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Former ministers charged and acquitted: Abuse of power in hydropower plants’ privatisation

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  • Kosovo

Former ministers charged and acquitted: Abuse of power in hydropower plants’ privatisation

Case Date(s)
04/2020
Case Updated
03/2023

Case Summary

Phase

2nd instance verdict

Offence

  • Abuse of functions

Sector

  • Administrative and support service activities
  • Other

Institution

  • Government (government committee for privatisation)
  • Kosovo Energy Corporation

Involved people

Allegedly involved people Besim Beqaj Minister of economic development and chairman of the government privatisation committee
Besim Beqaj
Politically exposed
Yes
  • Abuse of functions
Allegedly involved people Mimoza Kusari-Lila Minister of trade and industry and member of the government privatisation committee
Mimoza Kusari-Lila
Politically exposed
Yes
  • Abuse of functions
Allegedly involved people Nenad Rashiq Minister of labour and social welfare and member of the government privatisation committee
Nenad Rashiq
Politically exposed
Yes
  • Abuse of functions
Allegedly involved people Dardan Gashi Minister of the environment and member of the government privatisation committee
Dardan Gashi
Politically exposed
Yes
  • Abuse of functions
Allegedly involved people Arben Gjuka General director of the Kosovo Energy Corporation
Arben Gjuka
Politically exposed
Yes
  • Abuse of functions
Allegedly involved people Fllanza Hoxha Manager in the privatisation project authorised by the Ministry of Economic Development
Fllanza Hoxha
Politically exposed
Yes
  • Abuse of functions

The Hydropower Plant Affair revolves around the alleged unlawful privatisation of four state-owned hydropower plants in Kosovo by high-ranking officials, including former ministers and executives from the Kosovo Energy Corporation (KEK), which resulted in the acquittal of the accused. Prosecutors claimed that, in 2013, these officials improperly transferred KEK owned plants to the Limak-Çalik company, bypassing regulations that required the plants to remain under KEK’s control. This allegedly caused substantial financial losses to the state and KEK. In 2020, the suspects were charged with abuse of office, but in 2022, they were all acquitted in the first-instance verdict due to insufficient evidence of criminal conduct. The court of appeals upheld the first-instance verdict in 2023, following the prosecution’s appeal.

In 2013, four state-owned hydropower plants in Kosovo were privatised following a committee decision that involved former government ministers and other officials. In 2020, prosecutors filed an indictment alleging that these officials improperly transferred plants owned by the Kosovo Energy Corporation (KEK) to the Limak-Çalik company, bypassing regulations that required the plants to remain under KEK’s control. However, in 2022, all defendants were acquitted in a first-instance verdict issued by the basic court in Prishtina due to insufficient evidence to substantiate any criminal conduct. The court of appeals upheld the first-instance verdict in 2023, following the prosecution’s appeal.

The first reports about the controversial privatisation emerged when the newspaper Koha Ditore revealed that on 8 May 2013, four hydropower plants were privatised along with the power distribution network, despite not being explicitly listed in the tender package. This occurred within the context of Kosovo’s 2013 privatisation efforts, intended to attract investments and modernise state-owned assets. Prompted by these media allegations, the prosecution launched preliminary investigations in 2016. In May 2018, Kosovo's special prosecutor's office formally opened an investigation into the alleged covert privatisation of the hydropower plants.

On 10 April 2020, the special prosecutor's office of Kosovo filed an indictment with the basic court in Pristina against 19 individuals, including four former ministers from the Thaqi II government: Mimoza Kusari-Lila, Besim Beqaj, Dardan Gashi and Nenad Rašić. The suspects were accused of co-perpetrating the criminal offence of abuse of official position or authority under Kosovo’s criminal code.

The special prosecutor's office argued that Besim Beqaj, as chairman of the government committee for privatisation, along with committee members Mimoza Kusari-Lila, Nenad Rašić, Dardan Gashi and Lorik Fejzullahu, exceeded their powers and violated their official duties by acting with the intent to acquire a benefit for one party while causing damage to another.

According to the prosecution, on 8 May 2013, the officials unanimously voted to transfer four hydropower plants – Lumbardhi, Burim, Radavci and Dikance – to the Kosovar Company for Energy Distribution and Supply (KKDFE), which led to their privatisation through the Turkish company Limak-Çalık. The indictment detailed that on that same day, agreements related to import, transfer, supply and debts were signed, de facto completing the privatisation of KKDFE. Nonetheless, the transfer and privatisation of these plants allegedly violated the Law on the Electricity Regulator.

The prosecution also charged Fllanza Hoxha, the manager of the privatisation project, and Arben Gjukaj, the managing director of KEK, with exceeding and abusing their authority, respectively. According to the prosecution, both were aware that the hydropower plants were not authorised for privatisation but allowed the process to proceed regardless.

According to the prosecution, the hydropower plants were under concession, and the International Finance Corporation recommended that they remain within the Kosovo Energy Corporation. By transferring these assets, the defendants allegedly damaged the interests of both KEK and the Kosovo government as its shareholder. Specifically, the alleged damage amounted to €1,054,000 for unpaid monthly rental fees for the remaining concession period, which should have been paid to KEK rather than the privatised company.

