Djordje Padejski is an investigative reporter and founder of the FOIA Machine, an online tool for accessing public records. Michael Hudson is a senior editor at the International Consortium of Investigative Journalists

A major investigative report by Djordje Padejski and Michael Hudson of the International Consortium of Investigative Journalists sheds light on how Serbian businessmen allegedly used offshore firms to strip the assets of formerly state-owned companies, leaving the enterprises bankrupt and their workers on the streets.Below is a condensed excerpt from the report that focuses on the defunct Agrohem fertilizer company and its relationship with former Macedonian Economy Minister Zanko Cado. (Read the full reportDuring the Yugoslav wars of the 1990s, Milojica Hrvacanin was one of the hundreds of thousands of Serbs driven out of Croatia and Bosnia-Herzegovina by ethnic and religious violence.When peace finally came he resettled in Novi Sad, Serbia's second-largest city, and in 1998 found a job as an export manager for the Agrohem fertilizer manufacturer. As UN sanctions were lifted and peace returned to the Balkans, Hrvacanin hoped domestic and foreign demand for Agrohem's products would grow.After Serbs forced an end to Slobodan Milosevic's rule in October 2000, a wave of democratic, Western-friendly politicians took power, pledging to bring new prosperity. They began pushing across-the-board privatization of state-run companies like Agrohem, promising to lure foreign investment, expand exports, and boost workers' pay.Serbia's Privatization Agency was responsible for making sure buyers were legitimate investors who wouldn't strip the companies of their assets. But Serbia's privatization law was designed with a loophole -- buyers weren't required to fully disclose their identities and ownership structures.That led to hundreds of auctions, according to reports by Serbia's Anticorruption Council, in which buyers appeared to be foreign investors, but in reality were well-connected Serbs using front companies to buy state enterprises and milk their assets for large profits.Almost 2,000 of the 3,017 state-owned enterprises that were privatized between 2001 and 2011 have ceased operations or sunk into bankruptcy or are on the verge of closing down, according to the Social and Economic Council of Serbia, a joint governmental and labor-union body.Questions about the privatization process have become a roadblock to Serbia's efforts to join the European Union. The EU says it's concerned about the "illegal acquisition of public assets by private interests" and has asked the Serbian authorities to review 24 "controversial" privatizations.Agrohem isn't among the companies targeted in the review. But Hrvacanin and other ex-workers argue the company's privatization and failure also merit attention.In 2002-03, Serbia's Privatization Agency arranged to sell blocks of government-owned shares in Agrohem to outside investors. Investors also moved to gain control of Agrohem shares that had been distributed to employees earlier in the privatization process.The ex-workers' complaints to Serbian authorities allege that company officials pressured workers to sell their shares to outside investors. Hrvacanin claims that one top Agrohem manager took workers to bars and plied them with beer and brandy, telling them "that they would lose their jobs if they didn't sell their stock. My colleagues were afraid, so they did that massively."By 2003, two Serbian companies -- Pharmachem and SMM Metali i Minerali -- controlled more than 80 percent of Agrohem's shares. It was around this time, Hrvacanin says, that a "Mr. Cado" became a presence in the company. Agrohem executives described him as "the boss," Hrvacanin recalls, even though he had no official title with the company.Hrvacanin soon became aware of what he describes as a series of unusual transactions. He claims Agrohem began selling off equipment and taking out loans and then transferring the loan proceeds to foreign companies and accounts. He filed a report about these deals with local police, but nothing came of his complaint. He was removed from his job in 2005. Officially, he says, he was part of a large layoff, but he contends he was let go because he had taken his concerns to the police.In the 1990s, Zanko Cado was a director and shareholder of the London-based parent companies of two banks, Almako and Anglo-Yugoslav Bank, that ended up in bankruptcy. By the time Almako's problems became apparent in early 1999, Cado was serving as economics minister in Macedonia. Cado stepped down in April 1999 after just five months, citing "personal reasons."Some in the Balkan media asserted there was a scandal looming behind the story of Almako's demise and Cado's departure, charging that the bank had lost millions in government deposits by doling out sweetheart loans to Macedonian politicians and businesspeople. Cado has never publicly responded to the claims.After he returned to the private sector, Cado connected himself to both Pharmachem and SMM, the two firms that gained control of Agrohem. Serbia's corporate registry indicates Cado was a director of an Antigua-based company, Fer Trade, which controlled Pharmachem and SMM.Agrohem helped provide SMM with the capital it needed to purchase Agrohem shares, Hrvacanin and other former employers claim. Agrohem, they charge, took out a loan of more than $600,000 in late 2002 and used it to pay SMM for tons of chemicals that had been stored in Agrohem's Novi Sad warehouse. Then, they claim, SMM used the proceeds to buy Agrohem stock.Bankruptcy court records show that Agrohem engaged in dozens of transactions with companies in the British Virgin Islands and other offshore havens. The company regularly arranged to purchase raw materials through contracts that called for it to make payments in advance but put off delivery of the materials for months or even years, according to documents filed in court by Ninoslav Simic, the bankruptcy trustee appointed to deal with the Agrohem wreckage. In many cases the goods that Agrohem paid for were never delivered and the transactions were converted from purchases of goods to loans, according to claims filed by Simic. The offshore companies never repaid the "loans," stiffing Agrohem out of a total of $4.6 million.Zanko Cado was a director and shareholder for Alysun Marketing, a British Virgin Islands company to which, according to bankruptcy court records, Agrohem wired $6.9 million in December 2007, ostensibly to buy shares in the Fidelinka food-processing concern.Simic believes the evidence shows that Cado and others involved in the takeover of Agrohem were less interested in keeping the company operating than in siphoning away the company's assets. "Obviously they were not there to produce fertilizer," Simic said in an interview.By the time Agrohem filed for bankruptcy in 2011, the company had long since shut down operations, with 450 workers losing their jobs. The story of layoffs and misery has been repeated across Serbia. The country's jobless rate is one of the highest in Europe -- 27 percent in February. The Vojvodina region, Agrohem's home area, is one of the hardest-hit provinces.Whether Serbia can turn its economy around may depend in part on whether it can stop money linked to corruption and tax evasion from streaming out of the country. A study by Global Financial Integrity, a research and advocacy group, estimates that $51 billion in "illicit financial flows" left Serbia from 2001 to 2010, the 16th highest total among the 150 countries surveyed.Milojica Hrvacanin is among the ex-Agrohem workers who've hit hard times. After years of working as a railway economist and export manager, the only job he could find after Agrohem let him go was as a bricklayer. Recently, he got a temporary job as a custodian in Novi Sad. He works from 7 a.m. until 7 p.m. but barely earns enough to pay his bills.But he is hopeful that Serbia's new leaders will respond to the charges of former Agrohem workers. "We will not stop fighting to expose what happened to us at Agrohem," he says. "It's simply injustice."