In articles dealing with the 2002 presidential election in Serbia, I have made passing references to Zoran Djindjic as “Serbia’s kleptocratic prime minister” and to his “corrupt establishment” that “controls the economy and the media more stringently than Milosevic had ever done.”  While such designations would be considered unremarkable by most of Serbia’s impoverished and disheartened people, they raised an eyebrow or two among some foreign Yugoslavia-watchers who still believe that Mr. Djindjic is a “pro-Western, reformist” politician whose program of privatization may prove pain-ful at first but will eventually lead Serbia to prosperity and a free-market system.

That is wishful thinking.  Mr. Djindjic, his privatization minister Aleksandar Vlahovic, and about a dozen members of their inner coterie are in the process of turning Serbia’s state industries into their own private assets by means that would be considered criminal in most Western countries.  Take the announcement by Mr. Vlahovic last October that the Zastava car factory in Kragujevac would be sold to an American buyer.  According to Reuters,

Zastava became well-known as producer of the cheap-and-cheerful Yugo hatchback in the 1980s but was crippled by international sanctions and bombed by NATO during the turmoil that engulfed the Balkans in the 1990s.  Vlahovic said the joint venture with New Jersey based NUCARCO, backed by a group of investors headed by New York investment bank Kaupthing Securities Inc, would raise monthly production from 1,200 vehicles now to 10,000 over three years.  NUCARCO Inc. is headed by Malcolm Bricklin, who brought the Yugo to the U.S. market in the 1980s.  Vlahovic said the joint venture would be called Zastava Motor Works ZMW.  NUCARCO would own 80 percent, undertaking to invest a minimum of $150 million over three years to upgrade technological standards and existing brands and to initiate development of new models.

The questions connected with this story are not immediately apparent to most; for those of us who instinctively reach for our wallets when the name of Mr. Vlahovic is mentioned, however, they come naturally.

According to the Department of Revenue in Trenton, no company by the name of “NUCARCO” is registered in New Jersey.  In a telephone interview, Mr. Malcolm Bricklin tried to assure me that the company does exist, as the umbrella group for Zastava Motor Works USA, but there is no proof so far.

Moreover, Mr. Bricklin—for all of his upbeat talk of “returning job security and a sense of pride to Serbian workers”—refused to disclose any details about the company’s ownership and management structure, personnel, or present capitalization.

The same air of mystery applies to Zastava Motor Works USA, which, at one time, had a shell of a website ( displaying silhouettes and pictures of Zastava cars with no accompanying text or functioning links.  (The website has since disappeared.)  Mr. Bricklin says that the company does have a mission statement and a business plan, but he refused to disclose any information.  He told me that all further inquiries should be addressed to the Serbian government, as he is not at liberty to discuss such issues without approval from Belgrade.

Kaupthing Securities Inc. turns out to be a securities-trading subsidiary of Kaupthing, an Icelandic bank, which, in addition to its corporate headquarters in Reykjavik, also has offices in Copenhagen, the Faroe Islands, Helsinki, Luxembourg, and Switzerland.  According to the bank’s statement for the first half of 2002, “The operations of overseas associate companies and subsidiaries returned a profit of less than ISK 1 million” (less than $15,000 at current exchange rates).

The firm’s website ( and its newsletter make no mention of Kaupthing’s participation in any deal concerning Zastava, NUCARCO, or Serbia.  In a telephone interview, a representative for Kaupthing told me that the com–pany will be retained by NUCARCO, but neither he nor Mr. Bricklin wanted to disclose how they intended to raise substantial liquidity, except to indicate that there would be no IPO for at least three years and that foreign providers of financial assistance to Serbia are expected to chip in.

Mr. Bricklin’s name raises many eyebrows in the automotive industry.  A column in the Detroit News, “Bricklin redux: Another one of Malcolm’s bright ideas” (May 1, 2002) illustrates his reputation:

Omigosh, Malcolm Bricklin is at it again . . . He’s hooked up with his old pals at Serbian automaker Zastava, the former manufacturer of the late and largely unlamented Yugo, to bring another low-priced automobile from the region to lucky North American consumers. . . . I can’t help but wonder if he’d have better luck in trying to rebuild the Serbian film industry.

