are exempt from the requirement, creating a strong incentive to engage in fakery.\r\n
\r\n
\r\n– Serbian law stipulates that new construction can use a maximum of 65 percent of a given plot of land. For developers, it\u2019s much more lucrative to build illegally so they can use the entire plot.\r\nBuilding illegally lets you avoid paying construction taxes, which can amount to as much as 200 euros per square meter.\r\n
\r\n
\r\n– Building illegally lets you avoid paying fees to connect the building to the city\u2019s electricity and heating supply networks.\r\n
\r\n
\r\n– Even investors who do obtain a proper construction permit often build extra floors illegally. Then, they need to pay a bribe to have their extra floors legalized.\r\n
\r\n
\r\n\u201cWhen I build, it costs me 650-1000 euros a square meter, depending on whether it\u2019s a simpler or a more complex building,\u201d said an industry insider. \u201cFor those who build illegally it costs 400 euros per square meter\u2026. Later they pay \u2018legalization\u2019 of 150 euros per square meter, a bribe.\u201d\r\n
\r\n
\r\nThe savings are significant \u2014 between 100 and 450 euros per square meter. \u201cWhoever builds legally is in trouble, because he can\u2019t make money,\u201d the man said.\r\n<\/div>\n\n\n\n

\u201cThe citizens aren\u2019t to blame for anything,\u201d said Simi\u0107. \u201cIf everyone could have obtained a building permit within a normal period of time, they wouldn\u2019t have taken these risks \u2026 but when someone makes it impossible for you, of course you need a solution.\u201d<\/p>\n\n\n\n

In acknowledgement of these challenging circumstances, the Law on Legalization was passed in 2015 to help legalize structures built before that date. The Secretariat with Staji\u0107 at its helm was made responsible for processing these claims.<\/p>\n\n\n\n

But in interviews with KRIK, construction industry insiders said the process ended up being systematically abused by builders of newer structures that simply did not meet code.<\/p>\n\n\n\n

\u201cThings are [legalized] on the basis of blueprints and money,\u201d said real estate developer Branko Maljevi\u0107. \u201cSomething can be registered that would fall down on its own.\u201d<\/p>\n\n\n\n

Maljevi\u0107 and two other industry experts \u2014 who spoke anonymously due to fear of reprisals \u2014 said getting all the legal permits to build something in Belgrade is painfully slow and bureaucratic. Acquiring a construction permit can take a year and involves visits to as many as 18 offices, most of which require fees.<\/p>\n\n\n\n

But that could all be avoided, and construction could start immediately, they said, if a builder paid bribes to the Secretariat headed by Staji\u0107.<\/p>\n\n\n\n

\u201cNothing can be done without him,\u201d said Maljevi\u0107 earlier this year. \u201cAll channels lead to that hub.\u201d<\/p>\n\n\n\n

First, they said, a cash bribe could get them \u201cpermission\u201d to build without a permit.<\/p>\n\n\n\n

Then, after the building was completed, another bribe would allow the builder to falsely back-date official satellite imagery at the Serbian Geodetic Authority, making it seem like a building had been there before 2015, and was eligible for legalization.<\/p>\n\n\n\n

Staji\u0107 declined to comment. But he has publicly touted his work at the Legalization Secretariat, and the law on legalization, as important reforms for Serbia.<\/p>\n\n\n\n

\u201cMore and more buildings should be legalized, not demolished,\u201d he told Serbian news outlet Telegraf in an interview last year.<\/p>\n\n\n\n

Another former construction contractor, Goran Staki\u0107, told KRIK and OCCRP the system is riddled with corruption. He claims he worked on 25 illegal buildings over the years. In some cases, he said their owners turned to an alleged associate of Staji\u0107, Ivan Komatina, to get them legalized.<\/p>\n\n\n\n

He provided a list of some of these addresses to reporters, including four that were built after 2015. Reporters used satellite imagery to verify that all four were built illegally.<\/p>\n\n\n\n

\u201cThose who build illegally earn three times more,\u201d said Staki\u0107. \u201c<\/p>\n\n\n\n

But in the lawless world of legalization, not everything went according to plan. After years of illegal construction, Staki\u0107 says he was double-crossed by Komatina after paying a legalization bribe. Enraged, he threw a bomb at Komatina\u2019s apartment building, killing his dog.<\/p>\n\n\n\n

Staki\u0107 was arrested in 2019 and charged with illegal possession of explosives and causing public mayhem. His case is still making its way through the Serbian court system after an initial guilty verdict in 2020 was overturned. In the meantime, he says, he has lost everything.<\/p>\n\n\n\n

\u201cAfter the [bombing], I couldn\u2019t get any work with anyone,\u201d he said.<\/p>\n\n\n\n

Komatina, who attended each session of Staki\u0107\u2019s trial, declined to comment.<\/p>\n\n\n\n

