The closure of “Rudi Čajavec” was foreshadowed in 1992. Even before the outbreak of the first armed conflicts, the Crisis Headquarters of the Autonomous Region of Krajina, an entity established within the Socialist Republic of Bosnia and Herzegovina, made decisions that included removing all non-Serb citizens from their jobs in enterprises, institutions, schools, and judicial bodies within the region. No explanations for these decisions were ever provided, and none of the dismissed employees received written justification for their terminations.
Just four years after its founding, “Čajavec” began producing automotive and tractor components such as pressure gauges, thermometers, ammeters, turn indicators, switches, starters, signal lamps, control bulbs, and windshield wipers. “Iskra (Spark)” produced induction coils, dynamos for lighting, and voltage regulators, while “Saturnus” manufactured automotive and tractor headlights, auto pumps, and auto mirrors. This rapid expansion allowed for the development of motor vehicle equipment production in a very short time.
Major customers included “TAM” in Maribor and “FAP” in Priboj. A joint representative office was also established in Belgrade, tasked with studying market needs and demands as well as exploring product distribution opportunities. This cooperation resulted in significant foreign currency savings for the Yugoslav economy and substantial material benefits for the enterprises involved.
By a decision of the People’s Liberation Committee (NOO) Banja Luka, number 26297/56, dated August 1, 1956, the company was officially renamed “Factory for Electromechanics and Electronics Rudi Čajavec” That same year, the District Economic Court approved the industrial production of equipment and instruments for precision electromechanics and electronics.
A significant step forward in the development of “Čajavec” was achieved in 1955, with the start of production of UKT (ultra-shortwave) and radar technology.
At its founding, the factory employed 57 workers. By 1956, this number had grown to 560, and seven years later, it reached 1,719 employees, 35% of whom were engineers and technicians. Continuous efforts were made to enhance the professional skills of the workforce, leading to a fivefold increase in production compared to the company’s first year of operation.
Production
While implementing the Perspective Development Plan for the company for the period from 1956 to 1961, alongside production for the needs of the Yugoslav People’s Army (JNA), “Čajavec” also began manufacturing consumer goods. The company’s facilities produced commercial electronic products, such as televisions and car radios branded as “Bosna”. In collaboration with “Iskra” from Kranj, “Saturnus” from Ljubljana, and “Teleoptik” from Zemun, “Čajavec” introduced electrical equipment for motor vehicles to the market. Additionally, in partnership with “Jugoturbina” from Karlovac, the company produced equipment for the Yugoslav State Railways, including 500- and 900-watt generators and regulatory boxes. The company also manufactured various civilian items, industrial and control manometers, 30-watt electric motors, and other products. The distribution of “Čajavec” products was guaranteed.
To improve the standard of living for employees, the Workers’ Council of “Čajavec” decided in mid-1954 to establish a canteen on Marshal Tito Street 121. The following year, a buffet was opened within the company premises. At the sessions of the Municipal Council and the Producers’ Council of the People’s Liberation Committee (NOO) of Banja Luka, held on April 12, 1956, the establishment of a Workers’ and Employees’ Restaurant and a Dormitory for Singles on Tito Street was approved. Significant funds were also allocated for residential construction. The residential buildings constructed by “Čajavec” significantly changed the appearance of Banja Luka. The largest among them, located near the City Park, with 96 apartments and four commercial spaces, was completed in mid-1954.
The factory operated with a high degree of profitability, as it was almost the exclusive producer of a wide range of products, which allowed it to dictate prices. (Archives of the Republic of Srpska)
The SOUR, or Holding, as it was organized under the Law on Associated Labor of the Socialist Federal Republic of Yugoslavia, known as “Rudi Čajavec”, consisted of 35 production facilities—working and basic organizations of associated labor. It manufactured everything from transistors, televisions, and automotive equipment to highly sophisticated military equipment.
In addition to production facilities in Banja Luka, “Čajavec” had plants in Foča, Čelinac, Šipovo, Laktaši, Novakovići, and a smaller production facility in Rogoznica, Croatia.
The annual export value before the outbreak of the wars in the former Yugoslavia was approximately 50 million USD. However, considering that “Čajavec” produced highly sophisticated equipment for the military industry—primarily electronic and ballistic equipment, which was the brain of one of the world’s best tanks, the “T-84” and given that such data remains classified to this day, it is believed that the actual export value exceeded the reported amount.
“Those were completely different times—when life was better. I was invited to work in Banja Luka in 1957. Shortly after getting married, I received an apartment from the company. I deeply regret that those times will never return, and that Banja Luka’s economy will never rise to its former glory again”.
(Predrag Babić, former employee of Rudi Čajavec)
Photo: Slobodan Rašić Bobara; exhibition “The Rudi Čajavec Company”
In the “Čajavec Holding” restaurant in the center of Banja Luka in the early 1990s, former workers report that 7,000 meals were prepared daily for the employees of this largest company within the military industry sector of the former SFRY.
