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The key to the swindle was the power that local Communist chiefs have over regional banks. According to Yugoslav press accounts, Abdic pressured the local branch of Privredna Banka, the Bosnian central bank, into providing guarantees for a steady flow of unsecured promissory notes issued by Agrokomerc. The guarantees made it possible for Agrokomerc to sell the notes for cash to other banks. Abdic plowed the proceeds into his ambitious development plans for the company and lavish community projects for Velika Kladusa, including an Olympic-size swimming pool.
The fraud began to unravel last January when, following a warehouse fire, police discovered falsified bank orders in Agrokomerc's records. Newspapers, relying on government leaks, began running stories on the scandal in August. Earlier this month the entire governing boards of both Agrokomerc and the Privredna Banka branch were fired, while Abdic and seven others were jailed on charges of "counterrevolutionary activities." Following demands for a purge of the Bosnian hierarchy from Communist leaders in Belgrade, the capital, 50 functionaries were expelled from the republic's party organization.
Though the scandal has shaken public confidence in its banks, some of Yugoslavia's 23 million citizens have found reason to cheer. They say that the country's cumbersome rotating leadership, which has ruled since the death of Dictator Josip Broz Tito in 1980, may now have the opportunity to push through needed reforms. On the reformers' list are such measures as liquidation of money-losing state companies, closer supervision of regional banks by central authorities, and curbs on the ability of regional governments to veto national legislation. Moreover, the Yugoslav press played an unusually aggressive role in uncovering the fraud, and optimists hope that the high-level resignations ^ and arrests indicate that the days of official cover-ups are ending.
"These kinds of things went on in the past and no one wrote about them," said Alexander Zigic, 23, a Belgrade University student who works on a popular youth radio program. "This is a new openness and accountability. It is a kind of democratization." The question is whether it is coming too late. Said a Western diplomat in Belgrade: "This is perhaps Yugoslavia's last chance to get its economic house in order. If it doesn't, things will get worse and worse and worse."