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That Crush at Kosovo’s Business Door? The Return of U.S. Heroes

PRISTINA, Kosovo — Prime Minister Hashim Thaci is in a bind. His country’s largest and most lucrative enterprise, the state telecommunications company, is up for sale. The jostling among buyers is intense. Narrowing the bidders has hardly helped.

One bid is from a fund founded by former Secretary of State Madeleine K. Albright. Lobbying for another wasJames W. Pardew, the Clinton-era special envoy to the Balkans. Both former diplomats are among the Americans who hold the status of heroes here for their roles in the 1999 intervention that separated Kosovo from Serbia and created one of the world’s newest states.

In a meeting with Mr. Pardew in October, the prime minister explained his “difficult position” in having to choose between the buyers, according to a memo leaked to the newspaper Zeri, “because whichever of the two bidders behind them wins, he will be seen by 2 million people to have betrayed the other one.”

So many former American officials have returned to Kosovo for business — in coal and telecommunications, or for lobbying and other lucrative government contracts — that it is hard to keep them from colliding.

They also include Wesley K. Clark, a retired Army general and the former supreme allied commander of NATO forces in Europe who ran the bombing campaign against the Serbian strongman Slobodan Milosevic; and Mark Tavlarides, who was legislative director at the Clinton White House’s National Security Council.

The State Department has no policy that forbids former diplomats to lobby on behalf of nations where they served or returning to them for profit, beyond the one applying to federal employees as a whole, which prohibits senior officials from contacting agencies where they once worked for one year and bans all federal employees for life from advising on the same matters.

Kosovo is not the only nation where former officials have returned to conduct business — Iraq is another example — but it presents an extreme case, and perhaps a special ethical quandary, given the outsize American influence here. Pristina, the capital, may be the only city in the world where Bob Dole Street intersects Bill Clinton Boulevard.

Foreign policy experts say the practice of former officials’ returning for business is more common than acknowledged publicly. Privately, former officials concede the possibility of conflicts of interest and even the potential to influence American foreign policy as diplomats who traditionally made careers in public service now rotate more frequently to lucrative jobs in the private sector.

Asked for comment, former officials involved said their business dealings with the Kosovo government would benefit Kosovars by building a more prosperous economy. “We’re going to employ people, provide training, create exports and help the country grow and develop as a democracy,” said General Clark, who is chairman of Envidity, a Canadian energy company seeking to explore Kosovo’s lignite coal deposits and produce synthetic fuel.

Lawrence Lessig, a law professor and director of the Edmond J. Safra Center for Ethics at Harvard, said the appearance of “cashing in” risked undermining the prestige of the United States by clouding the humanitarian nature of the 1999 intervention, which was aimed at ending Serbian atrocities against Kosovars.

After the separation, Kosovo was an international protectorate run by thousands of officials from other countries and the United Nations serving as government representatives and private contractors. Four years of internationally “supervised independence” ended in September. About 6,000 peacekeepers remain.

The closeness of the ties between the state-builders and the state they built has made it easy for officials to change hats. Though the country is one of Europe’s poorest, there is still the potential for profit, particularly as the government privatizes critical assets.

Albright Capital Management, founded by Ms. Albright, has been shortlisted in the bidding for a 75 percent share in the state telecommunications company, PTK. The company’s sale is expected to bring in between $400 million and $800 million.

Senior executives of a sister company, Albright Stonebridge Group, are already small shareholders in PTK’s only competitor, the private company IPKO, raising concerns on the threat to market competition if Ms. Albright’s consortium wins the bid.

Mr. Pardew, the former American envoy, lobbied top Kosovo officials on behalf of a competing consortium, Twelve Hornbeams S.a.r.l /Avicenna Capital LLC.

The memo on the prime minister’s meeting with Mr. Pardew, from within the consortium, was leaked by someone unhappy with the running of the tender process. The choice of Mr. Pardew as their emissary was “vitally important,” the memo noted, because Kosovo’s elite “know and love him for his role on the ground during the war.”

After the memo became public, Mr. Pardew withdrew from lobbying for the consortium, and he declined to comment. It is still possible that neither of the American-backed bidders will win the tender, which is expected to be decided in January.

Ms. Albright responded to an interview request with a statement. Citing limits to disclosure during the tender process, the statement from Nelson Oliveira, managing director and general counsel of Albright Capital Management, read in part, “We take seriously all of our obligations — legal and ethical, in this and all other potential investments.”