INTRODUCTION TO THE WAR – THE ANNOUNCEMENT OF THE BEGINNING OF THE END
The closure of “Rudi Čajavec” was foreshadowed in 1992. Even before the outbreak of the first armed conflicts, the Crisis Headquarters of the Autonomous Region of Krajina, a body established within the Socialist Republic of Bosnia and Herzegovina, issued a decision to remove from their positions all non-Serb citizens employed in companies, institutions, schools, judicial bodies, and other organizations within the region.
No justification for this decision was ever provided, and not a single employee who was dismissed received a written explanation for their termination.
Recently, I came across a link on the Split University Index list highlighting the achievements of Dr. Mance Davor, M.Sc. in Electrical Engineering, a participant in the European-NASA Space Agency team that successfully implemented the InSight project, landing a module on the surface of Mars. Dr. Mance was one of the leading engineers in the development of the fire control system for the M84 tank while working at Rudi Čajavec, specifically in the Professional Electronics unit. He represents a significant group of engineers, technicians, and workers from various fields who contributed to the success of Rudi Čajavec, delivering numerous projects that remain technological achievements to this day. However, Rudi Čajavec ceased to exist under the new conditions of rising nationalism, which disregarded the importance of maintaining production—not only of complex systems but also of televisions, automotive electronics and parts, surface treatments, and the highly successful manufacturing of tools.
I often recall an incident from the early 1990s when a group of officers from the former JNA visited the general director of Rudi Čajavec, pleading with him not to dismiss workers of Croatian and Bosniak/Muslim ethnicity. At the same time, Radoslav Brđanin, the head of the Crisis Headquarters of the Autonomous Region of Krajina—and later one of those convicted of war crimes by the Hague Tribunal—stated that if Rudi Čajavec could not function without those workers, it should simply cease to exist. Tragically, his wish came true. The once-thriving giant, which employed over 7,000 workers in Banja Luka alone, equipped with an extraordinarily advanced machine park, technologies such as precision casting, toolmaking, multilayer printed circuit boards, microelectronics, the design and production of complex systems, and many other capabilities, was brought to ruin. Behind these achievements stood numerous expert teams led by engineers such as Enver Džubo, Ismet Blentić, Mance Davor, Reuf Kovačević, Dr. Partal, Dr. Mirsad Hadžikadić, Dr. Migdat Hodžić, Ante Anušić, Branislav Majkić, Muhidin Sulejmanpšić, Nedžad Rakanović, Osman Kovačević, Boro Franjić, Dr. A. Ilišković, Pero Kolarević, visionaries like Slobodan Cvjetić, and many master’s degree holders produced by Rudi Čajavec. Unfortunately, I cannot list everyone, especially those pioneers who laid the foundation for Rudi Čajavec, among whom I must highlight the then-general director Hadžiomerspahić. Under his leadership, the groundwork for this industrial giant was laid, leading to its peak during the 1980s. I must apologize to the many I have not mentioned because including all their names would result in a substantial book—a rich chronicle of deserving individuals, such as Ibro Srkalović, Miroslav Najrajter, Ivo Marić, the prototype workers led by Anđelko Višekruna, and countless others.
This is not merely an obituary for the Rudi Čajavec factory but an attempt to shed light on a collective that, among several industrial organizations, gave life to a city. It raises the question of what the city would look like today if 7,000 workers entered its gates every workday, receiving their salaries at the start of each month and infusing new vitality into every facet of urban life. Beyond the workers and their accomplishments, Rudi Čajavec served as a key employer for most graduates of the Faculty of Electrical Engineering in Banja Luka. The factory not only provided employment but also financed many of their projects. Its professors were involved in initiatives critical to the former Yugoslavia, including the M-84 tank project, which involved over 10,000 factories across the country. The collapse of this industrial giant led to the downfall of many ancillary factories that collaborated on the tank project, not to mention those working on helicopters, jet aircraft, anti-missile systems, artillery weapons, communication systems, and more.
This skilled workforce dispersed across the world and, through their successes, demonstrated that Rudi Čajavec was a breeding ground for quality professionals in various fields. After leaving with nothing but a backpack or a plastic bag, often fleeing for their lives and the safety of their families, they managed to rebuild their lives, relying on their knowledge and expertise. Particular recognition goes to the children of these displaced global citizens, among whom many have achieved doctoral and master’s degrees and now work at internationally renowned universities and companies, representing Bosnia and Herzegovina on the global stage. (Aljoša Mujagić, engineer, formerly employed at Rudi Čajavec until 1992, now residing in Kitchener, Canada.)
Workers of Bosniak and Croatian ethnicity left quietly. Their colleagues did not comment on the daily dismissals, acting as if they had never happened. Today, this behavior is justified with statements like, “It was war; this happened all over Bosnia and Herzegovina”, or, “We had to stay silent to keep our jobs”. The question of who would perform the work or whether it was possible to replace those suddenly dismissed with new, qualified staff overnight was neither asked nor considered.
TRANSFORMATION OF SOCIAL INTO STATE PROPERTY
In the midst of the war in Bosnia and Herzegovina, the National Assembly of the Republic of Srpska enacted the Law on the Transfer of Social Assets into State Ownership in 1993.
