1 Friday, 11 April 2003

2 [Open session]

3 [The accused entered court]

4 [The witness entered court]

5 --- Upon commencing at 9.18 a.m.

6 JUDGE MAY: We note that we are another quarter of an hour late in

7 starting. The reason being the late delivery of the accused here, the

8 second time this week. Those who are responsible should bear in mind that

9 they have a responsibility to the International Community. If this

10 continues, the trial will take longer to finish.

11 We will order the Registry to make a report to us to be copied to

12 the Registrar, to the President of the Tribunal, and to the relevant

13 authorities who are responsible for these delays.

14 Yes, Mr. Nice.

15 MR. NICE: I think it's the accused who is questioning.

16 JUDGE MAY: Quite right. Yes, Mr. Milosevic.

17 WITNESS: MORTEN TORKILDSEN [Resumed]

18 THE ACCUSED: [Interpretation] First of all, let me just add to

19 what you said a moment ago, Mr. May, that I was informed this morning that

20 I would be leaving at 8.00, and I've been waiting and ready since 8.00.

21 Cross-examined by Mr. Milosevic: [Continued]

22 Q. [Interpretation] Mr. Torkildsen, may we just dwell for a brief

23 moment on a question asked by Mr. Robinson, and that's where we left off

24 yesterday. As far as I made a note of it, what he asked you was whether

25 you had compared the assistance in 1985, for example, or some previous

1 years, what assistance was given, and your answer was that those entities

2 did not exist at all, so therefore, there was no assistance. Did I

3 understand you correctly?

4 A. Yes. Partly those entities did not exist, and therefore, I could

5 not make an analysis of any contributions paid to those entities. I know

6 from what I have read that there were some assistance from the SFRY budget

7 to certain areas within the SFRY.

8 Q. Well, that's what it's all about. This question is completely

9 justified, the question raised by -- the question that was raised.

10 Do you know that there was a fund of the federation for the

11 development of the underdeveloped regions? Are you aware of that? And it

12 had been in existence for decades in the SFRY.

13 A. I have heard about this, but I don't know any details about it.

14 Q. And do you happen to know, furthermore, that the whole of Bosnia

15 and Herzegovina was considered to be insufficiently developed, an

16 insufficiently developed region of the SFRY along with certain others?

17 A. I do not know any details about what regions were considered to be

18 underdeveloped, no.

19 Q. So you don't know that Bosnia-Herzegovina, as a whole, was

20 considered insufficiently developed and that it was the recipient of aid

21 and assistance, additional assistance for its development.

22 Now, do you know that the fund of the federation for support to

23 the insufficiently developed regions of the SFRY was first set up, and it

24 was financed 50 per cent by the resources and income of Serbia, by

25 Serbia's revenues?

1 A. I have no knowledge about this.

2 Q. Do you think that if one were to compare the resources which the

3 Republic of Serbia through the Federal Republic of Yugoslavia allotted and

4 paid into the fund for assistance to the insufficiently developed parts of

5 Yugoslavia, if you were to consider those resources with the monies it set

6 aside generally in what you are investigating, that this would be a

7 significant piece of information and portion?

8 A. Basically I do not know. I mean, my mandate when I wrote this

9 report was to look into whether there were any financial and other

10 assistance given by the Republic of Serbia and the FRY to the

11 Serb-controlled districts in Croatia and in Bosnia and Herzegovina.

12 Q. Under UN control. Now, tell me this, please: As I see here on

13 page 4 -- actually, I received this only in English yesterday. It's your

14 report, actually.

15 JUDGE MAY: Well, Mr. Milosevic, I'm going to interrupt because

16 you've put it on the record. You've had this document since November last

17 year. So in case it's said hereafter that you haven't been supplied with

18 documents in time, you most certainly have been. Yes, but continue.

19 THE ACCUSED: [Interpretation] I'm telling you how matters stand,

20 the fact of the matter. Now, whether the 400.000 pages that I was given

21 included this document here, I couldn't say, Mr. May.

22 JUDGE MAY: But it's been made clear to you that this witness was

23 going to give evidence. We've had argument about the admissibility of

24 that evidence. We've ruled on it. So you've had plenty of notice, and

25 it's not to be said by you that you haven't had notice that this witness

1 was going to give evidence and what it was to be. Yes, let us continue.

2 THE ACCUSED: [Interpretation] All right. Very well, Mr. May. I

3 just wanted this to be entered into the record, what I've just said, but

4 let's move on. And I don't mind for purposes of cross-examination. It

5 just gives me a few more problems.

6 MR. MILOSEVIC: [Interpretation]

7 Q. You say on page 4, point 15, paragraph 15, you're quoting

8 Ratko Mladic and you state the following: [In English] "Stated in a report

9 in December 1992 that," [Interpretation] Then you go into quote [In

10 English] "'Our army is one of the rare ones in history to have started a

11 liberation war with a very solid material base especially as concerns

12 combat hardware, ammunition, and food reserves.'"

13 [Interpretation] And then you quote the exhibit number. Then you

14 add the following: "Mladic's remark is supported by a written statement

15 made by Milosevic concerning the assistance provided to the armies of the

16 RS and RSK."

17 And then you speak about my complaints with regard to detention,

18 with regard to some sort of construed indictment, but in fact so that I

19 should be handed over to The Hague.

20 But as you have read through all these documents, Mr. Torkildsen,

21 do you happen to remember, and if you don't I'll help you and show you,

22 that those alleged accusations or, rather, as they said doubts and

23 suspicions that the resources of the federal customs reserves were being

24 used illegally, that this could have applied just to the period after 1995

25 from all the material and documents you had available that the Trial

1 Chamber rejected, but you did highlight this and place it in your report

2 to support the correctness of what Mladic says and link this up to the

3 support that I allegedly provided in this way and expressed, actually,

4 expressed, not provided, expressed in this way.

5 So do you remember in those documents it was the period from 1995

6 onwards exclusively that was mentioned?

7 A. You're referring to the period when Mr. Kertes was the head of the

8 customs of the FRY, that was in the period 1994 until 2000, something, if

9 I remember correctly. That is correct, yes.

10 Q. Well, Mr. Torkildsen, I'm thinking about the period to which this

11 written complaint of mine refers for the unfounded detention. So that's

12 the period that I mean, the period you've just stated. Isn't that right?

13 A. Partly. I'm not sure what period you actually referred to in your

14 complaint against your detention.

15 Q. Well, I assume I was thinking about the reasons for which I was

16 unfoundedly thought to be the culprit on the basis of the statement you

17 made, and it refers to the 1995 period of time, and it says that it deals

18 with 1995 onwards.

19 JUDGE MAY: I don't know that the witness can help about this, as

20 to what you were referring to. That's not for him to say. But I do

21 notice from a statement which you made, which is our Exhibit 427, tab 3,

22 to the investigating judge that you referred to an investigation against

23 you because it's said you incited officials of the government to work

24 against the law in order to gain benefit for others in the period, it

25 says, from 1994 to the 5th of October, 2000. So we've got that point. I

1 don't think there's much point asking the witness any more about that.

2 You can give evidence about it, of course, in due course if you want.

3 Don't interrupt.

4 THE ACCUSED: [Interpretation] Yes. But what I'm asking him is in

5 connection to what he says. "Mladic's remark is supported by a written

6 statement made by Milosevic concerning assistance provided to the armies

7 of the RS and RSK." And that refers precisely to the period of time that

8 you've just read out, that is to say, after 1995.

9 JUDGE MAY: The question -- the question isn't clear. You ask

10 questions in a way which is not clear for a witness.

11 What he seems to be putting, Mr. Torkildsen, is this: He's

12 putting your paragraph 15 as to Mladic's remark made in a report in 1992

13 that their army started the liberation war with a very solid material

14 base. That we have in our tab 2. And then you say that remark is

15 supported by the written statement made by Milosevic concerning assistance

16 provided to the armies of the RS and RSK. Perhaps you can tell us what it

17 is that you were referring to when you made that comment.

18 THE WITNESS: I think what is said by the accused in his appeal to

19 his detention do actually support this. To me it's not exactly clear that

20 he only refers to period covered by the domestic investigation, which is,

21 as far as I know, correctly in the period 1994 until 2000, because he's

22 also making a reference to the RSK army here, and as far as I know, that

23 ceased to exist sometime in 1995.

24 JUDGE MAY: I think it best if we get the document in front of us

25 so that we could follow the point.

1 Have you got a copy, Mr. Torkildsen, of your documents?

2 THE WITNESS: No.

3 JUDGE MAY: You should have. Right. You should have our tab 2

4 which is headed "Statement of reasons for the investigating judge of the

5 district court in Belgrade appeal." I'm sorry, it's tab 3. Tab 3, quite

6 right.

7 Let the witness, for the moment, have it in front of him, please.

8 You have the document, do you, Mr. Torkildsen? If you look at the

9 second page --

10 THE WITNESS: Yes.

11 JUDGE MAY: First paragraph or the second paragraph as regards the

12 resources. Do you have that?

13 THE WITNESS: Yes, I do.

14 JUDGE MAY: Perhaps you'd like to read that out.

15 THE WITNESS: "As regards the resources spent for weapons,

16 ammunition, and other needs of the army of Republika Srpska and the

17 Republic of Serbian Krajina, these expenditures constituted a state secret

18 and because of state interests could not be indicated in the law on the

19 budget which is a public document. The same applies to the expenditure

20 incurred by providing equipment from a needle to an anchor for the

21 security forces and special anti-terrorist forces in particular from light

22 weapons and equipment to helicopters and other weapons which still remain

23 where they are today. And this was not made public because it was a state

24 secret, as was everything else that was provided for the army of Republika

25 Srpska. In my opinion, these matters could not -- these matters should

1 still constitute a state secret but court organs can certainly look into

2 them. These anti-terrorist forces today still carry the heavy burden of

3 security-related tasks in the south of Serbia."

4 JUDGE MAY: Yes. Thank you. Yes, Mr. Milosevic.

5 MR. MILOSEVIC: [Interpretation]

6 Q. Yes, but the essence here, Mr. Torkildsen, to make matters simple,

7 is that the son can't be older than the father. If we're dealing with

8 matters here that you have described and date back to 1995 or, rather,

9 date from 1995 onwards, and Kertes became the director of the customs

10 administration in 1994, you can't place that in the context of Mladic's

11 statement made in 1992. It is absolutely untenable that something that

12 took place three years later can serve as evidence and proof of a

13 statement that was given in 1992 as to the situation that prevailed.

14 JUDGE MAY: Would you kindly make the point. You've heard the

15 statement read out that you've made regarding the resources spent for

16 weapons, ammunition, and other needs of the army of Republika Srpska and

17 the Republic of Serbian Krajina. Now, you're referring to those.

18 Now, it's quite unclear what point you're trying to make. It's

19 your statement, you see, about these things.

20 THE ACCUSED: [Interpretation] Well, the point is that Mladic made

21 this statement in 1992, and Mr. Torkildsen's statement, it says Mladic's

22 remark is supported by a written statement by Milosevic, whereas my

23 written statement or, rather, my appeal relates to the subject that had to

24 do with 1995, 1996, the case in 1995, 1996, 1997, and 1998. So it's the

25 cart before the horse. How can the witness place that as a function of

1 support to this attitude?

2 JUDGE MAY: I don't think there's very much more point going on.

3 We've heard your reference to these events in terms. The fact that the

4 investigation was about something else doesn't matter. Yes.

