Rise and Fall of Genex: To Have and Not to Have
25 April 1998
May god let you have something and then lose it. This supposedly Jewish curse can be used to describe the fate of all the citizens of FR Yugoslavia in the last decade, but is probably most descriptive of the fate of Belgrade’s Genex. Eight years and four months ago this world famous and accepted company had sales exceeding four billion dollars. Ten days ago its phones and electricity were discontinued because of unpaid bills! On March 30 the Bankruptcy Court in Belgrade began bankruptcy proceedings against Generalexport at the request of the New Belgrade branch of the court, the Agency for Account Settlement of the National Bank of Yugoslavia, which cited among its reasons “continuous insolvency lasting 60 days”. As unbelievable as it sounds, the news, which was announced by the daily newspaper Danas, proved correct. The first hearing in this proceeding should be held when this issue of VREME goes to press — April 23. And even though with possibility of bankruptcy sealing the fate of an empire which has existed for 46 years already has had the effect of an exploding bomb, it appears that at Genex itself that day is expected without too much excitement.
Namely, two days after the announcement of the news at a meeting of the Workers Union of Genex at which the whole bankruptcy case was laconically explained by Andrija Dozet, until recently the General Director and now the President of the Executive Committee, stated that what is at issue is the fate of a big company which will be dealt with by the Government of Serbia because it is on the special list for privatization. Despite the fact that the company’s account registers “zero dinars” since last August, Mr. Dozet had characterized the activities of the company for 1997 as “the most successful” in the past eight years. However, regardless of the way things develop in court, the fact remains that one of the biggest foreign trade companies in the world at one time is today only little more than a house of cards.
RISE: The Generalexport Company was created on May 30, 1952, with a Decree by the Government of the National Republic of Serbia. Under the direction of Vlada Visic, its legendary director, the company evolved like a well organized empire.
And then came the seventies and the “Croatian spring” (also known as “maspok”). From Zagreb came a barrage of accusations that all the foreign currency earned on the Croatian coastline were ending up in Belgrade. By the very nature of the business it was in, Genex found itself at the center of that affair. After the “spring” was snuffed, next came the “Serbian liberals”, and in dealing with them, as a side story, the fight against “techno-managers” also became an issue.
Still, through skillful management Vlada Visic not only succeeded in rescuing the company, but also placed “his” man, “an insider”, Miki Savicevic, at its helm. In the words of Miki Savicevic, at the end of 1989 Genex controlled 12 to 13 percent of the Yugoslav foreign trade and 27 percent of the Serbian trade with the outside world.
FALL: And then, at the end of 1989, Miki Savicevic became the victim of political settlements of accounts as had Vlada Visic. The decision as to his replacement was personally made by Slobodan Milosevic, as Mr. Savicevic claimed in an interview for the NIN weekly. There was also a previous business confrontation: while Mr. Savicevic, as the representative of Siemens in Belgrade, lobbied for this company to get the contract for building new telephone exchanges, Mr. Milosevic (sources say under the influence of Miodrag Zecevic, Director of Yugobanka in Paris) leaned toward the French company Alkatel. Mr. Milosevic, according to Mr. Savicevic, had claimed that it’s bad practice to put all your eggs in one basket. Alkatel got the contract and Mr. Savicevic was replaced. Several years later Mr. Zecevic ignominiously left France, while the Serbian PTT gave the contract to Siemens. This story, sensational as it is, was not the main reason for Miki Savicevic’s replacement. He was simply not “suitable” enough politically (dependable, willing to listen). In his place was appointed Andrija Dozet, who today, in his seventies, is still “swinging a punch” in Genex.
With the departure of Miki Savicevic the demise of Genex began, not because he was irreplaceable, rather his departure coincided with another dramatic event — the disintegration of the Soviet Union (USSR). Namely, Genex owes its rise to an economic anomaly — lists of goods. The USSR did business with the rest of the world according to the principle of exchange of goods for goods (barter), and every year lists of goods were put together (lists of goods which the Soviet Union would offer up for barter). As a rule, natural resources were on top of that list, that is to say attractive stock exchange items such as gasoline, natural gas, ores and such. The job of a foreign trading company like Genex was to find in Yugoslavia the goods which the USSR needed, to exchange those goods for one of the items on the list, and then to sell that item anywhere in the world for dollars in order to pay the Yugoslav manufacturer for his original goods. The difference Genex kept for itself.
ROBBERY: The disintegration of the USSR found Genex unprepared (still in chaos over the fight for power after Mr. Savicevic’s departure), and unable to adapt quickly enough to the downfall of its principal market. A change of fate was also possible. At the beginning of 1992, Genex attempted to revitalize barter trade with the states of the former USSR, but its fate was again controlled by politics.
Its fate in dealing with the rest of the world was sealed by the enforcement of economic sanctions. Genex was unable to adapt well in this situation, perhaps because it was too well known to be able to eschew the embargo, and perhaps even because many saw opportunity in this for reaping some personal profit. Aviogenex sold airplanes, while Greece purchased Yugotours for a pittance.
At the time of sanctions, Genex was deserted by its most capable employees, who took not only cash with them, according to some sources, but also that which is much more valuable in foreign trade — contacts, knowledge, and skill. Today some of the most successful business people from Yugoslavia started originally with Genex: Zoran Drakulic, with companies in Cyprus and London; Mirko Milatovic, with a company in London; Milovan Pavlovic, in Belgrade’s TIM Trade; Slavko Radosevic, owner of Belgrade’s DBR with partners; and Zoran Obradovic who created the company Petromet. Miki Savicevic also transferred business to his own company. According to one story, Andrija Dozet and Milovan Pavlovic were privy to the rise of the company Delta, a company which today models itself of the former Genex (directed by Miroslav Miskovic, former director of the company Zupa of Krusevac, and former MP in the Serbian Parliament, a man who does not hide his ambition to purchase Genex). Misters Dozet and Pavlovic supposedly transferred 750 million dinars into that firm on the basis of clearance proceedings at a time in which the Genex account was blocked for 75 days.
The lifting of sanctions found Genex as an impoverished firm in which the former staff of 6,500 was reduced to 2,500, and those in the know say that the few contracts that are serviced by this company could well be taken care of by 300 people. Genex still commands respect among many people, which today is accompanied by nostalgia among former and present employees of the company.
The fate of Genex should ultimately be looked at in the way Mila Korugic-Milosevic, Associate of the Economics Institute and former director of the Genex Bank, looks at it--as a symbol of a state which refuses to change and adjust to changes in the world. The disintegration of the state is probably no where reflected so clearly as in the downfall of Genex, which for decades was the symbol of our state.