“We believe that a transparent, well managed privatization of the state-owned telecom company should bring substantial benefits to the economy and people of Kosovo,” the statement added.

Kosovo’s government denied that any of the former diplomats got special treatment. “I hope they will make money in Kosovo and that Kosovo will make money from their investments,” said Deputy Foreign Minister Petrit Selimi. “The Kosovo government will not choose a company just because it’s American.”

Telecommunications in Kosovo can be a rough business. In 2007, gunmen tried — first with firearms, then with a mortar attack on his car — to kill Anton Berisha, the head of the telecommunications regulatory agency. He survived both attempts, which took place not long after he awarded Kosovo’s second cellphone license to the Slovenian-owned IPKO. A year later, he became ambassador to Slovenia.

In 2004, Ms. Albright became a special adviser to the chairman of the board of IPKO, Akan Ismaili, who is now Kosovo’s ambassador to the United States.

The telecommunications deal is just one of many that Americans have angled for. The biggest infrastructure project in Kosovo’s post-Yugoslav history, a 63-mile stretch of highway connecting Pristina to the Albanian border, was awarded in 2010 to Bechtel of San Francisco in a joint venture with a Turkish company, Enka.

At the time, the prime minister estimated the deal at $1 billion.

Bechtel had help getting the contract from Mr. Tavlarides, the legislative director at the National Security Council during the 1999 Kosovo intervention. According to a lobbying report filed with the United States government, Mr. Tavlarides lobbied on behalf of Bechtel in Kosovo on “highway-related issues” while working for Van Scoyoc Associates, a Washington-based lobbying firm.

Mr. Tavlarides now works at the Podesta Group, which signed a $50,000 monthly contract with the Kosovo government on Jan. 1, advising it on communications and strengthening Kosovo’s ties to the United States government. The Podesta Group was co-founded as Podesta Associates by John Podesta, White House chief of staff in Mr. Clinton’s second term. Mr. Podesta left the firm in 1993. It is still owned by his brother, Anthony.

Mr. Tavlarides declined to comment, citing his firm’s policy to not speak with the news media about clients.

For his part, General Clark said it was “insulting” to suggest that there could be any conflict between private profit-making and his past responsibilities. “My business is aboveboard, transparent and helps the Kosovar people,” he said. “We are going to use a resource that had no value to the Kosovo people and bring in hundreds of millions of dollars of investment.”

United States military officers have a one-year post-retirement ban on contacting their former armed service about official matters, and a lifetime ban on any contacts related to the same matters on which they worked, according to the Pentagon.

Watchdog groups raise the possibility that Kosovo’s government might see doing business with former American officials as a conduit to the current United States administration. They also fear that the influence of former officials diminishes competition and hurts consumers.

The appearance of an inside track by some companies had discouraged competitors “because they know the game is set,” said Avni Zogiani, a Kosovar journalist who heads Cohu, an anticorruption organization in Pristina that has investigated the links between the telecommunications business, crime and politics. “There is no interest in investing in Kosovo by reputable companies anymore.”

Even some former officials acknowledge discomfort at the extent of the interplay between dealing and diplomacy.

Steven P. Schook, a retired United States army brigadier general and former chief of staff of KFOR, NATO’s force in Kosovo, said he had “mixed feelings” about it.

Mr. Schook, who also served as the deputy head of the United Nations mission in Kosovo, has returned as a private consultant for former Prime Minister Ramush Haradinaj, who was acquitted last month by the war crimes tribunal in The Hague. He says that he works for Mr. Haradinaj because of a belief in his leadership and that his only compensation is his expenses living in Kosovo, about $2,600 a month.

“There are a lot of ex-diplomats coming in and out that are now representing private interests,” he said. “If I’m a large corporation and I want to get in to be competitive, I want to work with people to help me do that.”

“But on the other hand, it seems a bit tawdry,” Mr. Schook added. “One minute you’re liberating a place, and the next minute you’re trying to get an energy tender.”

Correction: December 15, 2012

An article on Wednesday about the large number of former American officials who are returning to Kosovo for business and lobbying interests gave an outdated name for the lobbying firm that employs Mark Tavlarides, who was legislative director at the National Security Council under President Bill Clinton. It is the Podesta Group, no longer Podesta Associates.

Source: http://www.nytimes.com/2012/12/12/world/europe/americans-who-helped-free-kosovo-return-as-entrepreneurs.html?pagewanted=1&_r=0

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