5 JUDGE KWON: Mr. Torkildsen, if you can read the second

6 paragraph -- the first page of this accused's statement. It refers to

7 the -- some certain period of time, from 1994 to 2000. Is that related,

8 what the accused is currently saying?

9 THE WITNESS: Your Honour, I understand that his -- the domestic

10 investigation against the accused covered this period. That is correct.

11 If I can also make one more comment regarding this second

12 paragraph on the second page. It is also mentioned that this was a state

13 secret, that it could not be mentioned on the law on the budget. And as I

14 have analysed all these budgets and looked at them, I can't find anything

15 in the budgets regarding the support to the two armies mentioned here.

16 And that also fits in with what the accused is saying here.

17 [Trial Chamber confers]

18 JUDGE MAY: Yes, Mr. Milosevic. Let's move on.

19 MR. MILOSEVIC: [Interpretation]

20 Q. Very well. If this isn't clear, then we can move on.

21 JUDGE MAY: Well, it's clear to us, but no doubt you can address

22 some argument on it. Now, let's move on and deal with another topic.

23 THE ACCUSED: [Interpretation] Very well, Mr. May. Fine.

24 MR. MILOSEVIC: [Interpretation]

25 Q. Mr. Torkildsen, you used, on pages 6 and 7, I think, in what is

1 again a very distorted light the meeting of the Presidency of the SFRY to

2 which the presidents of the republic were invited to attend, and you state

3 in paragraph 19 and in this report of yours, I -- and it was sent from

4 your side, the complete minutes from that particular meeting, and you say

5 in addition exhibit so-and-so forth, [In English] "Transcript of the SFRY

6 Presidency meeting held on 21 August 1991, contains a discussion about the

7 lack of revenue in the SFRY budget and the financing of the JNA. The

8 president of SIV," that is federal government, "Ante Markovic was opposed

9 to use primary issues for financing the federal budget. Slobodan

10 Milosevic, in contrast, raises no objections to making money available

11 through primary issues. Milosevic said that the National Bank of

12 Yugoslavia should continue to carry out the decisions of the ... Assembly

13 rather than the decisions of the federal government. He explained inter

14 alia..."

15 [Interpretation] And then inter alia you say that he

16 explained -- he explained inter alia, you say, and then you link that up

17 with my efforts to have from the primary issues to finance the army, which

18 is a complete untruth, and this can be seen from the minutes of that

19 meeting, and I'm going to prove this to you now by asking you questions,

20 of course.

21 You have the minutes, and you attached them. You quote them.

22 Therefore -- actually, I'm very grateful for having received the minutes,

23 because I myself can't obtain Yugoslav documents. I see that you can. So

24 I'm very grateful to you for that because there are some very useful

25 things in it.

1 Do you see, for example, Mr. Torkildsen, that in the minutes

2 here --

3 JUDGE MAY: I should say this is our exhibit, tab 6. Yes.

4 MR. MILOSEVIC: [Interpretation]

5 Q. It is C4274, Exhibit 4274, C4274, and it is the transcript of the

6 minutes in its entirety from the Yugoslav state Presidency meeting.

7 The discussion that was held relates to primarily the economic

8 situation in the country and even -- let me just find it. I'm going to

9 show you this in just a moment. In the introductory address that was made

10 on page 201 of this original minutes transcript, in the introductory

11 address made by the prime minister, in fact, the chairman of the meeting

12 was Stjepan Mesic, the president of the Yugoslav state Presidency of the

13 day, also from Croatia.

14 On page 201, then, Markovic is talking about the economic

15 problems, credit arrangements, and so on and so forth, measures of

16 economic policy, and so on. And then he emphasis that there's nothing

17 written here about defence, actually. That's at the end of the central

18 paragraph on page 201.

19 So he, too, emphasis that it has nothing to do with defence here.

20 Now, as you have quoted me, this will be like my speech in Kosovo

21 Polje for which I am grateful to you too, Mr. May. I mean, I'm grateful

22 to the other side over there, the opposing side.

23 So I'm going to ask you whether you've read it. Have you read it?

24 JUDGE MAY: Do you know what he's referring to? I think

25 it's -- are you referring to the speech or the minutes?

1 THE ACCUSED: [Interpretation] I am speaking exclusively about the

2 transcript of the minutes that I have been provided with. They are the

3 minutes from the 21st of August, Yugoslav state Presidency meeting,

4 precisely the same ones mentioned by the witness. And he says Exhibit

5 4274, transcript of the Yugoslav state Presidency meeting held on the 21st

6 of August.

7 THE WITNESS: I have read the parts of the minutes that's been

8 translated into English. I have not read the parts that's not been

9 translated, naturally. As far as I know, not the whole document has been

10 translated into English.

11 MR. MILOSEVIC: [Interpretation]

12 Q. That's your problem. That's not my problem. Because you are

13 distorting matters here, matters that I did not speak about. I didn't

14 speak about the financing of the army of any kind, and here we have the

15 transcript in its entirety.

16 Now, have you read -- first of all, I say that I agree with

17 Gligorov. I use his first name and say Kiro and it is Kiro Gligorov that

18 he is right in what he said, and that I agree with what he sets forward.

19 That agreements need to be reached on economic and social measures and the

20 function of Yugoslav organs, et cetera --

21 JUDGE MAY: I'm going to interrupt you so that we can all follow.

22 This is on our page -- again, we haven't got very satisfactory numbering.

23 The best page, I think, would be the registry page which is small and at

24 the top, and it's page 17612. It's about seven or eight pages in. 17612.

25 Can you find that, Mr. Torkildsen? There's a speech by the

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13 English transcripts.

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1 accused.

2 THE WITNESS: Yes, I do have 17612 in front of me.

3 JUDGE MAY: I think there's no sense in wasting time. "Kiro is

4 very rationally said here," it begins. Yes. We now have it,

5 Mr. Milosevic.

6 THE ACCUSED: [Interpretation] Fine, because this is a very good

7 transcript. So I speak on one occasion. I take the floor once, and I

8 make several comments on subsequent occasion. I say that I support

9 Kiro - who is the president of Macedonia, Kiro Gligorov - and I say that

10 agreement is needed on the minimum economic and social measures for the

11 functioning of Yugoslav organs and institutions. And furthermore, I state

12 in the next paragraph there is no need for us to view the damages, how far

13 the damages are. They are enormous and there is no dilemma as to whether

14 this serves anybody's advantage. It serves no one. There is no dilemma

15 whether anybody has been spared these difficulties.

16 Do we have reason to ensure free trade, something that is

17 elementary and the evolvement of normal financial transactions for these

18 damages to be lessened as far as possible, and some necessary codes of

19 conduct be set which will be beneficial to one and all.

20 And here I come out in favour of economic and social measures.

21 That's what we talk about. And I say I would rather be prone to have the

22 federal government to focus, narrow down its focus. In this central

23 paragraph I go on to say and you can see, it is 232, my number, for the

24 Federal Executive Council to focus on the main economic and social issues

25 and clear up the functioning of the organs of the federation prior to

1 that, that is to say the Assembly, the Presidency, and the federal

2 government.

3 Then I go on to say that I don't share the opinion of the

4 president of the federal parliament who in those days was also from Serbia

5 and who was highly respected and reputed politician and economist, and I

6 say I don't share his opinion that it goes into excessive detail. That

7 is, I'm referring to the proposal of the federal government. On the

8 contrary. I believe that the federal government should provide a precise

9 programme of measures of a social and economic nature, et cetera. And I

10 say that this should be the gist of the agreement, and you'll find that

11 further down, that is, the question of economic and social measures.

12 And then I go on to say without any excessive criticism. On the

13 contrary, my intention is by my questions to contribute to the federal

14 government which was headed by Mr. Ante Markovic. I am presenting a few

15 ideas of mine which are of a critical nature.

16 So even if you now consider them wrong, please prove me wrong.

17 And I make certain comments regarding the functioning of the monetary and

18 foreign exchange system contained in the document that is being proposed,

19 and I say the thesis that primary issue will be done on the open market to

20 finance the federal budget and through monetarisation of economic

21 development through foreign countries. I say that is unrealistic because

22 by the end of the year, the balance of payments will be unfavourable. And

23 then I add that Pelivan is right, who is the prime minister of Bosnia and

24 Herzegovina. He is qualified.

25 JUDGE MAY: I'm going to interrupt you so we can follow this.

1 Mr. Torkildsen, this is on page 17611, if you haven't got it.

2 It's the main paragraph. Now, it's time we came to a question. You've

3 been reading matters for some time. What is the point you're trying to

4 make?

5 THE ACCUSED: [Interpretation] I am trying to make the point that

6 this is a discussion regarding economic and monetary policies, because I

7 also mention Pelivan who used to be governor of the bank, and I say that

8 he is a professional in the area as well as I am, because the creation of

9 money through foreign exchange transactions will not be done. On the

10 contrary, money will be withdrawn and this will affect primary mission.

11 This is as clear as two plus two equals four. Operations on the open

12 market will not provide results regarding the moratorium because it

13 will -- the funds will mostly be used for for the federal budget.

14 I go on to say that I draw attention to this with the wish that

15 the federal executive council --

16 JUDGE MAY: You're cross-examining here. Now, Mr. Torkildsen, can

17 you assist us as to this speech as all? The accused is obviously relying

18 on it. He's saying that this contained his attitude about primary issues.

19 THE WITNESS: Well, basically I don't really have any comment.

20 The bottom line there is that they are discussing the SFRY budget, and as

21 what is stayed by Mr. Ante Markovic here as well is that the budget is

22 actually the army, because most of the budget will go to the army.

23 MR. MILOSEVIC: [Interpretation]

24 Q. I quoted Markovic at the beginning when he says that what we are

25 discussing now has nothing to do with the defence. Later on in the

1 transcript, there is something about the defence, and I don't participate

2 in that discussion. I mention here primary issue. You say that I

3 advocated, contrary to Ante Markovic, that the army should be financed out

4 of primary mission, and you cannot find anything in support of that in

5 this transcript. I say here the idea to free selective credits by banks,

6 and this should have been done for the purchase of wheat in 1991 is also

7 unrealistic, because the banks could not provide credit without the

8 support of primary issue. I'm not talking about the purchase of the

9 autumn harvest. There were 6 million tons of wheat, and I urged--

10 JUDGE MAY: I'm stopping you. You're to be asking questions.

11 Any comment on that, Mr. Torkildsen?

12 THE WITNESS: None.

13 JUDGE MAY: Yes, go on.

14 MR. MILOSEVIC: [Interpretation]

15 Q. Well, Mr. Torkildsen, am I talking about support for the primary

16 issue to purchase agricultural products or am I talking about primary

17 issue to finance the army? In those days, I wasn't concerned with the

18 army at all in any sense. And where can you find a single word that I

19 uttered regarding financing the army in this whole discussion? Can you

20 show me that place, please?

21 A. The budget overall was financed by primary issues. And it's not

22 like I can point at specific items. It's not like saying this specific

23 revenue should go to this and that. So I don't really follow.

24 Are you saying that the primary issues should only go to funding

25 agricultural? I don't really see the point there.

1 Q. For various purposes it is used. But you are taking out of

2 context a part of my statement, and as a result, you are claiming that I

3 was advocating that primary issue should be used for military

4 expenditures. And there's no mention of any such thing, because this was

5 a principled issue. And as you mentioned it, and you even quote it in

6 your report, I want to ask you now to give me your expert opinion here in

7 public. So please.