This law did not stipulate that the registration of rights to manage, use, and dispose of property would be considered equivalent to the registration of state property rights. As a result, in 2007, the National Assembly of the Republic of Srpska adopted an “authentic interpretation of Article 3 of this law. It clarified that the resulting state ownership would be entered into land registers as the property of the Republic of Srpska and that this registration would be carried out ex officio”.
“The concept of transformation of property rights refers to the phenomenon where rights that existed under the previous legal system—rights specific to social or state property—are altered by operation of law to become rights compatible with the modern legal framework. These transformed rights adapt their content to fit within the closed circle of property rights recognized in the contemporary legal system”.
This transformation occurs primarily in legal systems undergoing transitions, while it is rarely observed in traditional systems. The conversion of social (state) property into right to property has profound social and economic implications. It stems from the collapse of an entire system based on associated labor with the means of production in social ownership, which sought to negate the concept of private ownership—the foundation of the structure of civil society.
The legal system of the former SFRY was based on prioritizing social ownership over traditional private property rights. Social ownership is a form of property unique to socialist systems, representing a specific method of appropriating social goods by socio-legal entities. In the former system, it was the primary form of ownership. In essence, social ownership was a negation of ownership because it lacked a proper titleholder. This lack of a defined owner enabled nearly unlimited political decision-making and intervention in socio-economic relations.
Subsequently, amendments were made to the Law on Property Rights, with transitional provisions aimed at abolishing previous socialist relations. The intent was to transform all rights derived from social (state) ownership, as recorded in public registries, into property rights.
This is particularly significant because property relations determine socio-economic relations and profoundly influence the regulation of all other relationships within a society. Through this process, the domestic legal system aligns with the traditional principles of property law and harmonizes with the legal frameworks of European Union member states.
The decision to adopt a specific form of ownership is crucial for legal certainty, but it also raises many dilemmas regarding the process of future transformation. The primary intention of the legislator was to facilitate the completion of the conversion, or transformation, of rights to manage, use, and dispose of property into full ownership rights. These rights, in some ways, were a surrogate for real property rights, as they did not have the character of property rights. The change in the concept and designation of the form of social ownership was, as a rule, not implemented in public registries, and it occurred by operation of law. The right to manage was replaced by the right to use, which in turn was replaced by the right to dispose. Thus, these rights did not exist simultaneously but rather one right replaced another. As a result, it could be concluded that, in the end, only the right to dispose could exist, regardless of what was recorded in the public registry. Given the disorganized state of property registrations, the legislator addressed all three rights. The Law on Property Rights (ZSP) stipulates that the registration of rights to manage, use, or dispose of property shall be treated as the registration of ownership rights (with the titleholder being the entity that previously held those rights), unless the social ownership was converted into ownership by another party. (Duško Medić, judge of the Constitutional Court of the Republic of Srpska, passed away in 2022.)
PRIVATIZATION
In 1998, the National Assembly of the Republic of Srpska adopted the Law on Privatization of State-Owned Enterprises in the Republic of Srpska.
The introductory provisions of this law state:
Article 1
This law regulates the conditions and procedures for the sale and transfer of state capital in enterprises owned by the Republic of Srpska (hereinafter: state capital) to domestic and foreign natural and legal persons (hereinafter: privatization).
Article 2
Privatization is part of the overall economic and development strategy and policy of the Republic of Srpska, which is carried out with the aim of achieving:
- a) Faster economic growth in a market economy,
b) Preservation of productive employment and the creation of conditions for new jobs,
c) Technological modernization of the economy of the Republic of Srpska,
d) Introduction of new, modern, and efficient management methods in the economy of the Republic of Srpska,
e) Inclusion of the economy of the Republic of Srpska and its enterprises in the developmental flows of the European and global economy, as well as in the international capital market,
f) Encouragement of entrepreneurship growth in the Republic of Srpska,
g) Encouragement of the involvement of entrepreneurs originally from the Republic of Srpska, who conduct business activities abroad, in the development of the economy of the Republic of Srpska.
Article 3
The basic principles of privatization are transparency and equality of participants.
Article 4
The subject of privatization are shares and stakes, as well as state capital in enterprises that, by the date of the entry into force of this law, have not been established in accordance with the Law on Enterprises or the Law on Public Enterprises.
Article 5
The authorized seller of state capital from Article 4 of this law is the Investment-Development Bank of the Republic of Srpska JCS Banja Luka (hereinafter: the Bank).
Article 6
(1) State capital in enterprises from the sectors of electricity production and distribution, the oil industry, railway transport, telecommunications, water supply, mining and forestry, public media, gambling, arms production, military equipment, and other enterprises of strategic importance shall be privatized according to special privatization programs adopted by the Government of the Republic of Srpska (hereinafter: the Government), with the consent of the National Assembly of the Republic of Srpska.
(2) Notwithstanding the provisions of Article 3 of this law and the provisions of paragraph (1) of this article, state capital in the enterprises referred to in paragraph (1) of this article may be privatized by the method of direct selection of a buyer by the Government, with the consent of the National Assembly of the Republic of Srpska.
