The sock factory "Real Knitting" in Serbia received a cash transaction of 1,2 million dollars, which a New York bank claims is possible money laundering.
The workers of this factory complain about difficult working conditions and mobbing.
However, the state of Serbia is very generous towards "Real Knitting" and awards it with millions of subsidies.
In the village of Gajdobra near Bačka Palanka, in the northwest of Serbia, there is a factory for the production of socks, which the government considers an example of foreign investment that Serbia needs.
Since its opening in 2011, the "Real Knitting" factory has received almost two million euros of state aid, including 1,4 hectares of state land.
On its website, "Real Knitting" states that it is "the story of a successful company based on Italian know-how and true entrepreneurial spirit."
However, not everything is as it seems.
The workers of this factory that the journalists talked to complained about the difficult working conditions and the pressure exerted on them by their bosses.
The worker who participated in the strike was fired.
Even more suspicious is the ownership of the factory and the origin of the money that arrived in Serbia.
Although it is presented in the media as an Italian-Russian investment, the owner of the Serbian factory "Real Knitting" is the offshore company "Alpha Retail Group" from Hong Kong, which is backed by an Armenian businessman, KRIK journalists found.
In previous years, this Hong Kong company transferred large amounts of money to Serbia, and then returned them to its account in Singapore.
One of those transactions, a payment of almost 1,2 million dollars to a Serbian sock factory, was flagged by the New York-based bank BNI Mellon as possible money laundering and reported to the US Treasury.
This information came to light as part of a months-long global journalistic investigation "FinCEN files" led by the International Consortium of Investigative Journalists (ICIJ), BuzzFeed News and the OCCRP journalistic network, in which KRIK also participated.
Journalists had access to strictly confidential bank reports, and KRIK checked transactions involving Serbian companies and businessmen.
Suspicious transactions and "shell" company
FinCEN, the US Treasury agency that fights money laundering and other financial crimes, compiled a report in which it pointed to as many as 723 suspicious transactions totaling $56,5 million by twelve companies, including Alpha Retail Group. , performed in the period from December 2012 to March 2013 around the world.
Most of the transactions went through JSC Norvik Bank in Latvia, which was fined about 2017 million euros by the country's Financial and Capital Market Commission (FCMC) in 1,3 for having weak internal controls.
The New York bank BNI Mellon reported these transactions to FinCEN as money laundering because, as the report says, the money was paid by a "shell" company, its origin was unknown and it was transferred through countries marked as risky for money laundering.
Analyzing the transactions, the FinCEN report says, a phenomenon called "nesting" was observed - opening multiple bank accounts to close the trail.
One of these problematic payments, in the amount of nearly 1,2 million dollars, arrived in Serbia at the beginning of 2013 - the money was paid by "Alpha Retail Group" to the account of the sock factory "Real Knitting" in the then Piraeus Bank (today Direktna Banka).
In the business documentation of this company, KRIK journalists discovered more similar transactions that took place outside the period analyzed in the FinCEN report.
"Alpha Retail Group" from Hong Kong transferred another 7,5 million dollars and nearly 18 million euros to the company "Real Knitting" through 49 cash transactions, in the period from June 2011 to April 2015.
This money was not kept at the factory but was decided to be returned to an account that "Alpha Retail Group" has in Singapore, documents from the business registry show.
It seems that, in addition to the American ones, the operations of this factory drew the attention of domestic investigative authorities as well.
KRIK journalists asked the Directorate for the Prevention of Money Laundering if it was conducting an investigation into the company "Real Knitting", and this institution said that they could not provide us with an answer because it could endanger the "detection of a criminal offense", but also that they would progress in the specific case to inform".
Experts who reviewed the documents with KRIK journalists said that these transactions are unusual.
It is especially risky for them that they arrive from Hong Kong, which is one of the world's leading offshore zones.
"For a company from Hong Kong, it is not possible to determine the origin of funds that are placed (in Serbia)," said independent auditor Ljubiša Stanojević.
The company "Alpha Retail Group" was founded by Russian citizen Aleksandr Viktorovich Efimenko, but the company changed owners several times after that.
Since 2017, its owner is Armenian businessman Korjun Chilingaryan, residing in Lithuania, according to the documents of the Hong Kong Business Registry.
Before taking over this company, Chilingarjan managed two textile companies in Lithuania, which were punished for illegal activities – one for non-payment of taxes and the other for illegal employment of workers.
