Djukanovic and Deripaska Charged Over KAP Power Debt

Montenegro has spent years ahead of Serbia in the European Union accession talks, and Brussels often points to its record on the rule of law as a benchmark for the whole region. A criminal complaint filed against six people, two of them former prime ministers, is therefore not only a domestic Montenegrin story. It tests how serious that comparison really is once it turns toward the biggest names from the decade Milo Djukanovic held power.

The complaint was filed by the company Montenegro Bonus, through the Iustitia law firm and attorney Vladan Bojic. Six people are named: Milo Djukanovic, Russian national Oleg Deripaska, Igor Luksic, Aleksandar Kascelan, Vladimir Kavaric and Srdjan Kovacevic. They are accused of abuse of office and organized criminal activity connected to the electricity supply of the Podgorica Aluminum Plant (KAP). The public broadcaster Radio Television of Montenegro (RTCG) first reported the complaint on the evening of September 8.

Who’s who in the complaint

The roles described in the complaint trace back to the second half of 2012. Djukanovic led Montenegro’s government starting December 4, 2012, and under his leadership, the complaint says, the state exercised its founding and management powers over Montenegro Bonus, a wholly state owned company. Luksic was prime minister when the mechanism for supplying KAP through Montenegro Bonus was first set up. Kavaric was economy minister at the time, Kascelan was executive director of Montenegro Bonus, and Kovacevic chaired the board of directors of the Electric Power Industry of Montenegro (EPCG). Deripaska, according to the complaint, controlled KAP both in ownership and in practice through the company’s management structure during that period.

The complaint also lays out the mechanism it says caused the damage. In the second half of 2012, KAP owed EPCG more than 40.7 million euros, prompting EPCG to announce it would cut off the plant’s power entirely starting October 1 of that year. To avoid that, the complaint says, the state company Montenegro Bonus was rushed in as a formal intermediary: it bought electricity from EPCG, borrowed money to pay for it, and delivered it to KAP, which never paid for it. The complaint claims Montenegro Bonus lost more than 10 million euros in that quarter alone, worth roughly 25 million euros at today’s purchasing power, and that the state budget was damaged by tens of millions of euros overall.

The people behind the complaint stress how fast the deal came together. The entire process, from the decision for Montenegro Bonus to enter the electricity trade to the first delivery to KAP, unfolded between September 24 and October 1, 2012, even though the company had never handled that kind of business before. The complaint itself states that “this sequence of events spanning only a few days proves that the administrative and regulatory actions were not part of a regular and careful business process, but a part of a scheme prepared in advance to create a formal cover for shifting the debt onto a state company.”

What Djukanovic is specifically accused of

Djukanovic faces the more serious charge, the aggravated form of abuse of office under Article 416, paragraph 3 of Montenegro’s Criminal Code. The complaint accuses him, as prime minister, of actively taking part in regulating the relationship between KAP, Montenegro Bonus and EPCG, and of knowingly and deliberately keeping in place, together with the other people named, a mechanism in which a state company effectively became a free payment channel for private production under Deripaska’s control. It adds that this continued even though the government knew KAP was insolvent and would never be able to repay what it owed Montenegro Bonus.

The people who filed the complaint are asking for an investigation and a financial forensic review to establish the exact damage and each participant’s individual responsibility. According to RTCG, the complaint also covers people who have not yet been identified, additional officials and other responsible figures in the government, the relevant ministries and the companies involved in the supply chain, whose identities are expected to be established once the inquiry is underway.

The case now moves to Montenegro’s prosecution service, which will decide whether there are grounds to open a formal investigation. Until then, none of the allegations have been established in court, and Djukanovic and the other people named are to be treated as accused, not convicted. There is no date yet for when the prosecution might respond to the complaint.