(1) A special privatization program may provide for the fulfillment of conditions that buyers of state capital must meet within a specified period, which relate to:
a) Programs for retaining existing employees and employing new workers,
b) Retaining existing activities or adopting new activities,
c) Increasing the share capital,
d) Listing the shares of the privatized enterprise on an official stock exchange.
(2) A special privatization program for enterprises referred to in Article 6 of this law may also specify special conditions that potential buyers must meet.
At a distance of 24 years, most provisions, with the unequivocal support of the authorities of Republika Srpska—whether led by the Alliance of Independent Social Democrats (SNSD), followed by the Serbian Democratic Party (SDS) and the Party of Democratic Progress (PDP), and then again by the SNSD—have evidently remained mere words on a piece of paper.
Privatization was carried out to suit the interests of a new class of entrepreneurs, formed during the war, whose capital is of extremely questionable origin. Meanwhile, the government, through its agencies, failed to oversee the fulfillment of privatization contracts. As a result, instead of retaining existing workers, hiring new ones, achieving faster economic growth in a market economy, preserving productive employment, and creating conditions for new jobs, alongside the technological modernization of the Republic of Srpska’s economy, the introduction of modern and efficient management methods, the integration of the Republic of Srpska’s economy and enterprises into the development flows of the European and global economy, the international capital market, and the stimulation of entrepreneurship growth in the Republic of Srpska, we are faced with tens of thousands of unemployed individuals and a real sector that has become negligible in contributing to gross national income.
In the Republic of Srpska, the privatization process was managed by the Privatization Directorate. The outcome was the destruction of 80% of companies, with no investment, job creation, or generation of new value as promised by those in power. In contrast, certain individuals became enormously wealthy and have since laundered this money into legal financial flows.
“The assets plundered by this political clique, together with criminals and upstarts, are truly enormous”, says economist Svetlana Cenić. It is estimated that the value of these assets exceeds 15 billion BAM, while they were sold for only two to three billion, including one billion from the sale of “Telekom Srpske”.
In Bosnia and Herzegovina, the initial privatization concept, based on certificate redemption, was abandoned. Instead, a list of strategic enterprises was created and sold under, at the very least, dubious circumstances. Economists believe that it is impossible to restart the privatization process and that any talk of revising privatization is absurd. However, it is possible to confiscate assets from all those who participated in privatizations illegally and non-transparently. “A law should now be passed stipulating that all criminal offenses from the privatization period cannot become subject to a statute of limitations”.
Former directors of “Čajavec”, who led certain companies within the holding until the early 1990s, say they still feel a great deal of anger and dissatisfaction when they pass by the company where they spent their working lives and see what has become of it.
Dragovan Petrović, who ended his career at the helm of “Čajavec – Štampane veze (Printed Circuit Boards)”, explains that today, a wedding hall named “Tamaris” occupies its former location. He emphasizes that “Štampane veze”, with the modern technology it once had, could still be operating today.
“Unfortunately, there was no will, desire, or knowledge to preserve and sustain ‘Čajavec’, and politics allowed the destruction of the pride of the former defense industry of the SFRY. A particularly significant question is why the Federation of BiH preserved its defense industry, while in the Republic of Srpska, it was completely destroyed. At the site of today’s University of Business Studies, there once stood the ‘Čajavec’ Institute, while in the adjacent three-story building, which now houses the offices of Bel Television, Elta Television, a call center, and numerous other private companies, there used to be the production facility of ‘Professional Electronics’, or more popularly known as ‘Profesionala’. ‘Profesionala’ was the backbone of the system, employing 5,000 workers, including at least 400 highly educated personnel. Production was also located in the continuation of the building past ‘Tamaris’ which is now completely devastated. Where the ‘Konzum’ shopping center stands today, there was once the ‘Felma’ facility, as well as the largest production hall within the ‘Čajavec’ complex, where a ‘Beko’ store was recently opened. The real paradox is the fact that ‘Beko’ is a well-known brand of household appliances, which, had there been will and knowledge, ‘Čajavec’ could still be manufacturing today, instead of having a foreign appliance store occupying that space”.
Petrović explains that the company “Čajavec – Precizni Liv (Precision Casting)”, which once boasted the most advanced technology and was, alongside “Štampane veze”, one of the most profitable firms in the holding, is now the location of the “Euro Express” courier service. Adjacent to it, in the hall that used to house a large warehouse for “Čajavec”, is now the “Velpro” shopping center.
He also states that it is impossible to accurately estimate the value of “Čajavec’s” pre-war assets, emphasizing that, at the will of political power brokers, the assets of this holding were sold at book value rather than market value. This effectively facilitated the conversion of production facilities into wedding halls, hospitality venues, and shopping centers.
The period from 1992 to 1998 demonstrated that the government was a lousy master. Following the transformation of social property into state property, politically suitable individuals were appointed to managerial positions in companies, including “Čajavec”. The four war years and the three post-war years became a time of asset manipulation within enterprises, in addition to the loss of foreign markets. Workers report returning after the war to half-empty halls, with no one providing answers about where the machinery, tools, and spare parts had disappeared.
