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The first and the last report on corruption and the media

 
In late September 2011, two important media documents were adopted almost simultaneously in Serbia: “Strategy for the development of the public information system in the Republic of Serbia until 2016” (the Strategy) and the “Report on pressures on and control of media in Serbia” (the Report). A brief history of these two documents is very informative: the first took two years to develop, engaged significant human resources (the Ministry of Culture, media associations, international organizations, experts and NGOs), money (European donations totaling 200,000 Euros for the development of an international expert study, 40,000 Dollars for the preparation of an expert summary document by PwC – PricewaterhouseCoopers, a series of roundtable discussions with local and international participants organized by OSCE and the Embassy of Great Britain, the Ministry of Culture working group which wrote the proposal); while the other was created independently following several months of research by the Anti-Corruption Council. Although it is an institutional report, it’s bears the characteristic writing and personal touch of Verica Barac, the president of the Anti-Corruption Council known for her tireless engagement on tackling serious cases of corruption.

The release of the Strategy received great media attention, with the announcement that the state will withdraw from media ownership “no later than 24 months after a legal basis has been established”. This means that the greatest achievement of the long awaited document was to obligate, in the distant future, something that the Law on Public Information already required in 2003 but that was never implemented. EU accession also calls upon the adoption of other legislation such as those dealing with project financing and the control of state support, but this was done in an equally imprecise form. Although the strategy had been adopted by the Government of the Republic of Serbia, it is difficult to say who will really advocate for its implementation. Given that it contains many inconsistencies and some mutually irreconcilable principles, up to now everyone has primarily been praising themselves for participating in its preparation (“member of the working group”), but no one is taking liability for its content and in particular possible outcomes (“I did not agree with this proposal, but the Government nevertheless adopted it”). This has so far been the case with all media-related legislation adopted since the beginning of the painful, time consuming and inefficient transition. In the corridors there are often recounts of the battles for every comma and formulation, creating a common mythology according to which the “expert groups” and “working groups” advocated for the highest standards but the authorities did not accept them. As a result they always became ‘unenforceable laws’ that serve to demonstrate good will towards Europe, but which ultimately never had any significant impact.

Although the Strategy states that it’s not known what is the extent of state media ownership, how much money the state provides to the media, what is the amount public media receives from public vs. commercial sources, it claims that the state will regulate all these issues according to European standards. Despite the fact that currently there is no control over the system of media financing through public sources or effective protection from illegal media concentration, it claims that this will be done in the future, even under much complicated circumstances. It’s almost insulting that after all the efforts put into the development of the Strategy, it contains so little information about the media in Serbia, and even more insulting is the complete absence of any insight how such a rapidly changing area will be developed in the future.

When it appeared, the second document was mostly mentioned in short news briefs, but very little was said about its content. Although the Report was created by governments Anti-Corruption Council, it does not read like any media-related report created by a state institution. The Report is written clearly and boldly, it analyzes cash flows in and related to the media, as well as mechanisms used to trade or commission media influence. The Report analyzes an abundance of publicly mostly unknown information and conclusions are made about corruption and clientelism in the media. The report reads like a detective story – it follows the money associated with companies that have offshore addresses, moguls, media and government circulating around the globe. More importantly, the report shows clearly how the money moves so to hide true ownership and prevent unauthorized control of illegal media concentration and public’s media scrutiny. One would have expected that such a document would be eagerly picked up by the media which would attempt to fill the missing details and examine why this is happening with the media in Serbia.

Instead, the Report has been immersed in media silence.


Hidden media owners

How is it that at the time of so many studies, panel discussions and work on the Strategy, the most accurate analysis of the pressures and controls over the media was done by a government advisory body not responsible for the media? The Council started from a simple assumption that media is important in tackling corruption, and that this battle cannot be waged if the media themselves are corrupt. The Council investigated collaborations between the media and approximately 50 state institutions, and based on this information identified three most pressing issues:

(1) lack of transparency of media ownership,

(2) government’s economic influence on the media through various forms of budgetary contributions, and

(3) Radio-Television Serbia (RTS) which instead of being in public service is providing services for political parties and the ruling elite (p. 3).

According to the analysis of the Council, the media do not report on problems facing the country because they are politically pressured and because “they are completely controlled. There is no longer a source from which citizens can obtain complete and objective information, because being under intense political pressure media either remain silent or report about issues and events in a selective manner “(p. 1).

Out of the 30 major analyzed media (12 daily and seven weekly newspapers, 6 TV and 5 radio stations), 18 have non-transparent ownership. This is done through the use of offshore companies with intent to hide true owners. The Council’s attempts to identify an ownership structure resemble real detective stories: the national broadcasters such as a TV Prva, B92, Radio Index and Radio Roadstar, and print media such as Vecernje Novosti and Pres, have for owners companies registered in Cyprus, while TV Avala and the weekly Standard have unknown owners in Austria. Problem with having offshore companies in the ownership structure is that “these companies are usually used as a shell and have no classical infrastructure in the country of origin. The owner is sometimes a person in Serbia, and sometimes the owner of the company in Cyprus is hidden inside an established network of companies registered in other parts of the world “(p. 6).

There are many examples proving the Council’s claims. When in autumn 2010 one of the richest men in Serbia, Milan Beko, said publicly that he was the owner of Vecernje Novosti, a newspaper implicated in large disputes, this was not apparent from the supposedly proper documentation of the Agency for Business Registers, so it took “the Commission for Securities seven months to officially establish this for a fact. ” Officially, Vecernje Novosti are owned by two Austrian (Trimax Investmants – 24.99% and Ardos Holding – 24.90%) and one Cypriot company (Karamat – 12.55%). Controversies over their ownership first appeared in the public following the allegations of the German company WAZ after its unsuccessful attempt to buy the newspaper.

Another example is the TV Avala, in which journalists in late 2011 went into a strike because they were not receiving their salaries for months. According to the records of the Republic Broadcasting Agency (RBA), the majority owners of TV Avala are the Austrian company Greenberg Invest (48.4%), a local businessman Danko Đunić (46.65%), the Institute of Economics (0.99% – in which employees are Danko Đunić, a onetime Minister from Milosevic era and the head of the consulting firm Deloitte in Serbia, Aleksandar Vlahovic, Serbia’s former Minister for privatization), and Zeljko Mitrovic (4.95%). The strike lasted for 65 days during which time the majority owner never appeared nor did strikers ever make such demands. On behalf of the owners spoke Zeljko Mitrovic who is the sole owner of TV Pink, the largest commercial television station in Serbia. During all this time, RBA didn’t once respond to any of the programming non-compliance obligations, although for two months TV Avala broadcasted only movies, TV series and program reruns instead of its regular program. Six months later, Zeljko Mitrovic spoke publicly about the plans to sell TV Avala to CMI or AlJazeera.

The report also points to a possible connection between the owners of TV Prva and TV B92 implicating the Greek media group Antenna. When last year the Greek owners bought B92, RBA allowed this, but there are suspicions that this was done by the company that previously purchased TV Prva. This is supported by similar changes in programming and content following the ownership changes on both televisions.

And so, according to the Council, out of eleven radio and television broadcasters with a national license, nine have non-transparent ownership, raising a logical question: how will the media publish objective and truthful information if their greatest concern is to conceal their true owners?


How the state influences

The second problem identified by the Report is the different forms of financing and state’s influence over the media. The state is always a large media owner but at this moment, this ownership, similarly to that of private enterprises is not transparent. Budgetary financing of state-owned media is even less transparent and lacking effective public control. For example, in late March, the Serbian government approved a loan to the state news agency (Tanjug) for reporting on elections on May 6 through an expedited procedure. The decision about the interest free loan of 17.5 million Dinars (170,000 Euros) was made at the same meeting at which the government adopted austerity measures that will save 15.7 million Dinars. Tanjug receives annually 216.715 million Dinars (about 2.1 million Euros) from the state budget; information about such loans and exceptional financing usually never reaches the public. The exact amount of government’s financial assistance to the media is not known, and depending on the source, it ranges from 21 to 25 million Euros a year, with many of these funds being awarded through public tenders for co-funding various media projects. However, Serbia still does not have a single record of funding, effective monitoring of spending and impact evaluation.

Direct government financing of state media is not the only form of influence. The analyzed 50 state institutions spend about 15 million Euros for advertising and promotion, with primary clients being Telekom Serbia, the Ministry of Environment, the Agency for Privatization, the Ministry of Economy, Ministry of Health and the Ministry of Agriculture. According to the Report, this is used for party and personal promotion, at the same time making it impossible to find any critical article on the work of these departments in the media. The Council states that politicians who headed departments with largest advertising budgets are also the ones who, during the study period, were the most present in the media. The most expensive promotional campaigns during the study period were “Clean up Serbia” (Ministry of Ecology), the promotion of start-up loans (Ministry of Economy), “Kosovo is Serbia” and the vaccination campaign against influenza H1N1.