\n\nFrom Belgrade to the Caribbean \u2014 and Back Again\n<\/strong>
\n
\nGoran Staki\u0107 told OCCRP that Nemanja Staji\u0107 and Ivan Komatina also shared business interests in Belgrade\u2019s construction industry. Reporters didn\u2019t find evidence of this, but Staji\u0107\u2019s brother, Novak, recently turned up in a massive leak of offshore documents as the owner of a company in the British Virgin Islands that moved money into Serbian construction projects \u2014 with Ivan Komatina as his partner.\n
\n
\nRegistration papers for Novak Staji\u0107\u2019s offshore company, Loyal Sanibel, were discovered in the Pandora Papers, a leak of nearly 12 million documents from 14 offshore service providers obtained by the International Consortium of Investigative Journalists and shared with news organizations including KRIK and OCCRP. They provide an inside look at how the wealthy and well-connected hide money in secretive jurisdictions.\n
\n
\nLoyal Sanibel was set up in May 2019. A month later, it became the co-owner of a newly established Serbian construction firm, Loyal Trust. It also established another Serbian company, Loyal Building, in August.\n
\n
\nLoyal Sanibel almost immediately started moving money into Serbia through Loyal Trust, providing funds to complete two half-finished residential buildings in Belgrade belonging to Ivan Komatina.\n
\n
\nIt\u2019s unclear why it would make business sense for a Serbian to create an offshore company in the Caribbean to invest in construction projects back home.\n
\n
\n\u201cIt\u2019s definitely a red flag,\u201d said Nicholas Shaxson, a researcher at the Tax Justice Network. \u201c[For] creating a construction company, why not just set up a local company?\u201d\n
\n
\nOne advantage of a BVI firm, Shaxson said, is that \u201cyou can use it to disguise co-ownership, [and] hide money flows.\u201d\n
\n
\nNovak Staji\u0107 and Komatina also built three other Belgrade buildings together under the banner of yet another company, Loyal Trust. (Some of their interests were also revealed by the Balkan Investigative Reporting Network this year.)\n
\n
\nAt least two of their joint projects were also improperly legalized by Nemenja Staji\u0107\u2019s Legalization Secretariat: To qualify for legalization, buildings need to pre-date 2015. But when reporters examined Google Earth satellite imagery from 2015 and 2016, they found no trace of them. The buildings only appeared on the map in 2018.\n
\n
\nThe Secretariat did not respond to a request by KRIK to comment on the buildings or to release documents on the process by which they were legalized. Komatina and Novak Staji\u0107 also did not respond to requests for comment.\n<\/div>\n\n\n\n

Alleged corruption at the Secretariat has taken its toll not only on the construction industry, but on Belgrade itself.<\/p>\n\n\n\n

\"\"<\/a>
An unfinished building in Belgrade that was supposed to be three stories, but had an illegal fourth story tacked on. The construction was begun by a company belonging to Novak Staji\u0107, the brother of the longtime head of the Legalization Secretariat. Credit: KRIK<\/figcaption><\/figure>\n\n\n\n

The city\u2019s newspapers carry frequent headlines about building collapses and construction accidents. In one case, several families and a retired Orthodox priest were walled into their homes after an illegal building was hastily erected in front of their driveway. Last summer, an entire building collapsed in the Vracar neighborhood<\/a> due to poorly planned construction nearby<\/p>\n\n\n\n

Dubravka Vukoje, 69, remembers a more verdant Belgrade when families like hers could cultivate small orchards in their backyards. But last year, she told reporters, a construction company moved in and began ripping up her cherry and walnut trees to build a four-story building right outside her house. She is furious.<\/p>\n\n\n\n

The company erecting the building, she has learned, is Loyal Building \u2014 the same one that was owned by the offshore company belonging to Staji\u0107\u2019s brother. It obtained the correct permit to build a three-story structure, but added an illegal floor on top, which Vukoje says is an eyesore in an otherwise low-slung neighborhood.<\/p>\n\n\n\n

\u201cIt bothers the whole neighborhood but it bothers me the most,\u201d she said, showing a journalist how close the new apartment tower is to her windows. \u201cHe blocked my air and sun and light.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The longtime head of the Secretariat stepped down in July, but is now under investigation for allegedly abusing his office. He has been accused by developers and builders of demanding large bribes in exchange for deeming buildings \u201clegal.\u201d Authors: Milica Vojinovi\u0107 (KRIK) and Stevan Doj\u010dinovi\u0107 (KRIK\/OCCRP) Nemanja Staji\u0107\u2019s former title [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":43482,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"pmpro_default_level":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-52060","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investigations","pmpro-has-access"],"yoast_head":"\nAt Serbia\u2019s \u201cLegalization Secretariat,\u201d Developers Paid Cash to Have Their Construction Violations Excused - KRIK<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.krik.rs\/en\/at-serbias-legalization-secretariat-developers-paid-cash-to-have-their-construction-violations-excused\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"At Serbia\u2019s \u201cLegalization Secretariat,\u201d Developers Paid Cash to Have Their Construction Violations Excused - KRIK\" \/>\n<meta property=\"og:description\" content=\"The longtime head of the Secretariat stepped down in July, but is now under investigation for allegedly abusing his office. 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