8 JUDGE MAY: I don't understand. What is the question?

9 THE ACCUSED: [Interpretation] I'm, Mr. May, asking the expert, as

10 this is a financial expert who is quoting my words about the attitude of

11 the National Bank -- between the National Bank and the government. I want

12 to ask him a question about it. So allow me to quote, because he too is

13 quoting me here, three different paragraphs taken out of context when I

14 say that the National Bank should be placed under the control of the

15 federal government, that that idea is unacceptable. So allow me to

16 read -- to quote. I say:

17 "Don't be offended because we are talking frankly now," this is on

18 page 235 in the long paragraph. "This idea as you formulated it to retain

19 the obligatory reserve of banks at a low level is something I cannot

20 understand, so I say please don't be offended. But it is a manifestation

21 of a lack of understanding of the monetary instrument called obligatory

22 reserve."

23 MR. MILOSEVIC: [Interpretation]

24 Q. So please tell me, Mr. Torkildsen, if I am opposed to their idea

25 that the obligatory reserve of the banks with the national banks should be

1 held at a low level, doesn't that mean that actually I'm opposing any

2 increase of the mass of money in circulation? If the compulsory reserves

3 are increased, doesn't the mass of money circulating go down?

4 So aren't I talking about the obligatory reserves being kept at a

5 low level? You know what the obligatory reserve is and when the rate of

6 obligatory reserve is increased, the potential of commercial banks is

7 reduced. The possibility of providing credit for them is reduced. So I'm

8 advocating the opposite, not to have the obligatory reserves low but

9 allowing the National Bank to have flexibility to reduce the quantity of

10 money in circulation if this is threatening to produce negative effects

11 from the expert point of view, professional point of view. Is this

12 acceptable or not?

13 A. If you are increasing the obligatory reserve, the money supply

14 should be reduced. That is the way that I view this as well. But first

15 to also to the allegation what I mention in the report here actually in

16 paragraph 19, is that the president of the SIV, Ante Markovic, was opposed

17 to the use of primary issues for financing the federal budget. Slobodan

18 Milosevic in contrast raises no objections to making money available

19 through primary issues. That is what I'm saying here.

20 Q. And where is it that I say that I have no objections to making

21 money available through primary issues? Where did I say that? And then

22 you quote me regarding something else. You just confirmed what I said.

23 Increasing the obligatory reserves reduces the quantity of money in

24 circulation. That is out of dispute. That any professional will confirm.

25 Now, let me read out, as this is a paragraph that you are quoting

1 from.

2 MR. NICE: [Previous translation continues]... Answer.

3 JUDGE MAY: Yes, let the witness answer the question.

4 THE WITNESS: Sorry, I got a bit lost.

5 JUDGE MAY: I think what he's saying -- what he said was: "Where

6 is it that I said I have no objections to making money available through

7 primary issues?"

8 THE WITNESS: That is that I cannot see any objections are made

9 when Ante Markovic, Jure Pelivan is discussing the primary issues and that

10 the only alternative is to finance it through the Topcider mint and I

11 cannot see that the accused is making any objections as it goes from the

12 transcripts.

13 MR. MILOSEVIC: [Interpretation]

14 Q. Mr. Torkildsen, I was always against it. If I hadn't been, then

15 the 1994 programme could not have been enforced. As you know, that was a

16 political decision that the budget must not be financed out of primary

17 issue. That is how we stabilised the situation.

18 How can a professional be in favour of using primary emission

19 without control?

20 JUDGE MAY: That's not a question for the witness.

21 MR. MILOSEVIC: [Interpretation]

22 Q. You quote me in a completely different context. I'm not going to

23 read out this quotation from paragraph 19. I will read it out in the

24 Serbian language, and I'll read it out in it's entirety, not in the way

25 that you have cut it up here.

1 JUDGE MAY: No. Well, we can read it. We don't need to have it

2 read. We've got it in front of us. Now, what is the question?

3 THE ACCUSED: [Interpretation] This is not complete. It's not

4 given fully. "I'm just asking myself whether it is possible, and I can't

5 believe that experts from the central bank did not take part. Is it

6 possible that professionals looked at this, could have made such an idea?

7 And I'm talking about -- furthermore, I think that the idea that SIV

8 should take the central bank under its tutelage is not acceptable. That

9 is not the case anywhere in any market economy, that the government

10 controls the central bank. The central bank answers to the Assembly. It

11 carries out decisions on monetary policy taken by the Assembly. It must

12 have its autonomous position, and it would, so to say, a completely

13 unnatural position if the Federal Executive Council, that is the federal

14 government, were to be given the right to block the implementation of

15 documents adopted by the board of governors of the National Bank, et

16 cetera. In my opinion, that would be quite wrong, as would what is

17 written down here. The little work that is now in more or less competent

18 hands in the National Bank would be transferred to the hands of the

19 government which are certainly not equipped to decide and take measures on

20 such matters."

21 MR. MILOSEVIC: [Interpretation]

22 Q. To tell me, Mr. Torkildsen -- tell me, Mr. Torkildsen, in any

23 market economy, is the central government subordinated to -- the central

24 bank subordinated to the government? Is there any such case?

25 A. No, not that I know. I mean, the central bank should always be an

1 independent institution. And as far as I know, it shouldn't be

2 subordinated to the Assembly either. I mean, the central bank should be

3 outside the political control in order to act independently. That is how

4 it is in most Western countries, as far as I know.

5 Q. That was what I am advocating. You are placing this position of

6 mine in the context -- in an almost entirely opposite context, because you

7 are linking the financing of the army out of primary issue of which there

8 is no mention, but in fact I'm talking about what you yourself have now

9 confirmed. The governors of the central bank are nominated by the federal

10 parliament. They can't elect themselves. They are nominated by the

11 Assembly, but the bank is autonomous, and there is a board of governors

12 who decide autonomously --

13 JUDGE MAY: Mr. Milosevic, now you're here to ask questions. Now,

14 if you don't ask questions, you'll be stopped altogether.

15 Now, we've listened to all of this. We've been on this paragraph

16 for a very long time, and I suggest we move on.

17 THE ACCUSED: [Interpretation] Mr. May, can we please clear a point

18 up? This is not the first time that completely correct positions are

19 taken out of context and described negatively to prove something that

20 those positions do not contain.

21 JUDGE MAY: You let the witness explain what he means. I think it

22 is you who are taking things out of context and trying to manipulate them.

23 Let the witness explain what he means by paragraph 19. You may then ask

24 him a question about it, and then we'll move on to something else. Time

25 is not totally unlimited, and there are no doubt other important issues

1 you want to raise.

2 Would you explain, please, Mr. Torkildsen, since it's suggested

3 you've taken things out of context and misrepresented it, that's the

4 effect of what he's saying, would you explain what you mean by paragraph

5 19, the effect, you say, of this particular meeting?

6 THE WITNESS: The importance of paragraph 19 is to highlight that

7 in 1991, the SFRY budget started to be financed by -- by primary issues

8 and that most of the budget at that time was actually for the benefit of

9 the army.

10 And as the accused, he was actually implicating that he was not in

11 favour of using primary issues, and in the contrary, we can see from what

12 happened in 1992 and 1993 that that was not actually the case. The

13 budgets more or less in total were financed from the use of primary

14 issues. And that means that the army was financed from the use of primary

15 issues as well.

16 JUDGE MAY: So to understand what you say, you say two things.

17 First of all that the accused was present at this meeting and heard the

18 discussion. And secondly, you say that whatever he may have said -- is

19 this what you're saying? Whatever he may have said, the fact was in 1992

20 primary issues were used to finance effectively the army.

21 THE WITNESS: That is correct, yes.

22 JUDGE MAY: That's what you say. Yes, Mr. Milosevic.

23 MR. MILOSEVIC: [Interpretation]

24 Q. Very well. Mr. Torkildsen, from your -- in your expert opinion,

25 what I've just said regarding the position of the central bank which needs

1 to have autonomy and must not be subordinated to the government, do you

2 agree with that position of mine, yes or no, as an expert?

3 A. Yes, I agree that the National Bank should not be subordinated to

4 the government, yes.

5 Q. Why then did you put my opposition to the request of the

6 government to place the National Bank under its control, under its

7 tutelage, as some sort of evidence that I was behaving destructively? I

8 was acting responsibly, as you can see from this transcript.

9 A. I mean, it's simply a quote. And what is interesting in the quote

10 is that you are saying here that the central bank answers to the Assembly.

11 I mean, it's not an issue that I'm elaborating on here, but the question

12 is who controls the Assembly at the time, but that's a political matter

13 that I am not an expert in.

14 Q. Mr. Torkildsen, the only thing here is that the governors were

15 nominated by the Assembly. So the same body that nominates the prime

16 minister nominates the governors of the central bank. So there cannot be

17 a hierarchy between them because the same body nominates them. I don't

18 know in other countries who nominates governors of the central bank.

19 Probably the parliament. Not the government, surely. And that is not the

20 case in any market economy.

21 Then you go on to talk about primary issue and my attitude towards

22 it. Please look at the next paragraph. I believe that the proposal to

23 ensure equal position of republics in the use of primary issue, you should

24 at least tell us what you mean by that. "As primary issue is a residual

25 category, and its extent and use are a function of regulating the banking

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1 system's liquidity. That is, it is contrary to the nature of the monetary

2 system to determine in advance the regional distribution of the primary

3 money supply. That is impossible. It completely degrades the integrity

4 of the monetary system."

5 They're asking saying that the right to inflation be distributed

6 among the republics. That's a caricature of monetary policy, and I'm

7 criticising this in an expert way. "It degrades the monetary system and

8 the position of the central bank which has its place in the monetary

9 system, which is actually the only monetary authority."

10 Do you agree, Mr. Torkildsen, with that, that the central bank is

11 the only monetary authority and that the executive authority cannot have

12 any --

13 JUDGE MAY: Stop talking. You must ask questions.

14 You can answer the question now, Mr. Torkildsen.

15 THE WITNESS: Well, I will the last part, and I totally agree with

16 you that the central bank should be the only monetary authority. Yes, I

17 do.

18 MR. MILOSEVIC: [Interpretation]

19 Q. So that is what I am saying. And then I go on to say that the

20 focus should be on the economic complex that focus should be narrowed

21 down, that we should not engage in principled discussions and discussions

22 of principle and so on.

23 Did you, Mr. Torkildsen, pay attention or did you analyse the

24 further proceedings when I criticised the federal government? On page

25 238. "It's better not to talk about it. Let's just take the way the

1 foreign exchange reserves have been destroyed so that smugglers from east

2 European countries on the basis of the unrealistic rate of exchange have

3 taken away more than $3 billion in their pockets, not to mention the

4 nonsensical import of all kinds of product. And instead of being a net

5 exporter, we have become a net importer in spite of enormous food

6 reserves."

7 JUDGE MAY: Yes. Keep going. Just keep reading, Mr. Milosevic.

8 Just keep going and then at the end no doubt we'll get to a point. When

9 we get to a point, you can tell us, but if you are, you're going to insist

10 on reading all your speeches out, we are going to take a very long time,

11 and remember your time is limited.

12 THE ACCUSED: [Interpretation] I want to clear these matters up,

13 Mr. May, because as you see, Mr. Torkildsen in the expert sense cannot

14 disprove any one of these positions.

15 JUDGE MAY: Well, it's what you said. We notice what you said,

16 and it's obviously something to be taken into account. We'll also note

17 what happened about which you haven't yet cross-examined Mr. Torkildsen at

18 all.