In Serbia, two years ago, the labor inspectorate filed a request to initiate misdemeanor proceedings against the bosses of "Real Knitting" because they did not provide the workers with a free weekend or protective equipment.
This, however, is only a small part of the problems faced by the sock factory workers, as they told us.
Mobbing and fainting
A KRIK journalist visited Gajdobra, a quiet and neglected village in northwestern Serbia.
The "Real Knitting" factory employs more than 600 workers, as the financial report shows, and many of them come to work every day from the surrounding villages and towns.
Six former and current workers with whom the journalist spoke said that the conditions in the factory were bad, that the bosses were mobbing them, but most of them did not want to talk about it publicly out of fear.
Only former worker Tamara Čambor had enough courage, who was fired due to a strike at the factory in which she participated.
She met the journalist in a cafe in Bačka Palanka, where she lives.
Čambor worked on a sewing machine in the factory for over four years, her salary during those years was equal to the minimum wage, but that was not the main problem.
Their superiors pressured them to work so much that they were not allowed to go to the toilet after a half-hour break.
"The boss looked and said: 'Why are you going to the evenings?'" Chambor said.
During the summer, it was so hot in the factory, as she said, that the employees fainted.
"An ambulance was called three times because a woman fainted. Then the ambulance said that they would send an inspection to the factory if they had to come again. That's why the superiors didn't allow the ambulance to be called anymore, but the workers who were sick , driven home by a driver, a porter, anyone with a car," said Chambor as she nervously lit one cigarette after another.
In winter, on the other hand, it was cold and they worked in jackets, and one of the workers even brought a blanket.
For this reason, they started a strike in the winter of 2015, and Čambor was among those who negotiated with the director.
"We stopped that day, for the very reason that we were very cold," Chambor said.
This strike, as well as taking sick leave, cost her her job, she said.
"Basically, if I hadn't been fired, I probably would have quit, because it was… terrible."
During all that time, the state gave financial aid to the factory.
Citizens' money as a gift
Since it was founded in 2011, the sock factory "Real Knitting" has received around two million euros in subsidies from the state budget - that is, money from the citizens of Serbia that the state gives as a form of aid, KRIK revealed.
The documents show that she received the money from two governments.
In the year of the establishment of the factory, the Agency for Foreign Investment and Export Promotion (SIEPA) granted it 825.000 euros.
The contract was signed by Efimenko and former Minister of Economy and Regional Development Nebojša Ćirić from the G17+ party, which was a partner of the Democratic Party in the government.
Two years later, SIEPA gave this company another 275.000 euros.
At that time, the government was led by the Serbian Progressive Party (SNS), and the contract was signed on behalf of the state by Mlađan Dinkić, then the Minister of Finance and Economy and the first man of the G17+.
In 2014, the factory received more than 1,4 hectares of state land in Gajdobra from the Republic Directorate for Property.
Its value is estimated at around 12.000 euros.
And it didn't end there. The factory received state aid of 750.000 euros, which was paid in two installments - during 2017 and 2018.
The money was also approved by the agency SIEPA, which in the meantime became the Development Agency of Serbia (RAS), and the contract was signed by the Minister of Economy Željko Sertić from SNS.
"It is impossible that a procedure was opened at that time and that the company was under suspicion at that time. It is impossible that it would have been able to get funds from the Republic of Serbia at all," commented Sertić for KRIK.
Dinkić said: "I don't remember this company at all", and Ćirić said that it was not his job as a minister to check the origin of money invested in Serbia.
"My job was not to check whether they were laundering money. My job was to sign and see if the procedure was followed," Ćirić emphasized for KRIK.
Government agencies also promoted this factory.
In the publication on the textile industry published in 2016, RAS published on the first page a quote from the director of the company "Real Knitting" who spoke about a positive experience" in Serbia.
The Agency for Business Registers in Serbia called "Real Knitting" one of the most successful companies in 2017 based on profit - in 2017, the factory increased its profit by about four times compared to the previous year, according to financial data.
"Real Knitting" exports more than 90 percent of its products, and its main customers are in Russia.
Political analyst Cvijetin Milivojević tells KRIK that the "Real Knitting" case is not an isolated one.
"Serbia is one of those transitional countries that do not ask about the origin of money if someone is ready to invest it2," says Milivojević.
"We have created such a climate, the state created it, that the foreign investor is God."
Šarunas Chernijauskas (OCCRP, Lithuania) also contributed to the research.
KRIK publishes the next story from the project tomorrow "FinCEN Files".
Bonus video:
