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Eastern Europe's private armies

Separating "protection" from "corruption" in European private security companies.

A member of the Serbian security forces stands guard during a search of Ratko Mladic's home in Belgrade on Feb. 23. Serbia's private security industry has blossomed, providing a thin veneer of legitimacy for a range of criminal activities. (Andrej Isakovic/Getty Images)

GRAZ, Austria — Private security companies have flourished in southeastern Europe, filling a void left by the dismantling of communist institutions. But weak oversight has meant that they are as often linked with crime as with its prevention.

The sector's longest and most troubled history is in Bulgaria. The early 1990s saw over 100,000 military and police personnel put out of work, providing a ready and affordable source of manpower with which to establish a power base during a rocky transition from communism.

Bulgaria's prime minister since July last year, Boyko Borisov, a black belt in karate, was among the success stories, founding a private security company called Ipon-1 in 1991, although he has since relinquished ownership.

The havoc brought by Bulgaria's private security boom came to a head in the mid-1990s, but even now, after three years in the EU, links between private security companies, crime and the murkier areas of de facto power are staples of the local media.

Around 57,000 people, nearly all men, are officially employed by the sector according to the National Social Security Institute, 40 percent more than there are troops in the army. Tens of thousands more work on a casual basis, with the informal economy estimated to account for around 20 percent of the GDP.

The sector is repeatedly linked to dark dealings by the local media, though there has been no systematic evaluation of its impact across the region since a U.N.-sponsored report was released in 2005. The report, titled "A Cause or Effect of Insecurity?" expressed "significant concern" about cases of "improper criminal, political or paramilitary affiliations" and the "improper use of force in individual cases." The employment of former police personnel also raised fears that "illegal activities go unpunished," according to the report. 

In ethnically-divided Bosnia, meanwhile, the regionalised system of regulation was blamed for discouraging the formation of multi-ethnic companies. On the surface, little appears to have improved since then.

Changes to Bulgarian law put a stop to security companies offering debt collection and "insurance" services, said Ivan Ivanov, director of the National Association of Security Companies. "The law prohibits private security companies from being involved."

And the cleaned-up industry, he said, is ready to offer itself for inspection.

“Light is the best kind of disinfectant," he said.

He said his association bars membership to those with "any kind of unclear business in the past or insufficiently good reputation."

Beyond Ivanov's association, however, he admits the Interior Ministry's licensing regime "does not mean there is no risk of criminal elements entering the business."

Others have graver doubts about how far the Bulgarian private security sector has come in cleaning up its act, despite the new regulations. Costel Iordache, who heads Swedish security company Securitas in Romania, said: "It is too much of a risk to be there. There are too many companies paying black [off the books] contracts where you have to pay a 'commission.' It is the same in Romania, but not 100 percent of the market."

Ivanov, however, takes issue with the idea that corruption can be described as "widespread," adding that local companies face the same barrier as foreign rivals. But does the prime minister's background in the business make it easier  for the industry to thrive?

"No special status is given to the security industry despite Prime Minister Borisov's background, believe me," Ivanov said. "This is not only the case now, but also when he was the head of the Ministry of Interior. Private security is not a main priority or the main problem of the Bulgarian government or society."

In Serbia, the notorious paramilitary leader Zeljko Raznatovic, known as "Arkan," set the pattern for what would happen once the armies and police forces were downsized after the Yugoslav conflicts ended, running a security company involved in the trafficking of drugs and assassination. Arkan was himself killed in 2000 in the lobby of Belgrade's elite InterContinental Hotel by an assassin with underworld connections.

Since then, with no regulation in place, Serbia's private security industry has blossomed, providing a thin veneer of legitimacy for a range of criminal activities.

Regulation is still months, possibly years, away, but the Serbian security industry has improved thanks to better coordination with the police, said Djordje Vucinic, who heads the manned guarding group in the Serbian Chamber of Commerce.