Shaip Muja – Behgjet Pacolli – Kosovo Tax Dodgers Flourish in Corridors of Power

21 NOV 2011 / 10:31
Kosovo Tax Dodgers Flourish in Corridors of Power


A café in parliament, a restaurant owned by the Deputy Prime Minister Behgjet Pacolli’s family and another owned by the family of a senior figure in the governing party, Shaip Muja, are among the thousands of companies that are breaking the law by not properly declaring taxes.

Besiana Xharra



An investigation by Balkan Insight has uncovered proof of what many Kosovars have long believed – that their assembly is full of tax-dodgers.

Kosovo’s lawmakers, we can reveal, appear relaxed about breaking the law when it comes to protecting the country’s tax revenues.

Under the law on tax administration, introduced last summer, both businesses and consumers are required to tackle the black economy – all customer-focused firms were required to install fiscal cash registers, and consumers are legally obliged to ask for a receipt, or face a 20 euro fine.

But the Shqiponja restaurant in the middle of parliament has yet to install a fiscal cash register, making every assembly member who has enjoyed a coffee there a lawbreaker. 
All businesses were legally obliged to install fiscal cash registers by last September or face penalties ranging from 150 euro to 1,000 euro each.

The machines record each purchase and supply data directly to the Kosovo Tax Administration, ATK. They are being introduced as part of a drive against Kosovo’s black economy, estimated to be worth about 700 million euro a year.

Balkan Insight has discovered that only one in five businesses, or 12,000 out of 60,000 firms, have heeded repeated warnings to install the equipment.

And only 1,145 businesses have been fined since the deadline of last September, according to the latest figures.

The Shqiponja has a string of contracts with government institutions and is owned by a leading trade unionist, Fehmi Nika, head of the union at the Ferronikeli metal plant.

Despite his role fighting for workers’ rights and the café’s position at the heart of political power, Nika’s outlet is breaking the law and, as a result, the ATK is unable to know whether tax is being paid on the hundreds of macchiato and other drinks purchased every day by parliamentarians.

This newspaper also paid three visits to the restaurant of the Pacolli family, the Diamond Diplomatik Bar, on UCK Street, in central Pristina, and two visits to Ariu, a restaurant owned by the brother of assembly member and senior PDK figure Shaip Muja.

Neither was able to issue a legal receipt on these visits. On a third visit to both, and having confronted the owners about their breaking of the law, a fiscal cash machine was in use and the correct receipt issued.

On our first trip the Diamond, it was unable to provide any sort of receipt. “Sorry, but we don’t have one to give you,” a waiter said.

On the second visit, Diamond Diplomatik also could not issue a proper bill for our cake and coffee, but did issue a printed bill typed on a computer. The cash till would be “fixed soon”, they said on this occasion.

On the third visit, the eatery provided a proper receipt – but the receipt also suggested that the bar had issued just six of these in total.

According to the official business register, the owner of Diamond Diplomatik is Islam Pacolli, brother of Behgjet, Kosovo’s Deputy Prime Minister.

Rrahim Pacolli, Behgjet’s first cousin, is also involved with the business, and Behgjet is a regular diner there.

Behgjet Pacolli is the owner of dozens of companies across the world, many of which are run or part owned by his brothers and other relatives.

Perhaps his best-known company is Mabetex, which made a fortune building palatial structures in the ex-Soviet Union and renovating the Kremlin.

He also owns a string of hotels and restaurants under the Swiss Diamond label and formerly owned a newspaper, Lajm, which was in the same building as Diamond Diplomatik.

As well as owning Diamond Diplomatik, Islam Pacolli is a manager of Mabetex, which has also been involved in major projects in Kosovo, including work on the Rilindja government building and the Iliria Hotel.

A spokesman for Behgjet Paciolli, the former president and leader of the New Kosovo Alliance, AKR, told Balkan Insight that he was not in any way connected to the bar.

“Diplomatik restaurant is not managed nor owned by Mr Pacolli,” he said, adding that he had “nothing to do with that restaurant”.

Islam Pacolli told Balkan Insight that the failure of his staff to issue a receipt in Diplomatik was an error on the waiter’s part.

“The bar does issue bills but if the waiter didn’t do that, he probably wanted to get away with it [not using the register], and what can I do about that?” he asked.

“I am very interested to know if that happens and how and I’m also planning to install programs to avoid anything being done manually,” he added.

“It is absolutely not a question of trying to avoid taxes as that is not how the state is built.”
Similarly, Naim Muja also claimed that he had a fiscal cash register but that it was the waiter’s fault that no receipt was given, despite repeated requests.

He said: „I bought the machine two weeks after the law was adopted. It works perfectly well, so it’s not true that it doesn’t function.

„It is the responsibility of the client to ask for a receipt, but the waiters can also hide it from them because they tend to steal. We have had cases when we needed to dismiss waiters.

„You can come at anytime, and we can verify that we have it.”

When it was pointed out that we had visited twice and on both occasions had been told be the waiter that no receipt was available, he blamed the waiters.

His brother, Shaip, a senior figure in the governing PDK and an assembly member, is not listed as an owner of the business, although he is a business partner of Naim’s in other ventures.

“I have five brothers and many cousins, and they are adults, and I don’t know why I should be taken as a reference for what is their business.

“It might happen that the waiters steal as well. It happened to me. What can you do about that? Go check with the waiter’s school, those who issue their certificates. Deal with the origin of the problem, not its effect.