19 THE ACCUSED: [Interpretation] Mr. May --

20 MR. MILOSEVIC: [Interpretation]

21 Q. Mr. Torkildsen, do you know that I was the President of Serbia in

22 those days, at that time?

23 A. Yes.

24 Q. So I am attending here upon the invitation of the Presidency of

25 the SFRY to present my views; is that right?

1 A. I don't know in what -- why you were there, but I know you were

2 the President of Serbia.

3 Q. In the capacity of the President of Serbia, like all the other

4 presidents of the other republics. At the Presidency of Yugoslavia

5 meeting, and the Presidency consisted of eight men and was presided over

6 by Stjepan Mesic, and I'm presenting my views regarding the positions

7 being proposed by Markovic.

8 So as you can see, my positions were absolutely correct from the

9 professional point of view and from the point of view of a responsible

10 relationship towards economic policies, and my criticism is absolutely

11 based on principle.

12 Mr. Torkildsen, as you're working for the Prosecution, aren't you,

13 you know that this is an indictment regarding various wars. You probably

14 know that. Are you aware of that?

15 A. Yes, I am.

16 Q. How then did it not occur to you to quote, for instance, there was

17 the whole Presidency sitting there and all eight members, all the

18 presidents of the republics including, including the president of

19 Slovenia, Milan Kucan, you can see on page 239 another observation of mine

20 to Markovic?

21 JUDGE MAY: We haven't got the same numbers. Now, is this after

22 the bit that you've been quoting?

23 THE ACCUSED: [Interpretation] Yes, yes, after it, because this

24 goes on. There are several exchanges between me and Markovic when I say

25 that they have sold foreign exchange reserves at a low price. And then I

1 say that something needs to be said about the functioning of the borders.

2 And then I'm reading: "Failure to respect this provision regarding the

3 payment of customs duty," and then I say, "On the basis of such an

4 approach, you started the war in Slovenia over customs and borders. In

5 fact, over customs duty."

6 MR. MILOSEVIC: [Interpretation]

7 Q. You know that I am being charged with blame for the wars,

8 Mr. Torkildsen. Why didn't you quote this, for instance?

9 JUDGE MAY: Yes, let us find the page.

10 MR. NICE: Page 17603 at the top.

11 JUDGE MAY: Pardon?

12 MR. NICE: Page 17603 at the top, I think.

13 JUDGE MAY: Do you have the passage, Mr. Torkildsen?

14 THE WITNESS: No.

15 JUDGE MAY: 17603, we are told.

16 MR. NICE: It's at the conclusion of a number of interventions and

17 exchanges, but I think it must be the passage the accused has in mind

18 because it ends "Based on this approach you started the war in Slovenia

19 over customs and borders, actually over customs," which is his most recent

20 quotation.

21 JUDGE MAY: Yes, we have it.

22 MR. MILOSEVIC: [Interpretation]

23 Q. So, Mr. Torkildsen, you have received the transcript, the one

24 which I do not have. You are a professional and an expert of this

25 unlawful Prosecution accusing me of wars, and you see what this -- we're

1 talking about here. It is the war in Slovenia that is mentioned, and you

2 make no mention of that yourself although it is linked to the financial

3 aspects of the whole matter and customs are being talked about here,

4 mentioned, and I say, "on the basis an approach of this kind, you started

5 that war in Slovenia over customs and borders, actually, over customs."

6 That's what I say?

7 JUDGE MAY: What is the point, Mr. Milosevic? What point do you

8 want us to understand about this?

9 MR. MILOSEVIC: [Interpretation]

10 Q. I'll give you the point. Did you note that at the meeting

11 Milan Kucan, president of Slovenia was also present? And he was the

12 president of Slovenia then and still is now.

13 A. Yes. If that's what you're saying, I probably noted that when I

14 read through this, yes.

15 Q. Well, then I'd like you to bear in mind the following: This whole

16 discussion took place after the war in Slovenia, and Kucan attended the

17 meeting just like all the other presidents of the republics, and I say to

18 Ante Markovic that, "You began the war in Slovenia," and they were people

19 that accused me of that here. So have you read what Kucan says? And that

20 is page 243 or 005236 according to your numbering.

21 So the first time that Milan Kucan takes the floor in the

22 transcript, he says: "I'm not going to be responsible to the president of

23 the government who quite obviously wants now that he's lost the war to win

24 all the rest." And then he goes on to say that first he agrees with the

25 proposal made by Slobodan Milosevic that the federal Executive Council or

1 Yugoslav government should proceed in that manner.

2 JUDGE MAY: Yes. Let us find this passage. I've got Mr. Kucan

3 saying, "Let me explain. I didn't speak about that."

4 Yes, Mr. Nice. Can Are you help with this one?

5 MR. NICE: The only passage I can find at the moment is the same

6 passage Your Honour has found at 17599, and that follows on in case

7 there's any text that's been omitted for any reasons of translation, that

8 follows on from Stjepan Mesic saying, "You started a discussion." Kucan

9 applied to speak. Then there seems some textual confusion. "During the

10 discussion of other topics as agreed." That's all I can find at the

11 moment.

12 The accused will probably be able to help us whether we are

13 roughly at the right place, because the next intervention by Stjepan Mesic

14 referred to the SIV.

15 THE ACCUSED: [Interpretation] Yes.

16 MR. NICE: And Kiro Gligorov is the next speaker, so he'll tell us

17 if we're at the right place.

18 JUDGE MAY: Yes, Mr. Milosevic.

19 THE ACCUSED: [Interpretation] No. Move on from what we've already

20 found. When I speak about customs and boundaries, that the war was

21 started over that issue, you've found that, where I say that to Markovic.

22 After that, Markovic takes the floor. After Markovic, the next speaker is

23 Gracanin, one sentence there. Then Gracanin again and then Mesic.

24 Markovic again, Mesic, Markovic, and then Mesic goes on to say that Kucan

25 has asked to take the floor. And that is on page 243 of the transcript,

1 and my page is 00526136. Those are your markings. That's what I have.

2 And then it says Milan Kucan in capital letters as you would when

3 you are recording a transcript. Have you found it now?

4 JUDGE MAY: It seems there are some pages missing here because we

5 don't have what the accused is referring to.

6 Is that right, Mr. Nice?

7 THE INTERPRETER: Microphone, please, Mr. Nice.

8 MR. NICE: Sorry. If one looks at the page 5365 and 5365 and 4,

9 it does indeed appear that there is a long passage of Kucan which is not

10 reflected in the English translation, because on page 17534, there's a

11 whole -- well, it's the beginning of about three sides of Kucan or four

12 sides of Kucan speaking. We don't seem to have that. However, I did

13 find -- Your Honour, I've lost it again, I'm afraid. I did find what I

14 think was the observation by Mesic, "You started a discussion," Kucan

15 allowed to speak. Let me just see if I can find that. I think that's

16 probably the words we see at the foot of page 17535, in the accused's

17 version. I imagine that is in translation. "You start a discussion,"

18 Kucan allowed to speak. Correct me if I'm wrong, in which case there is

19 therefore a large passage of Kucan which has not been translated.

20 JUDGE MAY: Yes, that should be translated.

21 Yes, Mr. Milosevic. What is you wanted to refer to there?

22 THE ACCUSED: [Interpretation] I'm going to place it on the ELMO.

23 And I'm referring to Milan Kucan's part in the discussion, who also

24 states -- he begins with saying: "I'm not going to answer to the prime

25 minister," that is to say, Ante Markovic, "Who quite obviously wishes now

1 when he has lost the war to win everything else," all of that.

2 MR. NICE: If the Registry's copy --

3 THE INTERPRETER: Microphone please, Mr. Nice.

4 MR. NICE: If the registry's copy of this document at page 17534

5 could be placed on the overhead projector as the accused suggests, it may

6 be that the interpreters can help us. We've clearly found the right

7 passage.

8 JUDGE MAY: Mr. Nice, I think it would be easier -- just a moment.

9 If you handed over your pages. There seems to be some confusion.

10 MR. NICE: Yes, of course I can't catch up then but I'll do my

11 best.

12 JUDGE MAY: Yes. Let that be put on the ELMO, please.

13 THE ACCUSED: [Interpretation] Do you have Kucan?

14 JUDGE MAY: Would you help the usher, please, Mr. Nice? Would you

15 point out to her where it is --

16 MR. NICE: It's on the top of the page that's on the overhead

17 projector at the moment. It's on the overhead projector at the moment.

18 Thank you very much. Starting there. If the accused would like to turn

19 to his video evidence button, he can make sure we are following at the

20 right part of the transcript and then he can either read it out or it may

21 even be possible to ask the interpreters to read out the passage he wants

22 to be translated.

23 THE ACCUSED: [Interpretation] Yes. We have the same portion. Can

24 the interpreters follow whether I'm reading correctly? Is says Milan

25 Kucan. Let's go back to the beginning please and then the interpreters

1 can follow and see if I'm reading it properly. "I am not going to respond

2 to the prime minister who quite obviously wants now when he's lost the war

3 to win..." All that. And then you can skip over two lines where I go on

4 to say: "I agree with the three proposals put forward here. They have

5 their logic, and they are linked to each other. First, I agree with the

6 proposal made by Slobodan Milosevic that the Federal Executive Council

7 should compile realistic minimum economic and social measures," and so on

8 and so forth. But the point of this is on the war in Slovenia.

9 Now, turn the page, please. Turn over to the next page, please,

10 because on the following page, we have an extremely important portion

11 there too which I should like to read out to you. Lower down, yes. Thank

12 you. A bit -- place the page lower down, please. Down. Down.

13 We have here towards the end of this paragraph, and you can see it

14 on the screens, it begins with the word "trece," third. And as the

15 question has been raised as to why the members of the federal government

16 from Serbia will no longer attend government meetings, Kucan says the

17 following, and I'd like to ask you to interpret that.

18 "I do not have to convince you that you will not find in Slovenia

19 a single man including these two men here who will go back to the Federal

20 Executive Council and work there. That means they won't be able to find

21 anybody in the Slovenia to go back to the federal government. And then he

22 goes on to say this key statement: "That is the federal government which

23 we know in Slovenia began the war in Slovenia. Slovenia knows that that

24 federal government began the war in Slovenia."

25 So let's carry that point up or at least one of these wars. At

1 the Yugoslav state Presidency meeting, this is what has been said,

2 Mr. May. And I'm very grateful to Mr. Torkildsen himself for having made

3 available this transcript of the minutes, because we have it clearly here.

4 We have what I say and what others say set out quite clearly here, what

5 Kucan says clearly too, who was the president of Slovenia and he says this

6 after the war in Slovenia, why people don't want to go back and it's the

7 federal government and I say that the war was waged for customs reasons.

8 JUDGE MAY: Have you finished with that passage? In which case,

9 the usher can --

10 THE ACCUSED: [Interpretation] Yes, I have.

11 JUDGE MAY: -- Return the pages to Mr. Nice and we can go back.

12 THE ACCUSED: [Interpretation] Yes, he can take it back.

13 MR. MILOSEVIC: [Interpretation]

14 Q. Now, have you noticed, please, Mr. Torkildsen, that I do not ask

15 to take the floor after that, after the lunch break, because I didn't stay

16 for the luncheon itself. I had other duties to attend to. And as you can

17 see, this was a very lengthy meeting and the Yugoslav state presidency

18 members have to formulate the text of a document themselves and not

19 myself. I presented my views, and it was up to them to compile the

20 document. So I had nothing more to do there.

