How corruption and lack of accountability can set a country on fire: The tragic tale of ammunition trade in Albania The integration in the European Union and NATO is the only common political objective for the Albanian political class. The right wing came in power in 2005, under the slogan “With clean hands” – a fight in all fronts against corruption. Part and parcel of the ideology was the thinking that private sector can do better in terms of efficiency, transparency and corruption-free services than the government structures. It is under this thinking that the Prime Minister Sali Berisha proudly points to Albania's now having the smallest government per capita in Europe1. It has enacted a 10% flat tax on both personal incomes and business profits. This rate is lower than Albania's previously low maximum rates of 23% on individual incomes and 25% on profits. Social security levies have been lowered by 31%. Tariffs with European countries have been eliminated. Government personnel is been cut by almost 30%, and the cost of procurement is down 20%. Total revenues have surged from 22% of GDP to 27%. Even the IMF strongly advised Albania against slashing tax rates, but such advice was ignored. To make government more efficient, the prime minister initiated a program with Estonia--a pioneer in this--to bring high tech to tax collection and government contracts. While the Government proudly declares that the inflation is under control and that it is successfully fighting the corruption, most of the Albanians have to face a very tough life. The country continues to depend heavily on remittances, which according to some sources are as high as 13.5 percent of the GDP, although the figure could be much higher, according to the Bank of Albania. The Albanian emigrants have remitted more than the international assistance or 3 times more than the FDI in the country. An important part of the government attention in the last years has been on the fight against informal economy. However, it has to be noted, that the whole informal economy fight has as its main objective to collect more taxes and social security contributions. There is nearly no mentioning of informality in terms of labour relations and working conditions, which appear to be highly problematic in Albania, particularly in sectors such as building and construction, mineral extracting industry and textile, where many serious accidents have been registered and sometimes with casualties in people. The most extreme case has been the one of the Bulqiza mine, where 7 workers have died in the last 16 months. No matter the very dangerous working conditions in these sectors, workers have no choice but to continue their work and the casualties continue… 1 Forbes, 2008. http://www.forbes.com/forbes/2008/0407/015.html 1 Gerdec, Tirana, 15 March 2008 It is against this very gloomy reality that the tragedy of 15 March, in Gerdec, Tirana, should be considered. At least 24 people are known to have been killed, 4,200 houses destroyed more than 300 wounded by a series of massive explosions at an arms dump near the Albanian capital, Tirana on 15 March 2008. Many of the wounded people are still in serious conditions, and the number of casualties may rise. They happened as workers were dismantling obsolete munitions in a factory, which was a central collection point for an arsenal amassed by Albania's former dictatorship. Albania has about 100,000 tons of excess ammunition stored in former army depots across the country, according to Defence Minister Fatmir Mediu. The dismantling of the excess ammunition is part of the country’s reform to join the NATO, which is promised to happen in early April 2008. The tragedy of Gerdec, more than any other event showed the very face of the political, economic and social system in Albania. As such, the story of Gerdec has many facets, each of them worth to be analysed separated and in relation to each-other. The international press has reported on the tragic story, referring to people working in the factory as specialists. The truth is rather different. The most obvious facet of the Gerdec tragedy is the life story of many poor Albanians who were willing to get such a dangerous job, for which they were paid hideously low. The stories told from people working there are shocking. They reported to have not been trained for the job, but only told not to smoke inside the factory. The price of dismantling one projectile was from 10 to 13.3 leke (approx: 10 euro cent). Attempting survival, in a country which continues to be the poorest in Europe, many of them would bring their wives and children to help dismantle as many pieces as possible. Children of the age 12-16 were reported to have been seen working in the factory and teenagers as old as 18 were employed from the private employer. Most of these workers were not officially registered as employed by the firm. They worked in black market, and so were their wives and children. The concerns over child labour and the responsibility of the state structure were denounced from many political subjects and organizations, such as CRCA, which has asked also the Minister of Labour to resign. The catastrophic blast in Gerdec is a typical complicated story of corruption, which involves very high levels of politics and of state structures that were completely obsolete in controlling such a dangerous business. Often done in the name of small government, it reflects clear signals of government/politics capture. Although, the case is now under the investigation of the Attorney General, it is clear that the tragedy is a direct consequence of a corruptive affair of millions of Euros. Different sources report that there are violations of official procedures, which have created spaces for the sub-contracting private firm to 2 benefit not only from the sell of scrap metal from the dismantling of ammunition in the international market2, but also to benefit illegally millions of euros through illegal sell of ammunition. The international traffic of weapons is another serious facet of the story. The state capture? (Extracted from the Albanian Newspaper Shqip) On 28 of December 2006, Mihal Delijorgji – a young, talented and successful businessman, registers its business the “Albdemil” company, with the main objective “dismantling and export of all kinds of ammunition”. The headquarters of the company are declared to be in Gerdec. Patrick Cornelious Henry III, a representative of the American company SAC (Southern Ammunition Company), is a co-partner of Albdemil company. Until this time, there was no legislation in Albania which permitted a private company to trade or ammunition. On 14 March 2007, two months and a half later, the Council of Ministers decides that the state company MEICO (established with the purpose of ammunition export-import on behalf of the government) can contract “different subjects” to sell and dismantle ammunition. Up to this moment, MEICO – the state company – had the monopoly of trading any ammunition in and out of the country. Likewise, the dismantling of the ammunition up to this moment, was done only by the military factories under the strict surveillance of the Armed Forces, though the projects financed from international donors. Any ammunition trade was done with special decision of the Council of Ministers. On 5 April 2007, amidst opposition from the left wing political parties, the Parliament approves the law on “The state control on the import-export activities of military goods of the double use technology”. After the Decision of the Council of Ministers of March 14, 2007, this law takes totally away the state monopoly on the ammunition of trade and opens up for the private operators. In the same day that the law is approved by the President of the country, 17 April 2007, the private company “Albdemil” is registered in the Court of Tirana as a private subject with main activity “Trade, export-import, of the military goods and dismantling of the ammunition”. Seven days later, “Albdemil” registers in the Directory of Taxes and in the same day is given the certification of the recognition. This is particularly strange, given that all the reports in doing business in Albania, point to the long waiting time to be registered and certified. The day after, the Minister of Defence signs and approves the project “On the procedure of treating the weapons, technique and equipments of the Armed 2 There are also voices who argue that there is a percentage of gold as high as 3% in the scrap from the ammunition. But the technology in Albania can not separate these elements. (http://www.gazeta-shqip.com/ artikull.php?id=38935) 3 Forces regarding selling for dismantling of an amount of ammunition”. On the very same day, the Minister of Defence, orders the United Command, to make at the disposal of the dismantling the ammunitions, the facilities of the former- military base in Gerdec. This was the same place where the company “Albdemil” had its headquarters. The high officials claim that the order of the Minister has circumvented the Armed Forces from the surveillance of this process, although up to that time the dismantling was done only from them. In the meanwhile, the work to create the dismantling factory had already started in Gerdec. What lies beneath? The American company SAC, was selected (it is unclear whether there were other companies) in the waiting hall of the Secretary General of the Ministry of Defence, based on a presentation provided with a laptop according to the V. Colonel Ndreu. But what is SAC? SAC was established in 1975 and its main activity is trading bicycles and equipments for sportive weapons.