First, some history.  When Bricklin dropped out of university in 1958, he established a building-supplies business in Orlando and franchised Handyman Hard-ware, which reached a peak of 18 stores.  Then the lawsuits started; by the time he was 25, his name was on half a dozen of them.  In 1971, however, he made a fresh start and formed two car companies, General Vehicle Inc. and Bricklin Vehicle Corporation.  By late 1972, he had a prototype for an inexpensive sports car, with gull-wing doors—like the later DeLorean’s—and started looking for investors to finance it and a plant to manufacture it.  After failed negotiations with the government of Quebec, he went to New Brunswick, where he garnered $20 million in Canadian taxpayer funds.  As Bricklin’s biographer, Charlie Russell, recalls:

The New Brunswick government had provided financing of $4.5 million for Bricklin’s car.  The money had been advanced on the assumption that Bricklin needed the initial financing to begin the production of cars.  By the time the New Brunswick government discovered its error, it would have paid for the engineering and development of Bricklin’s car.  By that time, it would also be paying many of the costs, including salaries, of keeping Bricklin’s U.S. companies in operation.

Over the next three years, only 2,854 Bricklins were produced, but when Bricklin Canada Ltd. and General Vehicles Ltd. filed for bankruptcy, the companies owed a total of $34.6 million, which makes Bricklins second only to DeLoreans in cost per unit.  In 1976, Mr. Bricklin filed for bankruptcy with a U.S. district court in Phoenix, declaring personal assets of $2,000 against debts of over $32 million.

In the aftermath of the Canadian fiasco, it was argued that “Malcolm Bricklin’s flagrant nepotism alone would have been reason enough for a prudent business operator to call a halt”: His mother had been paid $30,000 per year as vice president; his father, $60,000 a year as head of “cost reduction.”  He took care of his family, while New Brunswick’s premier took care of him—and nobody took care of the interests of the taxpayers.

The subsequent Yugo episode is remembered chiefly for cruel jokes.  (“How do you double the value of a Yugo?  Fill up the gas tank.”)  Mr. Bricklin blamed the fiasco on poor quality and Yugoslavia’s implosion, but the company went belly-up before the first shots were fired in the Balkans.  Then, in 1993, the indefatigable Malcolm Bricklin and two other entrepreneurs formed the Electric Bicycle Company and developed a battery-powered moped called the EV Warrior.  That company went bankrupt in 1997, just as interest in electric mopeds seemed about to take off.

Malcolm Bricklin then undertook yet another high-risk automotive venture—this time, manufacturing fuel cells.  In 1998, Bricklin’s EVX Inc. signed an agreement with British fuel-cell maker Zevco to open a pilot plant in New York City to replace internal combustion engines with Zevco fuel-cell engines.

Mr. Bricklin’s record would be enough to warrant a painstaking and very open investigation of the proposed Zastava deal.  Any prudent investor would want to see some tangible evidence that Bricklin had learned from his many mistakes before plunging into a deal that is not at least evenly matched by Bricklin’s personal funds.  Considering the track record of Djindjic, Vlahovic, et al., this deal could spell big trouble for Zastava’s long-suffering workers, for Serbia’s impoverished citizens whose taxes built the factory in the first place, and for any entity rash enough to provide the start-up capital.

My article disclosing all of the above was published in the Belgrade daily Glas javnosti on October 18, 2002, and it caused an immediate sensation.  The following day, a Saturday, the Zastava Works’ Independent Union Council held an emergency session and demanded a meet-ing with Minister Vlahovic.  Kostunica’s Democratic Party of Serbia called for an immediate moratorium on the proposed sale and an investigation.  The following Monday, Vlahovic retracted his earlier announcement and explained that the proposed deal had not gone beyond the letter of intent and that his government would gladly consider other partners if they could be found.  His ministry further announced that the proposed deal would be subject to Bricklin’s ability to produce ready cash.

The shady privatizers’ lives may have been made a little more difficult by the controversy, but they will not give up: A lot of money is at stake.  According to a local source, “Whoever is trying to ‘privatize’ Zastava using Bricklin as a front—and several prominent names from Serbia’s new political and business elite are mentioned, including the veteran wheeling-dealing businessman from the old communist era Milorad Savicevic—he is bound to try again.”  This was evidenced by Bricklin’s hastily organized visit to Serbia in November, during which he acted and spoke as if the deal had been signed and sealed.

For the conclusion of this particular saga, you will have to look elsewhere.  Having been warned to “stop poking my nose into matters that are none of my business,” I will go back to foreign affairs.  In Belgrade, there have been over 50
unsolved murders in the past five years.  Even writing about Islam is safer.