The prosecution also reported that the actual value of investments made in the hydropower plants, amounting to €12,628,166.41 was not factored in the valuation of assets used as the basis for privatisation. Instead of using an updated value that included these investments, the authorities used a valuation from 2003. The prosecution argued that hydropower plants were thus undervalued in the process and privatised at a lower price than they were worth.

On 28 October 2020, all 19 defendants pleaded not guilty before the basic court in Prishtina and requested a dismissal of the charges. On 11 March 2021, the court dismissed the criminal proceedings against 13 defendants due to the statute of limitations but upheld the indictment against the former ministers Kusari-Lila, Beqaj, Gashi and Rašić, as well as manager Hoxha and former KEK director Gjukaj. For the remaining defendants, the court determined that further examination of the legality of their actions was warranted. The court of appeal upheld these decisions.

The trial of the six remaining defendants began on 1 July 2021, at the basic court in Prishtina. During the proceedings, the defence argued that the trial had wasted public funds, time and energy, while the prosecution failed to demonstrate any harm, motive or intent in the case. Conversely, the prosecution argued that although the suspects were aware that the hydropower plants had to remain under KEK ownership, they had failed to act in accordance with their responsibilities.

On 7 November 2022, the basic court in Prishtina acquitted the six defendants due to a lack of evidence. The court found that the prosecution did not prove the charges of abuse of official position related to the disputed privatisation. While the defence welcomed the verdict, the special prosecutor's office appealed the ruling, claiming that relevant facts remained unverified. Meanwhile, the case was approaching its absolute statute of limitations deadline of 8 May 2023, after which any further legal action would have been impossible.

On 27 March 2023, the court of appeal upheld the acquittal of the six defendants and rejected the prosecution's appeal as unfounded. The court affirmed that the first-instance court had accurately established the facts and complied with criminal procedure provisions. It also highlighted the prosecution's failure to provide sufficient evidence of misuse of authority. Notably, it noted that the indictment incorrectly cited the Law on the Electricity Regulator, which did not exist in 2013 when the alleged offences occurred. The court emphasised that the charges related specifically to actions from May 2013, and therefore only laws in effect at that time were applicable.

The case was marred by significant delays, raising concerns over the judiciary's promptness in addressing cases involving high-ranking officials. Additionally, there were speculations that the acquittal of the main defendants was aimed at avoiding the absolute statute of limitations. Social harm related to this case extended beyond the legal proceedings and highlighted both financial losses and governance issues. Specifically, it raised questions about the transparency, ethical governance and accountability in Kosovo’s management of public assets, especially in the privatisation of state resources.

Further details

JURISDICTION/COURT

Basic Court of Prishtina – special department;

Court of Appeal of Kosovo - special department

LAWS (ALLEGEDLY) BREACHED

Criminal Code of the Republic of Kosovo (Abuse of official position or authority, Article 422 paragraph 2, related to Article 31)

FINAL SANCTION OR MEASURE

Acquittal decision, not guilty

UNCOVERING METHOD

Investigative journalism: it appears that the first reports about the controversial privatisation emerged when the newspaper Koha Ditore revealed that on 8 May 2013, four hydropower plants were privatised along with the power distribution network, despite not being explicitly listed in the tender package. Subsequently, prompted by these media allegations, the prosecution launched preliminary investigations in 2016 and formal investigations in 2018.

PROSECUTOR

Atdhe Dema

JUDGE

Valon Kurtaj, Valbona Musliu, Musa Konxheli

DEFENCE COUNSEL

Florent Latifaj; Besnik Berisha (Besim Beqaj's lawyer);

Artan Çerkini (Fëllenza Hoxha’s lawyer); Arianit Koci.

Driton Musliu (Kusari-Lila’s lawyer);

Flamur Bllacaku (Arben Gjuka’s lawyer)

SOCIAL HARM ON SDGs

15 Life on Land

7 Affordable and Clean Energy

8 Decent work and economic growth

6 Clean Water and Sanitation

When it comes to quantifiable harm, according to the prosecution, the hydropower plants were under concession and the International Finance Corporation recommended that they remain within the Kosovo Energy Corporation. By transferring these assets, the defendants allegedly damaged the interests of both KEK and the Kosovo government as its shareholder. Specifically, the damage amounted to €1,054,000 for unpaid monthly rental fees for the remaining concession period, which should have been paid to KEK rather than the privatised company.

The prosecution also reported that the actual value of investments made in the hydropower plants, amounting to €12,628,166.41 was not factored in the valuation of assets used as the basis for privatisation. Instead of using an updated value that included these investments, the authorities used a valuation from 2003.

Disclaimer

Every effort has been made to verify the accuracy of the information contained in this database. All information is believed to be correct as of 03/2023. Nevertheless, Transparency International cannot accept responsibility for the consequences of its use for other purposes or in other contexts.

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