21 Now, for the first time in the transcript of the minutes, you can

22 see on page 289 and 290 and 92, that is the first time that the question

23 arises of the financing of the army, and the crops up in a fairly - how

24 shall I put this? - in a sort of cafe talk, cafe speak style, because it

25 doesn't deal with any serious matters, but it is almost in the form

1 of - how shall I explain this? - very brief interjections on unclear

2 comments that don't indicate any solutions. They just indicate the

3 absurdity of the whole position.

4 Take a look at page 289, please. And it is the portion that you

5 have quoted.

6 JUDGE KWON: [Previous translation continues]... Page 17591,

7 maybe. Is it remarks by Markovic?

8 THE ACCUSED: [Interpretation] Yes. Markovic says that the bulk of

9 the budget is the army.

10 JUDGE KWON: Yes, it's right.

11 THE ACCUSED: [Interpretation] The bulk of the budget is the army.

12 MR. MILOSEVIC: [Interpretation]

13 Q. I'm just mentioning this because this is the first time -- it is

14 only on page 289, the first time in the transcript. And that was way

15 after the lunch break that the army is mentioned at all and the exchanges

16 between Ante Markovic and Pelivan. That is true. What they say is quite

17 true. That would mean Topcider, that would mean --

18 JUDGE MAY: Let the witness answer. It's been put that this is

19 the first time that anybody mentions the army. Is that right, and do you

20 have any comment about it, Mr. Torkildsen?

21 THE WITNESS: Well, to be honest, I don't know whether it's the

22 first time the army is mentioned.

23 JUDGE MAY: Well, in the bits that you've been able to read?

24 THE WITNESS: I do not remember that.

25 THE ACCUSED: [Interpretation] Well, read the whole thing. Read

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1 the whole transcript of the minutes. It's your own document. You -- it

2 was made available to you.

3 JUDGE MAY: The next point is do you have any comment as to what

4 is said here?

5 THE WITNESS: No, I do not have any comments.

6 JUDGE MAY: Yes.

7 MR. MILOSEVIC: [Interpretation]

8 Q. Well, I have a question to ask you. So you put all this into

9 paragraph 19 of your report. Now, tell me, how as a professional, as an

10 expert can you be quite improper in your conduct, especially as you have

11 confirmed the matters of principle which I --

12 JUDGE MAY: You're not getting away with that. Allegations of

13 impropriety are far too serious. Now, don't make those comments. A

14 difference of opinion, of course you can put to the witness, but to accuse

15 him of impropriety is quite wrong.

16 What is the point, Mr. Milosevic?

17 THE ACCUSED: [Interpretation] Well, the point is that in paragraph

18 19, something has been put out of context, my position with which

19 otherwise the witness agrees, about the fact that the central bank cannot

20 be subordinated and subjugated to the Federal Executive Council. And then

21 from that same minutes pulled out of context a brief passage between

22 Ante Markovic and Pelivan, and it starts at 289, 290, 91, 92. Those are

23 the pages. That's where it starts. And not even if you use the biggest

24 possible scissors, you can't clip this portion on and stick it in here.

25 MR. MILOSEVIC: [Interpretation]

1 Q. So what do you wish to draw from this, Mr. Torkildsen? Can you

2 seen that I have spoken about Topcider and taken issue with it?

3 JUDGE MAY: What is it that you draw from this exchange?

4 THE WITNESS: What I wanted to highlight with this was how the

5 SFRY budget was financed in 1991, at least from the second half of 1991.

6 It was financed by the use of primary issues. And that's what continued

7 and was actually enhanced in 1992 and 1993, and again back to the fact

8 that the major part of the budget was for the use of the army. And again,

9 that was totally different from what was the situation in 1990 when the

10 budget was not financed from primary issues.

11 MR. MILOSEVIC: [Interpretation]

12 Q. Well, tell me this: Do you see anything - how shall I put

13 this? - unusual in the fact that your whole paragraph 9 has been compiled

14 from my correct attitude and position with respect to the position of the

15 National Bank which should be independent and autonomous. And 200 pages

16 later, an exchange between Markovic and Pelivan, and then you combine it

17 all together to explain how I have something to do with the financing of

18 the army from primary issues. And you know that I was president of the

19 Serbia, not president of the federal government, nor was I governor of the

20 National Bank. So where do you see here any links and ties with the way

21 the federal government operated which was composed of all the republics

22 and led by a Croat, in fact and the Federal Presidency which was led once

23 again by a Croat as we're discussing this with the presence of the

24 president of Slovenia who was a Slovene, where do you see any wielding of

25 any influence on my part to have the army financed through primary

1 emission, through primary issues?

2 JUDGE MAY: Let the witness answer the question.

3 THE WITNESS: It is clear from some of the exhibits that were

4 discussed yesterday that obviously the accused had influence on this

5 financing. I think that's particular highlighted in paragraph -- I think

6 it was -- it is 98 to this report and also paragraph 102 to this report.

7 MR. MILOSEVIC: [Interpretation]

8 Q. Mr. Torkildsen --

9 JUDGE MAY: I think we'll adjourn. We will consider how long

10 you're to have left for your cross-examination. You've spent more than an

11 hour, probably an hour and a half, on this document, and we can't waste

12 time. But we'll consider how much longer you should have.

13 We will adjourn. Twenty minutes.

14 --- Recess taken at 10.42 a.m.

15 --- On resuming at 11.50 a.m.

16 JUDGE MAY: Could I have the legal officer, please.

17 Yes.

18 MR. NICE: Your Honour, there is a further English translation of

19 the document that we were looking at with the accused before the

20 adjournment. I'm not -- haven't yet tied up where it goes to. I see.

21 It's the English translation pages 6136 to 6157, so that's of some use I

22 hope. And the second point is this: The interpreters have, I think, been

23 having a difficult time this morning because although they have in their

24 booths the report of the witness, they don't have the attached exhibits,

25 and therefore I think they would ask probably that things are taken more

1 slowly when exhibits are placed on the overhead projector.

2 JUDGE MAY: Yes. Ideally they should have copies of these

3 exhibits, particularly in complicated evidence like this.

4 MR. NICE: Yes. Probably easier said than done with the

5 quantities of material that we're dealing with and the limited prospect of

6 much of it being looked at in detail, but I entirely take the point.

7 JUDGE MAY: Mr. Milosevic, we've considered the time you should

8 available. You can have an hour and a half more if you want it with this

9 witness. Yes.

10 THE ACCUSED: [Interpretation] As far as this witness is concerned,

11 in view of all the documents that have been provided, I could go on

12 cross-examining him not for an hour and a half but at least a week and a

13 half.

14 However, I'll use the one and a half hours I have been given,

15 Mr. May.

16 MR. MILOSEVIC: [Interpretation]

17 Q. Now, your main point, Mr. Torkildsen, is it, therefore, in the

18 transcript clear, based on my examples as to the needs to include the

19 fundamental reserves, that I advocate a position against inflation and

20 against increasing the money mass? Is that position of mine clear?

21 A. I can't really understand what you're claiming here, because

22 you're saying that you're against inflation. You can't be against

23 inflation at the same time as you are in favour of using primary issues

24 for financing the federal budget.

25 Q. I am not supporting primary issues. Where do you find a single

1 word to support that claim that I support primary issues as an instrument

2 of the federal budget? I mentioned it only in the context of buying up

3 agricultural produces, and of course only partially. If 6 million tons,

4 if there are 6 million tons of wheat then the National Bank with its

5 selective credits and loans to commercial banks helped them buy this up.

6 Then the wheat is sold and then the money recuperated. So there is no

7 negative effect in this procedure.

8 So where in this entire transcript, which numbers several hundred

9 pages as you can see, is there a single word mentioning primary issues as

10 a function of the federal budget? All I talk about is the buy-up of

11 agricultural produces and they don't go through the federal budget but are

12 financed by the banks along with assistance from the central bank, of

13 course, and I'm sure you ought to know that as a professional man

14 yourself?

15 A. I am basing this on what actually happened later on in 1992 and

16 1993 when the whole of the federal budget was financed from primary

17 issues. But I do not specifically see from this document that you say

18 anything about financing primary issues over the budget. The only thing I

19 can see is that you do not raise any objections to making money available

20 through primary issues.

21 Q. That's great. But that isn't true either, Mr. Torkildsen, because

22 quite obviously my insistence upon an increase in compulsory reserves is

23 quite contrary to the idea of any kind of primary issue, because the

24 increase in primary -- in issues would annul the effect of raising the

25 compulsory reserves in the expert sense. That's right, isn't it? So if

1 somebody who is an expert doesn't understand this, then I don't have

2 anything further to ask.

3 A. Well, I do understand the document, but I mean, basically you

4 didn't raise any objections against the use of primary issues when this

5 was mentioned by Jure Pelivan and Ante Markovic.

6 Q. Well, I wasn't there then either, and that took place at the end

7 of the meeting when they had this discussion.

8 A. Then, that I was not aware of, that you were not present.

9 Q. I don't think Kucan was there after that either. They had other

10 business to attend to and left it to the Presidency to discuss that with

11 the prime minister.

12 But let's move on. As you say that practice has shown that

13 primary issues were in fact used, what I'm asking you is this: Are you

14 aware of the fact that I was the President of Serbia at the time and not

15 the president of the federal government, the prime minister?

16 A. Yes.

17 Q. And do you know that based on Yugoslav provisions who it is who

18 proposes the federal budget, who deals with the federal budget? Is it a

19 matter done by the federal government to propose a budget and to put the

20 budget before the Yugoslav Assembly?

21 A. As far as I know, the budget process would be like -- if we start

22 with the army here, it would be the Federal Ministry of Defence, meaning

23 the SSNO who would suggest a budget for the army. That would be passed on

24 to the SIV, the federal government, and they would again incorporate this

25 into the total budget, and they would further then pass on the total

1 revised budget to the Presidency. That again would pass this on to the

2 Federal Assembly for the final decision on the budget. I think that's at

3 least how I have understood it.

4 Q. Well, you didn't understand it in the best of ways, but let's make

5 things simple. Is it clear to you that according to the constitution of

6 Yugoslavia, the proposer in the Assembly of the budget is the federal

7 government? The federal government proposes the budget. That's a simple

8 question. Is that clear to you?

9 A. I have not read the constitution, but it makes sense that the

10 federal government proposes the budget, but I also thought that the

11 Presidency had a say in this.

12 Q. Mr. Torkildsen, I assume you know that with issues of budget in

13 every parliamentary democracy a vote of confidence or a vote of no

14 confidence is voted to the government. If not, if they get a vote of no

15 confidence, the government tenders its resignation. The government is no

16 longer able to function if somebody proposes a budget which the government

17 does not accept, and that is the case in each and every country.

18 A. Yes, that's my understanding as well.

19 Q. Well, now take a look at Exhibit C324, your own exhibit. And the

20 date is September 1991. That is to say after these meetings and after

21 this quite correct reaction on the part of both Markovic and Pelivan that

22 primary issues cannot be a solution to the problems.

23 Does it not say up at the top the federal government or the

24 Federal Executive Council, the SIV, that's its document?

25 JUDGE MAY: Tab 7?

1 THE ACCUSED: [Interpretation] It is C324, your exhibit.

2 THE WITNESS: Yes, that is correct.

3 MR. MILOSEVIC: [Interpretation]

4 Q. And isn't the heading "Proposal, or draft law" -- "proposal for a

5 new law"?

6 A. Yes, it says: "Draft law on revenue sources for financing certain

7 national defence requirements in 1991".