The former president of the Confederation of Trade Unions of the Republic of Srpska, Obrad Belenzada, says that “Čajavec” was not privatized but destroyed. He expresses his belief that some companies within the “Čajavec” system could still be operational today, citing “Čajavec – Precizni Liv” as an example.
That company was pushed into bankruptcy and then “privatized” so the new owner could relocate the technology to Zaprešić in Croatia, where it still operates today. In short, there was no political will or expertise to preserve “Čajavec”. As a result, the gates of that once-mighty giant no longer see thousands of workers entering, but rather a few hundred individuals toiling as virtual slaves for the new owners of “Čajavec’s” assets.
The Confederation of Trade Unions of the Republic of Srpska, which became the legal successor of the Trade Union of SR B&H and continued operating solely within this B&H entity, was utterly unprepared for the process of property transformation.
As such, it neither demonstrated the will nor the knowledge to position itself as a relevant social partner in the negotiation process and in protecting workers’ rights, particularly during privatization.
Milena Dodig, a union activist who worked at “Čajavec” for 42 years, states that at the start of privatization, the expected and requested assistance from the Confederation of Trade Unions was entirely absent. She explains that instead of the sought-after support in defending workers’ rights, the response from the leadership of the Confederation of Trade Unions and the branch union of industry and energy was simply that privatization was necessary and that it would lead to the revitalization of production.
“Čajavec” was like a city within a city. Imagine over ten thousand workers receiving their salaries on the 25th of each month—the amount of money flowing into the city’s coffers was immense. Shutting it down was a crime. An unparalleled crime. But for everything that happened to us, we workers are partly to blame as well. The problem with “Čajavec”—and the same applied to many large industrial plants—was that not all employees were purely working-class. A significant number lived in rural areas, engaged in agriculture, and saw factory work as a secondary source of income. It’s not easy to work on a farm, I respect that. But when you wake up at 3:50 a.m. to plow your field until 5 a.m., and then head to the factory exhausted, you’re not particularly invested in your job. Workers like that weren’t overly concerned or interested in what happened to the factory during privatization. And without their support, you don’t have the strength of the workforce behind you. The transformation of social property into state property in 1993 barely meant anything to the workers. Nearly the entire male workforce was mobilized and sent to the frontlines, and the women took over the work to the best of their abilities. That was just how things were back then—we who stayed in the factory thought only about keeping production going. Even during the war, some sectors like electric equipment for the cars were exporting to Serbia, and from there to Cuba and Russia.
During our conversation, Dodig and many former workers do not associate management changes with politics, claiming they happened due to “circumstances” as many people left for the frontlines. While aware that the quality of leadership declined significantly, workers accepted this without question. They did not ask why social property—essentially workers’ property—was being transferred to state property. They continued to completely absolve political leaders of responsibility.
“There were no explanations during that time in our factory. In wartime, you only think about survival. That foul play was imposed on us. We weren’t the only ones exploited—it was forced upon us from the outside, upon our authorities. Foreigners were intent on destroying our industry to impose themselves on our market and take our jobs. They orchestrated it all. I don’t believe our authorities wanted that. Maybe some of them were involved, but I don’t think it was their intention”. (Milena Dodig)
Union Struggles – Establishment of the Development Organization of the Čajavec Union (ROS Čajavec)
In order to facilitate privatization, “Rudi Čajavec” was fragmented into 34 organizational units. One by one, the production plants went into bankruptcy, even when there was no real justification for it. “State-appointed directors” devalued the factories’ assets, machines and tools were sold without any explanation, manufactured goods disappeared from warehouses, and funds were not deposited into the company’s account.
As a result, the entire “Čajavec” industrial complex in Banja Luka was disconnected from the power supply, and workers were placed on months-long “waiting periods” without salaries and without contributions for health and pension insurance.
The late Bratislav Naputnik, therefore, in 1999, aware that the Confederation of Trade Unions could not provide assistance and protection to help them realize their rights or challenge the illegal bankruptcies and privatizations, initiated the establishment of the Development Organization of the Čajavec Union (ROS Čajavec) together with a group of workers.
“No one is innocent in this. We are all responsible for our inaction or merely observing the situation. In the end, it caught up with all of us”, commented Naputnik on the situation in “Čajavec” during those years.
In 2001, workers and the union attempted to prevent the illegal privatization through a lawsuit. They invoked the Law on Privatization and pointed out the irregularities; however, the process was never completed and is still pending before the Higher Commercial Court.
Momčilo Vesović, who was the head of the ROS Čajavec union at the time, also recalls the lawsuit:
“At that time, we requested the court to issue a preventive ruling to prohibit the disposal of assets until the legal proceedings were concluded. The court did not grant this request, likely due to political pressure at the time”.
Confirmation that the privatization of state capital in the companies within the “Čajavec” system was carried out illegally was obtained by the workers in early 2009 from the Republic of Srpska Privatization Audit Commission.