“Kosovo is growing and the implementation of law is getting better. Things cannot be done in a day.”

Balkan Insight visited dozens of other restaurants, bars and shops in Pristina, many frequented by Kosovo’s top politicians.

Most of these also appear to be breaking the law although we have not printed their names as the practice is so widespread.

One café owned by a senior politician and – unusually – using the correct equipment is the Strip Depot, owned by Deputy Foreign Minister Petrit Selimi.

Our reporter was not immediately offered a receipt when paying, which is an offence in itself, but the waiter was able to provide a fiscal receipt when asked to.

The manager of Shqiponja, Bedri Nika, brother to Fehmi, said his firm ran two restaurants in parliament and both now had fiscal tax registers, though he admitted one was only installed recently.

He could not explain why our reporter was unable to get a proper receipt at one of the venues, despite asking for it.

Officials in parliament declined to answer Balkan Insight’s questions on this issue.

Black hole in the economy:

Strip Depot remains in the minority in its use of fiscal cash register, despite a high profile campaign by the ATK since last year and the threat of fines.

ATK officials said they did not wish to comment on specific cases, but their inspectors were continuously checking businesses and handing out fines.

“This includes all businesses, also those that conduct activities inside the government, parliament or the municipalities,” spokeswoman Hava Ademi said.

Ademi told Balkan Insight that the results of their campaign were satisfactory, even if only one in five firms had now installed the correct equipment.

“During 2011 alone, the ATK issued 1,145 fines to businesses that are not equipped with fiscal cash, or do not issue tax receipts,” she said.

“The point of the fiscal cash register is: fair competition in the market, payment of taxes, examination of the origin of goods, and so on,” Ademi explained.

Three companies are licensed in Kosovo to sell the tills, which cost around 700 euro each, although many businesses have complained that the firms act as a cartel and have artificially inflated the price of the tills. This issue is under investigation.

In a bid to increase the number of businesses equipped with fiscal cash registers, the ATK has held seminars across Kosovo in recent months, in Ferizaj, Gjilan, Gjakova, Pristina, Peja, Mitrovica, Prizren and elsewhere.

“The seminars have gone well, and we hope they were useful for businesses which have not ‘fiscalised’ yet,” Ademi continued.

But some economists say the take-up rate remains scandalously low.

“Not using fiscal cash boxes inside [public] institutions shows how this process has failed,” economic expert Isa Mulaj said.

“I’m sure the Ministry of Economy [which has overall responsibility for taxes] is aware that this coffee bar [could be] evading taxes, yet they do nothing – for who knows what reason?” 
Another economist, Musa Limani, also questioned whether the government drive was serious.

“Not using fiscal cash registers in bars that are inside [public] institutions sets a bad example to other businesses,” Limani noted.

Agim Shahini, head of the Kosovo Business Alliance, said the huge size of the black market seriously undermined Kosovo’s budget.

He said research carried out by his alliance and other international organization estimated the annual value of this illicit trade at 700 million euro.

Economist Muhamet Sadiku said he believed about 40 per cent of all economic transactions in Kosovo was illegal.

Taxpayers, meanwhile, are angered by the apparent unwillingness of the private sector to pay its dues to the state.

“All strong states are built on taxes,” Bedri Gola, a resident of Pristina, said. “There is no state without taxes, but illegal businesses will continue to operate freely while Kosovo does not have functioning laws, judiciary and police.”

Adrian Lima, another resident of the capital, said he doubted the wrong will be rectified any time soon. “Whenever I buy something, I never receive a proper invoice,” he noted.

14 FEB 12 / 12:44:53
Kosovo Lawmaker Testifies in Medicus Organ Trafficking Case
A former health adviser to Kosovo’s prime minister testified on Monday in the so-called Medicus case, which centres on allegations of organ trafficking and organised crime.
Fatmir Aliu BIRN Pristina
Shaip Muja, who is now a member of the Kosovo parliament, told the court that the Medicus Clinic near Pristina did not have a proper operating licence and was not licensed to carry out organ transplants.

Seven Medicus-linked suspects appeared in court in mid-December in Pristina accused of bringing up to 30 people, plucked from the poorest corners of the world, to Kosovo under the false promise that they would be paid for their kidneys.

Muja, a member of the ruling Democratic Party of Kosovo, also said he had met one of the defendants in the case, Turkish doctor Yusuf Sonmez.

Sonmez, dubbed “Doctor Vampire” by the Turkish media, was arrested in Istanbul at the beginning of January and later released on bail.

Muja said that he was introduced to the suspect by the owner of the Medicus Clinic, Lutfi Dervishi.

“We met at the wedding of Lutfi Dervishi’s son. There were plenty of guests at the wedding, personalities from political life and doctors…it is part of our customs that you meet with the rest of the guests at a wedding,” Muja said.

The case involves allegations that a group of people brought poor donors and rich recipients to the Medicus clinic and organised and carried out the harvesting and transplant of kidneys.

Nine people in total have been charged with human trafficking, organised crime and the unlawful exercise of medical activities, including university professor Dervishi, who is accused of being the ringleader of the alleged activities during 2008.

The Kosovo men named in the indictment were allegedly aided by Sonmez, who is wanted on organ trafficking charges in several countries, and Moshe Harel, an Israeli of Turkish origin who the prosecution says acted as the gang’s fixer, finding both donors and recipients and handling funds.