8 Q. Yes, it's a draft, a proposal. So I assume that you are aware of

9 the fact that laws are first drafted, there is a draft law to begin with,

10 which is then discussed by the federal government in detail, and then it

11 is sent in the form of a proposal to the federal parliament. So here we

12 already have the final product, the final document of the federal

13 government which takes the form of a proposal and is addressed to the

14 federal parliament.

15 And what does it say, Mr. Torkildsen? What does this proposed law

16 say? It says: "Proposed law for the sourcing of finance for the needs of

17 national defence in 1991," and we're dealing with a proposal that was

18 brought in on September 1991 by the government, by that same person,

19 Mr. Ante Markovic for whom you say was against primary issues and yet is

20 tabling a proposal of this kind. This is the proposal he's submitting.

21 Look, see what it says.

22 Article 2: "In order to ensure resources from Article 1 of this

23 law," and this is the crux of the matter, "The National Bank of Yugoslavia

24 will allow for a credit to the federation which will amount to the

25 difference between the resources determined by law from Article 1 of this

1 law and the incoming accrued by the balance federation to finance the JNA.

2 "Credit, pursuant to Article 1, will be paid back in ten yearly

3 annuities which fall due on the 15th of December of each year beginning as

4 of the 15th of December, 1993."

5 I see that the interpreters are asking me to slow down. And then

6 it goes on to say: "The amount of credit not used will incur a 5 per cent

7 interest rate per year, per annum."

8 So you can see, that same federal government, that same man

9 Mr. Ante Markovic is submitting a proposal to this effect. So what does

10 the Republic of Serbia and I myself have to do with a proposal tabled by

11 the federal government, a proposal which we have no influence on because

12 in the federal government of Serbia can have several people representing

13 it as do all the other republics. So what links do you see there and on

14 the basis of what are you able to state anything like that?

15 A. Yes, that only Ante Markovic would be able to answer that

16 question. And also, just to make that clear, I have understood that this

17 was basically the reason for why Ante Markovic later went from his

18 position as the SFRY prime minister at the time. In his resignation

19 statement on the 20th of December, 1991, he's saying that he is not

20 willing to support a budget that comes from primary issues and most of the

21 expenditure is for the army.

22 Q. Let us not turn things upside down. This proposal that I'm

23 showing you now under your exhibit number C324 is not dated December but

24 September. So it was after this Presidency meeting.

25 And as far as I can see from what you say here, because I don't

1 remember that, Ante Markovic, in his resignation, said, among other

2 things, that he did not agree with the budget for 1992. And we're talking

3 here about 1991.

4 In your documents here --

5 A. Yes, I agree, but this is when the financing using primary issues

6 started. It only accelerated with the 1992 budget which was cleared later

7 the same year.

8 Q. Yes. But you didn't -- you were not right when you said that that

9 is why he resigned, because this draft was submitted by him, his

10 government. And he mentioned something in his resignation relating to the

11 1992 budget, and I assume you're aware of that.

12 A. Yes, I am, but this is the same issue.

13 Q. Now, please look at this note marked C43279, where the service for

14 legal affairs informs the Presidency in connection with a proposal of the

15 Federal Executive Council regarding provisional financing of the JNA until

16 the end of the year. Is there any dispute that the service is informing

17 the Presidency in connection with the proposal of the federal government

18 of Ante Markovic and not in connection with anybody else's proposal?

19 JUDGE MAY: This is tab 9.

20 THE WITNESS: That is correct. They are referring to the proposal

21 of the federal government, yes.

22 MR. MILOSEVIC: [Interpretation]

23 Q. They are actually informing the Presidency about it, and they

24 say: "The significantly reduced revenues of the budget of the federation,

25 due to failure to pay in taxes, import duties, and contributions by the

1 republics which have seriously affected the financing of defence, and for

2 those needs, the Federal Executive Council in the past period used

3 short-term loans from the National Bank of Yugoslavia," et cetera. And

4 then there is the proposal that a law be adopted on sources of financing

5 through a credit of the federation if it is not possible to provide the

6 necessary resources from the federal budget. Is that what it says in that

7 document?

8 A. Yes.

9 Q. And as this is the legal service, you can see that it has two

10 footnotes here to provide legal explanation to members of the collective

11 head of state. And in the first footnote, this is on page 2, on the other

12 side of the document I received, in this connection the Chamber of

13 Republics and Provinces decides by a majority vote at a session at which

14 all delegations of the assemblies of republics and provinces are

15 represented and which is attend by a majority of delegates of the Chamber.

16 So not only is it the federal Executive Council and nobody of

17 Serbia that is submitting the proposal, but a decision about it is taken

18 by the Chamber of Republics and Provinces which means that delegations of

19 all the republics and provinces need to be present. And that is the legal

20 explanation of the legal service of the collective head of state.

21 Then the second footnote says: "Pursuant to Article 319 of the

22 constitution if the competent chamber of the Assembly does not accept the

23 proposal of the Presidency for determining the domestic or foreign policy

24 or a draft law or any other regulation or by-law which the Presidency

25 considers necessary, then the Chamber and the Presidency will, by

1 agreement, agree on a procedure, and the Chamber will set a deadline not

2 longer than six months for a coordination of views. If, even after that

3 agreed deadline, agreement is not reached, the disputed issue is removed

4 from the agenda of the Chamber and is put on the agenda again at the

5 request of the Presidency or upon the initiative of the competent Chamber.

6 "If upon a second review agreement is not reached within a period

7 of three months, the competent Chamber of the SFRY Assembly is disbanded

8 and the Presidency of the SFRY ceases to exist. Its mandate expires."

9 So all the bodies' responsibilities here are clearly indicated.

10 Draft law is submitted by the federal government, in this case that of

11 Ante Markovic. The Presidency sends it to the Assembly, and the decision

12 is taken by a Chamber at which all republics and provinces need to be

13 represented. Is that at issue or not, Mr. Torkildsen?

14 A. It would be interesting to actually have an overview of the

15 delegates in the Assembly at that point in time, in September 1991.

16 I -- I find it unlikely that the Croatian delegates and the Slovene

17 delegates to the Assembly were still there, but I may be mistaken.

18 Q. You may not be mistaken, but what has that got to do with what you

19 are claiming, that a decisive role in that is played by Serbia?

20 A. Didn't Serbia have its delegates to the SFRY Assembly? And if the

21 SFRY Assembly was made up with a majority from Serbia and Montenegro...

22 Q. No. In the Chamber of Republics and Provinces -- in the Chamber

23 of Republics and Provinces, you have delegations of the republics and

24 provinces. So there can be no majority. But let us not move away from

25 this other question, please.

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1 A. Sorry. Can you repeat the question, please?

2 Q. I've just found it in your report that you call a finding. You

3 say that the resignation of Ante Markovic was explained in exhibit, I

4 don't know which, 4911. I'd like to see the whole resignation so that I

5 could see at least the date it bears.

6 He says that the budget for 1992 was proposed in such a way that

7 81 per cent was intended for the JNA. Et cetera. Since you have that

8 document, may I see it, please?

9 Could you place it on the ELMO, please? Not just this small

10 passage but the whole document, please, if I could see the document of his

11 resignation. Or if you could let me have a look at it and then I can ask

12 you a question about it.

13 I can't understand this. But this is a report. This is not

14 Markovic's resignation.

15 JUDGE MAY: Read on. You'll see it's a report of it.

16 MR. MILOSEVIC: [Interpretation]

17 Q. I see it's a report from the press, as far as I can see.

18 Now, tell me, please, what is the date? I can't see any date on

19 this document.

20 JUDGE KWON: It's dated December 20, 1991.

21 THE ACCUSED: [Interpretation] Very well.

22 MR. MILOSEVIC: [Interpretation]

23 Q. It is quite clear that since he submitted this resignation on the

24 20th of December, that this resignation relates to a period that is from

25 mid-September, October, November, December. So more than three months

1 after this draft that I showed you a moment ago, the draft law on the

2 sources of financing in which there is the proposal that the army be

3 financed through primary issue.

4 So it came more than three months later and is allegedly linked to

5 the 1992 budget. And do you know --

6 JUDGE MAY: Let the witness answer that.

7 Mr. Torkildsen, you see what comment the accused has made.

8 THE WITNESS: Yes.

9 JUDGE MAY: Is he correct in what he said?

10 THE WITNESS: I agreed that this is later. The other document is

11 from September 1991, and this is from December. But the issue is still

12 the same, the financing of the army through the use of primary issues, and

13 that's, according to this document, why Ante Markovic is resigning.

14 MR. MILOSEVIC: [Interpretation]

15 Q. Do you see on this document that the note for the Presidency of

16 the SFRY, 4279, is dated the 12th of September? The draft law was

17 obviously before the 12th of September, 1991, this draft law of

18 Ante Markovic's government to finance the army out of primary issue. Then

19 from the 12th of the September until the 20th of December, it is three

20 months and eight days. Is my calculation right?

21 Therefore, the practice implemented by that government, that is

22 financing out of primary issue cannot be called in doubt at all. Is that

23 right, Mr. Torkildsen, or not?

24 A. It is correct from the document dated the 12th of September, 1991,

25 that they suggest primary issues as the tool of financing, yes.

1 Q. So we've cleared that point up. And now, since you say regardless

2 of the fact that we haven't found in these minutes that you have offered

3 as evidence what you say but quite the opposite, you say that it was the

4 practice to finance thing out of primary issue. We see who the proponent

5 of that practice was, that is the Federal Executive Council. And do you

6 know that even after Ante Markovic, pursuant to the same regulations, the

7 federal government continued to be the proponent of proposals for the

8 budget which -- of what became later the Federal Republic of Yugoslavia?

9 Are you aware of that?

10 A. Yes, the use of primary issues actually increased. It became much

11 more extensive in 1992, and in 1993 this was as good as entirely financed

12 by primary issues.

13 Q. That's fine. Now, who was president of the federal government

14 which proposed the budget for 1993? We see that Ante Markovic completed

15 1991. Then he referred to the budget in December 1992. And do you know

16 that Germany recognised Croatia in December 1992? It recognised it as an

17 independent state. Are you aware of that?

18 A. I think I've read that somewhere, yes.

19 Q. And do you believe that Ante Markovic's resignation was prompted

20 by the budget or by this rather larger political issue?

21 JUDGE MAY: The witness can't answer that question.

22 MR. MILOSEVIC: [Interpretation]

23 Q. Let us then focus on the financial legal issues then. Who was the

24 president of the federal government that proposed the budget for 1993?

25 A. I know that in 1993 there were several revised budgets because of

1 the high inflation. So it would probably depend on -- on the -- on a

2 specific time when the revised budget was issued. I mean, it was

3 Mr. Zoran Lilic who came on as the federal president in the summer - I

4 think it was July 1993 - and he was replacing Cosic, I think his name is.

5 Please correct me if I'm wrong.

6 Q. I will have to correct you. The president of the federal

7 government or the prime minister from 1992 until the elections in Serbia

8 in 1993 was an American of Serbian origin, Milan Panic and my main

9 counter-candidate at the elections for the Presidency of Serbia in 1993.

10 There is no doubt, therefore, in view of the period whenever the

11 prime minister, the Federal Prime Minister, that Milan Panic's government

12 proposed the budget for 1993. The election took place in 1993, towards

13 the end of 1993.

14 JUDGE MAY: Do you accept that?

15 THE WITNESS: Yes, sorry. I got a bit confused using the term

16 president of a government and prime minister. So that's why I mentioned

17 Mr. Lilic.

18 JUDGE MAY: Yes. Don't worry, Mr. Torkildsen, it's not a memory

19 game or a test of general knowledge.

20 Yes, Mr. Milosevic. What's the next question?

21 MR. MILOSEVIC: [Interpretation]

22 Q. It's not even that important, but it is a fact that Milan Panic,

23 an American of Serbian extraction, my main opponent at the elections for

24 the Presidency of Serbia in 1993, which were also early elections, was the

25 proponent of the draft budget for 1993. But federal president of the

1 republic of Yugoslavia was Dobrica Cosic, our well-known writer. But the

2 president had no competencies regarding the budget. That was up to the

3 federal government.

4 JUDGE MAY: Have you got a question for the witness?

5 MR. MILOSEVIC: [Interpretation]

6 Q. So do you know that in view of the fact that Milan Panic was my

7 main opponent that could I not have had any influence over the federal

8 government of Milan Panic which proposed the budget for 1993?

9 A. Well, I can only refer to the documents I have looked at, and to

10 me it seems like you had an influence of -- on directing funds. And I

11 would particularly like to draw to your attention paragraph 98 in my

12 report and paragraph 102. That indicates that you do have influence.

13 Q. I will find that paragraph. Let me find it. We are talking here

14 about the assistance of the Republic of Serbia, not about any federal

15 budget. Which other paragraph did you mention? 102 and 58?

16 A. No. I mentioned 98 and 102. Can I please elaborate on that?

17 JUDGE MAY: Yes, by all means.

18 THE WITNESS: It is stated on page 36 of this report, paragraph

19 98, and it's an exact quote from this document that was discussed

20 yesterday. It is stated here in the last paragraph, I quoted that: "The

21 president Milosevic stated his attitude that the means for the maintenance

22 of the technical devices should be planned via the Yugoslav army, and he

23 said that he will help in realising it and that he will initiate the

24 Yugoslav army to finance the active officers and the civil personnel that

25 stayed in Krajina."

1 I think that paragraph speaks for itself, and it talks about

2 influence.

3 MR. MILOSEVIC: [Interpretation]

4 Q. Very well. You are speaking here about some document. We'll find

5 it later. But as far as I recollect, yesterday that document was quoted.

6 Did you leave out a critical word, and that is the peacetime composition

7 of the army of the Republic of Serbian Krajina? Because in fact, we were

8 endeavouring quite the opposite, that is, to find a peaceful solution to

9 all this. And reference is made to our assistance to maintain the

10 peacetime level of the army of Republika Srpska.

11 I think you omitted to quote that word "peacetime." It is in a

12 letter from the Minister of Defence of the RSK, Spanovic, that I

13 remembered from yesterday.

14 JUDGE MAY: Where is the document? What is the document that

15 you're referring to, Mr. Milosevic?

16 THE ACCUSED: [Interpretation] I'll find it, but I assume it is

17 4682. I'm not able to find it now here in my documents. But never mind,

18 I will find it. Because it refers to the peacetime strength, and there is

19 no issue with that. There was no secret that we extended assistance to

20 both Republika Srpska and the Republic of Serbian Krajina.

21 JUDGE MAY: Let us --

22 THE ACCUSED: [Interpretation] And we would be the worst scoundrels

23 if we hadn't.

24 MR. NICE: Tab 11.

25 JUDGE MAY: Tab 11 of the binder that we have. Have you got it,

1 Mr. Milosevic? 4682.

2 THE INTERPRETER: Microphone, please. Microphone.

3 JUDGE MAY: A copy is coming up.

4 MR. MILOSEVIC: [Interpretation]

5 Q. Here it says --

6 THE INTERPRETER: Microphone, please.

7 MR. MILOSEVIC: [Interpretation]

8 Q. The fourth paragraph, it says: "President Milosevic accepted the

9 concept." And then it says the number of men which should form the

10 peacetime basis of the army and should provide security on the border. It

11 means that it should be reduced to peacetime strength because all our

12 efforts were designed precisely to find a peaceful solution and for

13 everything to be reduced to peacetime levels. As you can see from the

14 information presented by witnesses, the forces were much greater, much

15 stronger, but it was as a result of our endeavours that the effort was to

16 reduce them to peacetime strength hoping that the problem would be

17 resolved by peaceful means, the problem of the RSK.

18 JUDGE MAY: Yes. Now, what is your question of the witness.

19 MR. MILOSEVIC: [Interpretation]

20 Q. Therefore, is it clear, Mr. Torkildsen, that we are not talking of

21 any wartime situation but rather an effort to maintain a balance and the

22 peacetime strength to obtain a peaceful solution?

23 A. That is your interpretation, but my basic point by highlighting

24 this document now today was to -- because you were saying that you had no

25 influence on the federal budget or the federal army, but to me this

1 document indicates the opposite, because it is stated here that he will

2 initiate the Yugoslav army to finance the active officers and the civil

3 personnel that stayed in Krajina, and that, at least to me, indicates some

4 influence. And remember that the Yugoslav army was financed through the

5 federal budget.

6 Q. Yes, that is quite clear. It says that I would endeavour or urge

7 or intervene with the army. It doesn't say I would order, because I can't

8 order, but that I would endeavour, yes.

9 And do you know that even after Dayton and after the war, since

10 you were reviewing the financial documents, the Federal Republic of

11 Yugoslavia continued to assist in financing the army of Republika Srpska.

12 JUDGE MAY: The English translation has: "He said he would help

13 in realising it and that he will initiate the Yugoslav army to finance the

14 active officers," et cetera.

15 Do you challenge that, Mr. Milosevic, as a translation?

16 THE ACCUSED: [Interpretation] Of course. That is a free

17 interpretation by Mr. Spanovic, Mr. May, which is contained in his letter.

18 But it's only possible in real terms that I can urge or stand in support

19 of something, because up until 1997, I had no competence over the army.

20 JUDGE MAY: That, no doubt, will be one of the issues we're going

21 to have to try. But you're saying that this was a misinterpretation of

22 whoever made the record. Is that what you're saying?

23 THE ACCUSED: [Interpretation] I am saying that it is his free

24 interpretation because it is his letter, but no record of the conversation

25 itself. It is his interpretation that he hopes that measures would be

1 taken along those lines. But generally, that was our position. There is

2 no dispute over that, that people who voluntarily remain in the army of

3 the RSK or the RS cannot be punished by their families going hungry. And

4 their salaries were a kind of social relief that we extended to the

5 Republic of Serbia. So there's no need to go into any detailed

6 explanation. There was no secret over that.

7 JUDGE MAY: Yes. Let's move on. The next question.

8 MR. MILOSEVIC: [Interpretation]

9 Q. We're talking about cooperation between the national banks of

10 Yugoslavia, the Republika Srpska, and the Republic of Serbian Krajina; is

11 that right?

12 A. Yes. It was a cooperation, yes.

13 Q. It is page 14 and 15. And then you go on to say at the top of

14 page 15 that there was a report by Miletic, the director, the National

15 Bank of Yugoslavia provided expert assistance, you say. [In English] "As

16 we read in the 1992 NBRS annual report" [Interpretation] and so on?

17 A. Yes, that's correct.

18 Q. I'm sure you're familiar with the structure of management for the

19 National Bank. You know that there's the governor for the National Bank,

20 the deputy governor, the vice-governor and directors. Four different

21 departments. I assume that's something you are familiar with.

22 A. I don't know the detailed structure of the National Bank, but I

23 know there's the NBY governor, and it's logical he's got his deputies and

24 his assistant staff, yes.

25 Q. I would like to clear this up for those who are not familiar with

1 this. When you say the director of the National Bank, then people would

2 think that that is somebody who manages the National Bank. There are

3 several directors, and this man is without doubt a professional, and he

4 assumed the post of one of the directors. He's not the governor or the

5 deputy governor or the vice-governor. So that, in fact, testifies to the

6 fact that cooperation was on a professional expert level and that expert

7 assistance was provided. So what's bad in that, Mr. Torkildsen? Why

8 shouldn't there be assistance granted?

9 A. That is precisely what I am claiming in this report. It was

10 assistance from -- from the FRY to the RS and to the RSK in this respect.

11 Q. Then you go on to say the following: During the period of

12 banknote replacement the National Bank of Republika Srpska collected, and

13 then you go on to explain 12.000.506, the equivalent of 12.506.000 German

14 marks, the banknotes, dinars. [In English] "The said banknotes are hereby

15 delivered to the treasury of the National Bank of Yugoslavia in order to

16 be replaced by an appropriate amount of valid banknotes."

17 [Interpretation] So the replacement of money moving from old

18 dinars to the new dinars. Now, this whole operation, if someone has

19 German marks, for example, and lives in South Africa and then they're

20 moving to the euro and then he has to exchange the German Marks via some

21 bank for euros because the German marks will not be valid after a certain

22 period of time, so where is that operation different from this one? It's

23 a technical operation. You can take anyone. It can be an American, a

24 Norwegian like yourself who for example is in possession of old dinars and

25 he has a time limit up until which he can transfer those dinars.

1 So where is the difficulty there if this financial transaction is

2 being conducted?

3 A. I agree it's a technical cooperation, but it's limited to the area

4 of the RSK, the RS, and the FRY.

5 Q. Of course. Now, do you constantly forget the environment and

6 circumstances under which all the Serbian people lived and all the other

7 inhabitants who are inhabitants of Serbia, the RS and RSK? They were

8 completely isolated, faced with international sanctions that had been

9 imposed exclusively against Serbia, Montenegro, rather, the Federal

10 Republic of Yugoslavia and the RS and RSK. Are you forgetting all that?

11 A. No, I'm not forgetting it. And I guess that that was one of the

12 reasons for this monetary integration. I mean, the RS and the RSK were in

13 an isolated area and that's why you had to cooperate financially. But

14 this cooperation was very much of a subordinated nature with the NBY in

15 the decision-making role and --

16 Q. Oh, come on, Mr. Torkildsen. You know full well that in trade, in

17 commerce, one exchanges an equivalent for an equivalent. If a company in

18 Serbia, for example, is purchasing something from the RS, it pays the

19 price of those logs, for example, and there is no subordinate

20 relationship. This exchange is done on the basis of the price that is

21 prevail on the market, goods for goods or whatever you like to call it.

22 So what kind of subordination are you talking about? When you

23 talk about financial institutions, when you look at them in your

24 professional capacity you can only talk about cooperation here. They are

25 three financial institutions. I hope that's not in dispute.

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1 A. That is definitely in dispute. If we go to Exhibit C4779, we will

2 definitely see the subordinated relationship I'm talking about.

3 JUDGE MAY: Let us find that document. 18 --

4 MR. MILOSEVIC: [Interpretation]

5 Q. Mr. Torkildsen --

6 JUDGE MAY: Just a moment. Let's get it. Eighteen, I think.

7 Yes. Mr. Torkildsen, what do you refer to here that we have at tab 18?

8 THE WITNESS: Well, I would like to go to the second point. There

9 are listed quite a number of points, 1 to 15. And in the second one it is

10 stated there that: "The National Bank of Republika Srpska and the

11 National Bank of the Republic of Serbian Krajina operate as main branch

12 offices of the Yugoslav National Bank and under its authority alone."

13 And as further stated in paragraph 4: "The National Bank of

14 Republika Srpska, the National Bank of Republic of Serbian Krajina shall

15 implement the decisions of the Yugoslav National Bank in a disciplined

16 manner."