The media actually earns income from state institutions in seven different ways: advertising, funding for specialized information services, contract-based informing, subscriptions for different services, subsidizing cultural content, funding earmarked for civil society, and research. Approximately 40 million Euros originates from budgetary sources. This money is provided largely free of public control and certainly represents a very significant proportion of the 175 million Euro worth advertising market.

The Report indirectly deals with the role of public relations agencies, marketing and production companies, and comes to a devastating conclusion that they are largely owned by party activists and individuals with strong political ties. Among them certainly most notable are Multikom Group, in part owned by Dragan Djilas, Mayor of Belgrade and the Deputy of the Democratic Party (DP), and McCann Erickson owned by Srdjan Saper, an influential member of the DP and a close friend of the former Serbian President Boris Tadic. Both agencies have well developed services in the field of advertising, PR and production of programs including most commercial licensed programs such as Big Brother, Trading Wives, 48 Hours Wedding, Operation Triumph, Karaoke War and I Have Talent. Public rumor is that they control the advertising market and mediate between the advertisers and the media. Agencies purchase advertising space from the media, which is subsequently sold to individual customers for profit; this simultaneously allows these companies to exert influence and control over all media funding.

This intricate web of money and influence demonstrates a high level of corruption in the commercial and public media, and a high degree of political parallelism – that is, the translation of political and financial influence of power centers on the media. In such a frontal attack, financially exhausted media yield one by one. Despite the highly polarized and divided society and public during the 90’s and despite the undemocratic regime, there were several media outlets in Serbia that were famous for their independent journalism and were core to critical public thinking. The Report has shown that this is ancient history and that there is almost no media outlet today which wants to take on such role, even for the sake of initiating a public discussion about the media. One third of all published articles concerning the Report appeared in the daily Danas, while the majority of once members of independent media largely ignored it. Despite being created by government’s Anti-Corruption Council, because it was never endorsed or reviewed by the Government, the Report was on its way to being forgotten. But two months following the release, the weekly Vreme unexpectedly published a series of articles “Dossier: Corruption in the Media” in two subsequent issues. In addition to the text of one of its journalists who presented the Report, Vreme also published seven articles written by influential media workers.

In this small sample of the media world one can easily see the how the topic and the Council are perceived in Serbia. Presidents of the two journalists’ associations, who see the majority of things differently, Vukasin Obradovic (NUNS) and Ljiljana Smajlovic (UNS), were this time the only ones who praised the Report and talked about its importance for understanding the current state of affairs in the media and journalism altogether. All directors and chief editors have a different opinion – they all agreed that there is corruption in the media but, of course, in companies that are not theirs. In addition, Veslin Simonovic, editor in chief of Blic (Ringier Axel-Springer) thinks the Report is an attack on an honorable industry and that the Report is published in the interest of the state, ie, the Government; Aleksandar Tijanic, director of RTS, believes that under the parole of “public interest” lies the intent to destroy the public broadcaster, which can only be in the interest of media moguls and other oligarchs; Dragan Bujosevic, editor in chief of Politika, about which we know everything except who owns it, did not comment the Report but instead expressed hope that the Council will become an independent institution.

In the next issue, Darko Brocic, head of the commercial research agency AGB Nielsen, defends the reputation of the advertising industry that operates in Serbia saying that it operates the same way it does in “the whole civilized world,” and explains that the Council wrongly thought that the money provided by state institutions or companies for advertising, and the money provided by the state to media for other reasons have anything to do with each other. The final piece by Dragoljub Zarkovic, editor of the weekly Vreme, “Criticism on public’s expense”, begins with the sentence: “Again the same old, Verica Barac talks about corruption” and explains that by “working overtime she created an impression of the society in which the perception of corruption is stronger than corruption itself.” As a connoisseur of media and the Serbian society, Zarkovic knows the same things as Aleksandar Tijanic, who in his paper also warns about the devastating consequences of “Baracism”. The target of their attacks are not the tycoons or the government, or corruption or the Anti-Corruption Council, but Verica Barac. It is not important what the Report says, who is blocking or hindering the media or what the Council may or may not know about corruption. What is important is to discredit Verica Barac, whose personal integrity and reputation in the public have not for a long time been associated with institutions or even her job.

It is almost symbolic that the first Report on corruption in the media was at the same time the last one conducted by Verica Barac. Recently deceased, she has set the standard and showed that it is possible to talk publicly about things that even the media are trying to keep secret.

 
Media preža No. 42, May-June 2012, pp. 19-20, Peace Institute, Ljubljana (in Slovenian)

The Summary of the Report on pressures on and control of media in Serbia (in English)

Report on the pressures and control of media on the site Peščanik (in Serbian)

 
Peščanik.net, 27.06.2012.