The privatization was illegal because no division balance was conducted, nor were there valid proofs of the registration of the factory’s assets. “In the document ‘Audit of Čajavec Privatization,’ it is unequivocally stated that if privatization even took place, it was conducted outside the law, meaning the assets were effectively plundered”.
Momčilo Vesović: “The union requested the National Assembly of the Republic of Srpska (NSRS) to process this audit in accordance with its rights and obligations. Nothing was done. Instead of preventing further illegal privatization of the “Rudi Čajavec” system, which had been driven into bankruptcy, the Government of the Republic of Srpska dealt the final blow to the company at the end of 2009. They granted permission for 24 companies, which emerged from the former “Čajavec” business system, to divide assets that once belonged to this industrial giant. This allowed the owners and users of these premises, who acquired them through questionable privatization processes, to register the properties in their names. Who is to blame for this? Perhaps it would be better to analyze who actually benefited from “Čajavec”?”
Although the company’s assets were valued at 73 million euros before privatization, no one knows exactly how much was earned through “Čajavec’s” privatization. It also remains unknown where the 20 million dollars of pre-war foreign debt ended up. The only certainty is that millions in unpaid contributions, spanning several hundred years in total, are still owed to the workers.
Milena Dodig: “During our struggle, we appealed to the Government of the Republic of Srpska, the authorities of the city of Banja Luka, and opposition politicians to help us save the factory. Aside from kind words, we received nothing”. She pointed out that even when it became clear that nothing would be achieved without a fight, a large number of “Čajavec” workers waited for someone else to solve their problems.
As a result, only about 1,600 workers attended the protest organized on the 59th anniversary of “Rudi Čajavec’s” founding.
The Economic Institute of Banja Luka developed a revitalization plan for the “Čajavec” system, which at the time employed 2,500 workers. However, the Republic of Srpska Privatization Directorate rejected the plan and declared the company an enterprise of strategic importance.
Momčilo Vesović: “Then it was declared that it was not of importance for the Republic of Srpska. Later, under pressure from the unions, around nine strategic companies were designated for which special programs were supposed to be implemented. Clearly, someone had no interest in keeping that giant alive”.
Damir Miljević, who resigned in 2001 from his position as an advisor to the then Prime Minister Mladen Ivanić, on privatization, says that one of the reasons was that he could not change the privatization system, including that of “Rudi Čajavec”:
“No one here is interested in clearing up even the most basic issues when it comes to the privatization process”.
The ROS “Čajavec” filed their first lawsuit challenging the privatization of the company and demanding a ban on trading its assets and capital as far back as 2001, but the first hearing on their lawsuit was held only after a full ten years. What is particularly interesting is that no lawyer wanted to represent the union members in this case, even though the workers sought damages amounting to 250 million BAM in their lawsuit. The lawsuit is still sitting in the drawers of the District Commercial Court in Banja Luka today.
In addition, this lawsuit was labeled as “nonsense” by the first director of the Republic of Srpska Privatization Directorate, Borislav Obradović, who, after leaving that position, became a member of the management bodies of “Čajavec Holding”.
After Napotnik’s death in 2015, the new leadership of ROS was confronted with the shocking fact that hundreds of documents on which the lawsuit was based had mysteriously disappeared—both from ROS’s archives and from the files in the District Commercial Court.
Under pressure from the unions, the National Assembly of the Republic of Srpska adopted the
LAW ON THE AUDIT OF THE PRIVATIZATION OF STATE CAPITAL IN ETERPRISES AND BANKS in 2006 (published in the “Official Gazette of the RS,” No. 33 of April 17, 2006).
To clarify the expected outcomes of this law, we present some of its key articles.
I – BASIC PROVISIONS
Article 1.
This law regulates the subject, procedure, and authorities responsible for conducting the audit of the privatization of state capital in enterprises and banks in the Republic of Srpska.
Article 2.
In order to protect the rights of citizens established by the Constitution of the Republic of Srpska, to safeguard state property during the privatization process in the Republic of Srpska, and to protect the public interest, an audit of the privatization of state capital in enterprises and banks shall be conducted.
Article 3.
For the purposes of this law, the audit of privatization (hereinafter: the audit) shall include the examination of:
- a) decisions and procedures of the Government of the Republic of Srpska, the Republic of Srpska Privatization Directorate, the Ministry of Finance of the Republic of Srpska, and the Banking Privatization Unit, as well as decisions and procedures of other authorities of the Republic of Srpska;
- b) procedures in the implementation of privatization, tenders, auctions, and direct sales;
- c) documents, certificates, financial, and other reports;
- d) accounting and financial transactions;
- e) other records;
- f) privatization contracts and the fulfillment of contractual obligations;
- g) disposal of assets from the passive sub-balance;
- h) procedures for the separation of parts of enterprises and the implementation of status changes during privatization;
- i) changes in business activities contrary to the conditions specified in the sales contract;
- j) the manner of using old foreign currency savings in the privatization process.
Article 4.