17 And in paragraph 7 it's mentioned: "The governor of the National

18 Bank of Republika Srpska and the governor of the National Bank of the

19 Republic of Serbian Krajina are required to attend the sessions of the

20 council of the Yugoslav National Bank without the voting right."

21 I think that this illustrates very much that this was not the

22 relationship between equals.

23 MR. MILOSEVIC: [Interpretation]

24 Q. Mr. Torkildsen, you've just said without the right to vote,

25 without voting rights. So they are not the main branches. But we're

1 talking about cooperation in which efforts are made to keep the same

2 criteria. That is to say, not to reduce or increase interest rates, for

3 example, to the disadvantage of the other side, the others involved, and

4 to adhere to discipline in financial undertakings and financial discipline

5 is a very vital characteristic, I'm sure you'll agree, for successful

6 financial transactions, that is to ensure that clients are not at a

7 disadvantage through the irresponsible behaviour of any one of those three

8 banks. And quite certainly, most of the professional potential and

9 economic potential lies in the hands of the National Bank of Yugoslavia.

10 That is not in dispute. Is that in dispute from your professional expert

11 point of view, Mr. Torkildsen?

12 A. First of all, I would like to say that this document speaks for

13 itself and I don't really have any comments to this.

14 Q. All right, Mr. Torkildsen. Let's take the liberal economy of the

15 United States. Who topples the prime rate, for example, or raises the

16 prime rate? One of the leading commercial banks. Isn't at that right?

17 Morgan Chase for example. Or one of the other leading banks. Actually,

18 it doesn't even have to be the first. It reduces the prime rate, or

19 raises the prime rate, one does that, one bank does that and the others

20 follow suit.

21 So there's always a leading bank which makes a move which is

22 respected by all the rest. Isn't that so, even when you're talking about

23 commercial banks and not cooperation between central banks as it is here

24 between Republika Srpska, Republic of Serbian Krajina and Yugoslavia.

25 A. It would be the central bank that sets the interest rate.

1 Q. Well, do you not consider that it is necessary, if it is narrowed

2 down, if the economic environment is so narrowed down to the extent to

3 which daily some 12 million people are struggling for their survival, for

4 mere existence, on a market which has been restricted under sanctions

5 where it has been closed off by sanctions, that full cooperation is

6 necessary to service the limited possibilities that the economy has and

7 that is functioning under quite impossible circumstances and conditions?

8 Is that clear to you? And where is the problem if the central banks

9 cooperate amongst themselves? Is it a crime?

10 A. I'm not saying that it is a problem at all, and I'm not saying

11 that it is directly a crime either. But it depend on what this financial

12 assistance facilitates, and it ultimately facilitated the financing of the

13 RS army and also the RSK army.

14 Q. Mr. Torkildsen, I assume you know as well that apart from the

15 army, the Republika Srpska and RSK have their educational system, they

16 have their health system and health service, its public services. It has

17 their -- its pension funds and intervention for social allotments for

18 refugees and so on and so forth. And for a series of other things that

19 every state or even every municipality, if you will, must needs have. So

20 how can you boil that down to the army alone? Well, the people over

21 thereby the people living over there, so many people. They didn't only

22 have military needs. Military needs in that respect were the least of

23 their needs because they had too many arms, too much weapons, especially

24 in this area.

25 So why are you forgetting about the all the other needs that the

1 budget has to provide for?

2 A. I'm not forgetting about them, but it is a fact that the major

3 part of the budgets went to the army. And that can be demonstrated by

4 documents. And I don't think that's in dispute.

5 Q. Well, it's always -- the budget always sets aside the largest

6 portion for the army, for example. But you're losing from sight the fact

7 that Yugoslavia has two republics, Serbia and Montenegro, and that in the

8 budget of Yugoslavia, which is financed by Serbia and Montenegro, the

9 largest portion is set aside for the army. And within the budget of the

10 Republic of Serbia, and the Republic of Montenegro and the budget of

11 Serbia is bigger than the federal budget, there's not a single dinar

12 earmarked for the army. All the other needs are catered to.

13 So do you have any idea that when you look at the general public

14 and joint consumption picture that you must bear in mind the sum total of

15 all these parts of the budget, not only that portion financed from the

16 budget. The army is financed by the budget of Federal Republic of

17 Yugoslavia because there's only one army. But the army is not financed

18 from the budgets of either Serbia or Montenegro.

19 JUDGE MAY: I've stopped -- I've stopped you, Mr. Milosevic.

20 You're supposed to be asking questions, not making speeches.

21 What is the question?

22 MR. MILOSEVIC: [Interpretation]

23 Q. Is it clear to you that when we're talking about Yugoslavia, the

24 army is financed from the federal budget?

25 A. Yes, that is clear to me.

1 Q. And is it also clear to you, for example, that the health service

2 and education is not financed from the federal budget?

3 A. Then I would have to look at the actual budgets again, but I would

4 assume that you're correct there. I haven't seen anything to contradict

5 that.

6 Q. So as we said, the health service, education, public services,

7 pension funds, and many other things are financed at the level of the

8 republics. Is that something you're aware of?

9 A. Again, I'm -- I'm just assuming that what you are saying is

10 correct and -- I'm absolutely sure that the economic and financial

11 sacrifices made by the Republic of Serbia in supporting the RSK and the RS

12 with the humanitarian aid and so on were great, and I got no reason not to

13 believe that that was not the case.

14 Q. But, Mr. Torkildsen, I assume you are also bearing in mind the

15 hundreds of thousands of refugees that Serbia took in based on the

16 principle of non-discrimination and it took them in from all parts of

17 Yugoslavia, which is also that invisible aspect and portion which requires

18 an enormous amount of funds to be secured to cater to the needs of those

19 refugees in addition to the everything else. And not only in the

20 Republika and the RSK but hundreds of thousands are in Serbia. So apart

21 from this humanitarian aid this humanitarian aid would come under this

22 heading too. Right? Are you bearing all that in mind?

23 A. To me that sound like a fair assumption. I got no detailed

24 knowledge about the humanitarian aid provided, but I with just assume it

25 must have been great and representing enormous amounts of money and

1 ultimately sacrifices made by the Serbian people.

2 Q. The Serbian people in Serbia and the inhabitants of Serbia of

3 non-Serb origin, that is people of all the ethnic groups, have taken upon

4 themselves an enormous burden to help the RS and the RSK. Did you delve

5 into an analysis of those facts at all? Who else could have helped them?

6 A. I have not conducted an analysis of that. And as you are

7 correctly pointing out, who else could have helped them? I don't think

8 there was anybody else to help them than the Republic of Serbia and or the

9 FRY.

10 Q. Therefore, what is it we're talking about? And secondly,

11 Mr. Torkildsen, I have gain the impression that an atmosphere is being

12 promoted here where there seems to be some sort of secret with respect to

13 the assistance we gave to the RS and RSK. You have an exhibit here.

14 I apologise, Mr. May, but I can't see the number. It's been taken

15 out of a binder, but page number is 00435081. And it is a photocopy, in

16 fact, of the Official Gazette of the Republika Srpska Krajina, number 3,

17 page 205, Tuesday the 25th of April, 1993, is the date. It's your

18 exhibit, but it has -- it's come out of my tab, so I can't give you the

19 tab number. I just have the page number, 00435081. It is the Official

20 Gazette of the RSK. And that is a public document that is printed, is

21 published, and is available to one and all.

22 And this is what it states: "Decision" --

23 JUDGE MAY: [Previous translation continues]...

24 MR. MILOSEVIC: [Interpretation]

25 Q. "Decision on allocation of funds for financing." It is the

1 English translation. The RSK in the period from January until June 1993.

2 2004356130043/5688. Those are your -- that is your numbering. OTP team

3 5, 1 and 2, et cetera.

4 And when it says is the following: "Decision on the distribution

5 of the resources for financing --

6 JUDGE MAY: [Previous translation continues]...

7 MR. NICE: Give me one minute.

8 JUDGE MAY: Go on, Mr. Milosevic, while we're looking for it.

9 Just read out what it is you want to put.

10 THE ACCUSED: [Interpretation] Well, let me read it out. They're

11 your documents, so there is nothing there that is in dispute.

12 It says: "The funds to finance the competencies of the RSK," the

13 amount doesn't matter, "shall be ensured" and then it has a colon, "from

14 the source funds of the Republika Srpska Krajina to the total amount of

15 such-and-such." And then the next point states: "From additional funds

16 of the Federal Republic of Yugoslavia, in areas under UN protection," and

17 the amounts are stipulated.

18 JUDGE MAY: We're told it's 64. 20th of April, 1993.

19 THE ACCUSED: [Interpretation] Mr. May, the point is as follows,

20 not to waste time, the point is this, Mr. May: This Official Gazette is a

21 publish document, and it publicly states that from additional funds of the

22 Federal Republic of Yugoslavia are used to finance, et cetera. And then

23 the other points, once again relying on the funds of the Federal Republic

24 of Yugoslavia, the credits of the national -- from the National Bank of

25 Yugoslavia, because having a credit from the National Bank of Yugoslavia

1 was in part, I suppose, supported by the National Bank of Yugoslavia,

2 credits from the National Bank.

3 MR. MILOSEVIC: [Interpretation]

4 Q. So why do certain aspects of assistance to the RS and RSK seem to

5 be made a mystery of, as if we're dealing with some sort of discovery, the

6 discovery of some secret facts which are public knowledge?

7 A. Yes. I think this is a very interesting document, as the accused

8 is pointing out. It is stated here that a large proportion of the budget

9 is obtained from additional funds of the Federal Republic of Yugoslavia.

10 And also as he's pointing out, an even larger amount is actually

11 originating from credits here, being a different word for primary

12 emissions, again originating from the National Bank of Yugoslavia. And,

13 basically, if you add these two figures, you will see that more than 90

14 per cent of the total proposed budget was financed from the Federal

15 Republic of Yugoslavia. And looking at -- it is suggested what this is

16 going to be spent on. It is a breakdown on the second page of the

17 translation here, where we can see that the two-thirds of --

18 JUDGE MAY: [Previous translation continues]...

19 THE WITNESS: -- This proposed budget, the expenditure would be

20 for education and self-protection and a part of that would be the funds

21 for military salaries, comprising about one-third of the total budget

22 ultimately provided by the FRY.

23 JUDGE KWON: But the question was it was made public at the time.

24 THE WITNESS: Yes. It was made public, yes.

25 MR. MILOSEVIC: [Interpretation]

1 Q. Why then this mystification, Mr. Torkildsen, as just we're

2 uncovering what the papers say on the 20th of April, 1993? Do you have

3 the need to uncover or discover anything that has been common knowledge

4 for anybody who wanted to read about it in the papers, for example?

5 A. If we are talking about anything being a secret, then we would

6 have to go to the item concerning National Bank credits, which actually

7 financed about two-thirds of this budget. Because the right way that I

8 have understood this, and I'm absolutely sure that this is correct, is

9 that the National Bank credits you're talking about here, they are here

10 referring to National Bank credits from the National Bank of Republika

11 Srpska Krajina. But this would again ultimately originate from the

12 National Bank of Yugoslavia. And that is not straightforward clear from

13 the document that these credits originate from the National Bank of

14 Yugoslavia.

15 Q. All right. Fine, Mr. Torkildsen. Let's -- I'm really interested

16 in this. I'm really interested in hearing your professional expert

17 opinion. It's not in the document because they are referring to their own

18 National Bank.

19 And let me add that most probably the National Bank of the

20 Republ