World Bank Keeps Serbian Mine Tender Review Under Wraps

The World Bank has declined BIRN's request to see a copy of the internal review, which gave the controversial mine tender the all clear.

This article is also available in: Bos/Hrv/Srp

The World Bank has stonewalled Balkan Investigative Reporting Network’s attempts to secure the bank’s review of the bidding process carried out by Serbia’s state-owned electricity provider, EPS.

Key points from BIRN’s investigation

The tender became the centre of a media storm after BIRN revealed questions about the Serbian company, Energotehnika Juzna Backa, and its partner, Romanian Ness, which won the contract for 15 million euro to pump out 114 million cubic metres of water from a coal mine.

BIRN’s investigation revealed that although one of the tender requirements was for the bidders to have at least one relevant reference, neither member of the winning consortium had previous experience of pumping large quantities of water.

Energetika Juzna Backa’s previous work was on the electrical infrastructure in Serbia, while Ness is a construction company. The Serbian company’s director, Dragoljub Zbiljic, confirmed to BIRN that his company did not have any experience of pumping large quantities of water.

The investigation also revealed that Zbiljic is on trial for tax evasion in the town of Kragujevac and under investigation for the same charge in the city of Novi Sad.

The investigation also revealed that the consortium not only lacked experience in pumping out water, but did not actually carry out the work for which it was contracted on its own. Instead, it engaged a Dutch company, Van Heck, that carried out crucial  works.

The Dutch company, with unique experience in this field, had offered its services to Serbian officials when floods hit the country in May, but was not contracted in direct negotiations, which Serbian law allows in emergency conditions. 

The article revealed that Serbian Electric Power Industry, EPS, which launched the tender, could have start dewatering sooner if had it chosen the contractor through direct negotiations, as Serbian law allows.

BIRN wrote that the delay of several months while the tender was carried out and while the work started cost Serbia more than 100 million euros for the purchase of import electricity and coal. 

The network contacted several Serbian institutions, querying the tender and the choice of the bidders that were contracted, but they declined to answer.

On December 23 and 25, when BIRN contacted the World Bank office in Belgrade to get more information on the companies that won the tender, a spokesperson directed journalists to EPS as the source of information.

Click here to see full article in English. This text is a literal translation into English of the original in Serbian which has not been edited or adapted in any way to suit an English-language readership.

The project to empty flood water from the Tamnava mine, funded by the Washington-based organisation, was awarded to a consortium of two companies which had no relevant experience and whose one of directors is on trial for tax evasion.

Concerns about the process were first raised in an investigation published by BIRN on January 8, which has been denounced by Serbian Prime Minister Aleksandar Vucic and by sections of the press.

On January 9, Vucic branded BIRN journalists “liars”.

He did not address the specific concerns about the story. Pro-government publications have meanwhile branded BIRN – an NGO – as “racketeers”, “lobbyists,” “a foreign agency,” “spies,” and “a journalistic mafia”.

The World Bank added to the controversy when Vesna Kostic, its spokeswoman for Serbia, effectively rubbished BIRN’s reporting on January 12.

She previously told state news agency Tanjug on January 12, that the bank’s experts had conducted an analysis of the tender that was “more comprehensive than in any previous project funded in Serbia”.  

Internal Bank documents mention a “review” of the tender procedures.

“My colleagues looked at all decisions, all procedures and established that everything was done in accordance with Serbian regulations,” Kostic also told the Serbian public broadcaster, RTS, on January 12.

When BIRN asked Bank headquarters on January 12 for a copy of a review of the tender process, and requested clarification on many points, a spokeswoman replied: “I can confirm that the procurement was conducted according to Serbian Public Procurement law.

“Because this project is an emergency operation, the World Bank agreed to consider financing the dewatering activity as carried out according to Serbian Public Procurement law.

“Regarding your questions about the bidding process and the selection of a contractor, please refer to EPS [the Electric Power Industry] for those questions and for your request to discuss the details of the tender procedure as EPS is the implementing agency for the project.”

Further requests for her to release a copy of the review have to date been ignored.

BIRN has also approached several directors of the World Bank Board, urging them to accelerate the process of releasing information.

The tender for “dewatering” the mine was finalised in August, before the World Bank and Serbia signed an agreement in October, in which a World Bank loaned 23 million euros for the job.

Tamnava mine, one of the most important mines in Serbia, was flooded in May as the country faced flash foods.


This article is also available in: Bos/Hrv/Srp