The audit is conducted for the purpose of:
- a) identifying irregularities in the privatization process and determining the ownership structure of capital;
- b) preventing organized crime from establishing control over capital;
- c) determining the duties and responsibilities of responsible individuals within state administration bodies, administrative organizations, and other entities;
- d) verifying contractual parties and other persons with whom they acted jointly in the privatization process.
Article 5.
The privatization audit under this law shall be conducted in enterprises and banks whose state capital has been privatized or is in the process of privatization under the Law on Privatization of State Capital in Enterprises – Consolidated Text (“the Official Gazette of the Republic of Srpska”, No. 54/05) and the Law on Privatization of State Capital in Banks (“the Official Gazette of the Republic of Srpska”, Nos. 24/98, 5/99, 18/99, and 70/01).
The privatization audit process requested by ROS was initiated by the Republic of Srpska Privatization Audit Commission. However, this process ended in the same way as most other cases in which the Commission found “reasonable suspicion” that the privatization had been unlawful. Nevertheless, union representatives openly stated at the time that they did not expect any results from the Privatization Audit Commission, especially after Savo Ševaljević took over as its head. They identified him as the person who “broke the ice” in the destruction of “Čajavec”, as he was the bankruptcy administrator who first liquidated one of the companies within the “Čajavec” system—specifically, “Fizičko-tehničko obezbjeđenje (Physical-Technical Security)” (FTO).
State capital has been privatized in over 700 enterprises and banks in the Republic of Srpska. Of these, 630 companies ceased operations. Millions of BAM were appropriated, and several thousand workers were laid off. Audits were conducted in 203 cases, and 126 reports were forwarded to the competent prosecutor’s offices, but not a single privatization contract has been annulled so far. Savo Ševaljević, the president of the Privatization Audit Commission, stated that privatization was carried out under pressure from the international community and with poor legal frameworks. Like his predecessor, Borislav Bijelić, he emphasized that the Commission does not have significant powers.
According to data from the Special Prosecutor’s Office of the Republic of Srpska, the Commission submitted reports on the privatization of 78 enterprises to this office. The prosecution’s investigation determined that the sale of state capital was illegal in 67 cases. In July 2008, an indictment was filed against nine individuals. The trial was conducted and concluded with an acquittal by the District Court in Banja Luka, which was later upheld by the Supreme Court of the Republic of Srpska. The remaining cases are still under investigation.
Ranka Mišić, president of the Confederation of Trade Unions of the Republic of Srpska, does not expect anything from the Commission’s report. She stated that in all previous controversial cases, the lack of evidence was the main issue, which, in her opinion, speaks volumes about the Commission’s work.
“Simply put, we only know that workers paid the price for poor privatization, bad contracts, and the failure to comply with agreements. That is the fact. But has anyone been held accountable for it? No, and I don’t think anything significant will happen”, said Mišić.
Economic analyst Gavrilo Antonić stated: “Privatization in the Republic of Srpska allowed a handful of greedy individuals to acquire great wealth quickly and easily. The audit has not resulted in a single annulment of privatization. Instead, it has effectively confirmed and cemented this illegal privatization”.
For decades, political elites in the Republic of Srpska have been shifting the blame for the oligarchic privatization that, instead of bringing prosperity, only accelerated the economic downfall of the Republic of Srpska—leading to the collapse of industries and the creation of an army of unemployed workers.
One example is Mladen Ivanić, who, in the early phase of privatization, served as the Prime Minister of the Republic of Srpska while leading the PDP party. Today, as a member of the opposition, he states: “Privatization and its audit were the work of Milorad Dodik’s government and a political tool to buy voter support. This commission has not annulled a single privatization case, nor has any of the political accusations they brought forward resulted in a positive outcome in court. Everything collapsed, and it all turned out to be an empty story and nothing more than that”.
Aleksa Milojević, director of the Economic Institute in Bijeljina and a retired university professor, argues that the entire situation is a result of poor laws and unfavorable economic relations. He states: “First, what was taken must be returned. When you have a criminal law, it best conceals crime. And so, we are stuck in a vicious circle. The economy has collapsed, the people have been impoverished to the point of despair. A small privileged group has become enormously wealthy, creating a complete social and economic deadlock”.
In December 2019, the Government of the Republic of Srpska dismissed the leadership of the Commission for the Audit of the Privatization of State Capital in Enterprises and Banks of the Republic of Srpska. Critics questioned the purpose of establishing this Commission in the first place, given that it failed to produce any results.
Thirteen years after its establishment, the work—or rather the formal existence—of the Privatization Audit Commission was brought to an end. The Government of the Republic of Srpska, which originally founded the Commission, dissolved its president and members.
The president, members, and secretary of the Commission for the Audit of the Privatization of State Capital in Enterprises and Banks were dismissed: Ravijojla Simić Tešanović – president, Goran Maričić – member, Nenad Račić – member, Danica Vučković – member, and Milorad Nedimović – secretary.
During its mandate, the Commission spent millions and hundreds of thousands of BAM on fees paid to auditing firms. Around 70 cases of suspicious privatizations were processed; however, the judiciary did not annul a single privatization contract, nor was anyone held accountable.
Simić Tešanović, in a rather baffling stance, repeatedly stated during her tenure that the public had wrongly expected the Commission to judge, arrest, and annul privatization contracts, claiming that these were never the Commission’s intended functions.
Thirteen years after the Commission’s establishment, all that remains are grandiose announcements and millions in costs covered by the budget of the Republic of Srpska.
DEFENDING THE INDEFENSIBLE
Slobodan Ćurčić, a businessman from Bijeljina and owner of the company “Sloboprom”, who acquired several properties within the “Čajavec” complex in the center of Banja Luka through privatization, argues that many business moves by entrepreneurs in the Republic of Srpska are wrongly interpreted and placed in the context of flawed privatization and crony capitalism.
“During 2005, 2006, and 2007, I purchased part of the business premises of the company “Rudi Čajavec” and built a shopping center at that location, featuring all well-known retail brands. The idea to build a hotel naturally followed as a logical need”.
Ćurčić emphasizes that the former giant “Rudi Čajavec” had its production facilities spread across dozens of locations in and around Banja Luka. After privatization, the company had 34 legal successors, and he believes it is outdated to link the former factories—once employing thousands of workers—to the narrative of failed privatization in the Republic of Srpska. He draws parallels to similar situations in Italy and Austria during globalization, where many factories met the same fate, and the process was accepted as a natural course of capital and market development without significant public backlash. Ćurčić states that he acquired the business and office spaces of “Rudi Čajavec”, like other interested buyers, through six transactions over three years, all conducted transparently, with six valid purchase agreements. He claims the total cost of the acquisitions amounted to around 20 million BAM.
In the “Čajavec” complex, he also opened a new hotel named “Jelena”, identical to the hotel he owns in Brčko. The four-star hotel has about sixty rooms, and he claims to have invested approximately 5 million BAM into the project. “In the early stages of constructing the shopping center, I enabled the employment of around 200 workers. With the opening of the hotel, the total number of employees has increased to 350”, Ćurčić asserts.
EPILOGUE
For the former workers of “Rudi Čajavec”, the story has come to an end, leaving behind a bleak picture of the union’s inability to fight against a system where there is an undeniable connection between the authorities and the judiciary. As the privatization process lasted for nearly 15 years, the former workers found themselves in different positions throughout this period. According to the former management of ROS, workers who were dismissed before 2011 were not included in the social welfare program for employees who lost their jobs due to bankruptcy, which began that year.
For them, years of work experience have been irretrievably lost. Those workers who eventually qualified for an old-age pension and are now receiving just over 200 BAM (100 euros) per month have felt this loss most acutely.
For the remaining workers, the government linked their work experience, fulfilling obligations towards pension and health insurance funds. However, the obligation to pay the outstanding wages from the bankruptcy estate was never realized.
On the 84,000 square meters that make up the area of the “Rudi Čajavec” complex in the center of Banja Luka, not a single production facility remains today. Some of the factory halls are still in a state of disrepair, while others have been transformed into a business zone consisting of shopping centers, hotels, and various hospitality and service establishments.
As the pinnacle of hypocrisy, the former industrial complex’s main façade now houses the headquarters of nearly all key political parties in the Republic of Srpska. While the faces of their leaders smile from the building’s exterior alongside party slogans promising peace, equality, social justice, and a better tomorrow, the former army of workers avoids the former Braće Pavlića Street whenever possible.
All that remains of the memory of the days when they proudly entered their factory is a visibly neglected bust of the national hero Rudi Čajavec, after whom the factory was named.
Appendix:
On the occasion of the 70th anniversary of the founding of the “Rudi Čajavec” factory, photojournalist Slobodan Rašić Bobara, drawing on years of professional experience in research, collection, and archiving, realized the exhibition project “Preduzeće Rudi Čajavec” in 2020.
From an extensive archival collection, Rašić presented photographs, documents, artifacts, and testimonies of former “Čajavec” workers, collectively telling the story of the factory’s founding and development. In the early 1990s, the factory employed 10,500 workers.
Rašić’s exhibition serves as both a testimony and a tribute to the workers who contributed to the factory’s growth and, along with it, to the economic and social prosperity not only of Banja Luka but also of the Bosanska Krajina region.
The collected and curated exhibits are valuable witnesses to the era in which they were created. At the same time, they represent a significant contribution to the culture of remembrance and the preservation of the city’s important industrial and economic development during the time of the SFR Yugoslavia.
Sources:
http://www.podaci.net/_gBiH/propis/Zakon_o_reviziji/Z-rpdkpb03v0633.html
Yearbook of the Law Faculty of Banja Luka http://www.gfpn-au.com/sites/default/files/GFPN-8-8/Godisnjak%208-8-Dusko%20Medic.pdf
Verica Josipović, Head of the Department for Organization and Processing of Archival Materials at the Archives of the Republic of Srpska
https://www.banjaluka.com/drustvo/sjaj-i-bijeda-nekadasnjeg-rudi-cajevca-foto/
https://www.banjaluka.com/drustvo/razvoj-cajavca/
Author: Gordana Katana
