¹⁹⁰⁵⁰

Friday, 11 April 2003

[Open session]

[The accused entered court]

[The witness entered court]

--- Upon commencing at 9.18 a.m.

JUDGE MAY: We note that we are another quarter of an hour late in starting. The reason being the late delivery of the accused here, the second time this week. Those who are responsible should bear in mind that they have a responsibility to the International Community. If this continues, the trial will take longer to finish. We will order the Registry to make a report to us to be copied to the Registrar, to the President of the Tribunal, and to the relevant authorities who are responsible for these delays. Yes, Mr. Nice.

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

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

WITNESS: MORTEN TORKILDSEN [Resumed]

THE ACCUSED: [Interpretation] First of all, let me just add to what you said a moment ago, Mr. May, that I was informed this morning that I would be leaving at 8.00, and I've been waiting and ready since 8.00. Cross-examined by Mr. Milosevic: [Continued]

Q. [Interpretation] Mr. Torkildsen, may we just dwell for a brief moment on a question asked by Mr. Robinson, and that's where we left off yesterday. As far as I made a note of it, what he asked you was whether you had compared the assistance in 1985, for example, or some previous ¹⁹⁰⁵¹ years, what assistance was given, and your answer was that those entities did not exist at all, so therefore, there was no assistance. Did I understand you correctly?

A. Yes. Partly those entities did not exist, and therefore, I could not make an analysis of any contributions paid to those entities. I know from what I have read that there were some assistance from the SFRY budget to certain areas within the SFRY.

Q. Well, that's what it's all about. This question is completely justified, the question raised by -- the question that was raised. Do you know that there was a fund of the federation for the development of the underdeveloped regions? Are you aware of that? And it had been in existence for decades in the SFRY.

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

Q. And do you happen to know, furthermore, that the whole of Bosnia and Herzegovina was considered to be insufficiently developed, an insufficiently developed region of the SFRY along with certain others?

A. I do not know any details about what regions were considered to be underdeveloped, no.

Q. So you don't know that Bosnia-Herzegovina, as a whole, was considered insufficiently developed and that it was the recipient of aid and assistance, additional assistance for its development. Now, do you know that the fund of the federation for support to the insufficiently developed regions of the SFRY was first set up, and it was financed 50 per cent by the resources and income of Serbia, by Serbia's revenues? ¹⁹⁰⁵²

A. I have no knowledge about this.

Q. Do you think that if one were to compare the resources which the Republic of Serbia through the Federal Republic of Yugoslavia allotted and paid into the fund for assistance to the insufficiently developed parts of Yugoslavia, if you were to consider those resources with the monies it set aside generally in what you are investigating, that this would be a significant piece of information and portion?

A. Basically I do not know. I mean, my mandate when I wrote this report was to look into whether there were any financial and other assistance given by the Republic of Serbia and the FRY to the Serb-controlled districts in Croatia and in Bosnia and Herzegovina.

Q. Under UN control. Now, tell me this, please: As I see here on page 4 -- actually, I received this only in English yesterday. It's your report, actually.

JUDGE MAY: Well, Mr. Milosevic, I'm going to interrupt because you've put it on the record. You've had this document since November last year. So in case it's said hereafter that you haven't been supplied with documents in time, you most certainly have been. Yes, but continue.

THE ACCUSED: [Interpretation] I'm telling you how matters stand, the fact of the matter. Now, whether the 400.000 pages that I was given included this document here, I couldn't say, Mr. May.

JUDGE MAY: But it's been made clear to you that this witness was going to give evidence. We've had argument about the admissibility of that evidence. We've ruled on it. So you've had plenty of notice, and it's not to be said by you that you haven't had notice that this witness ¹⁹⁰⁵³ was going to give evidence and what it was to be. Yes, let us continue.

THE ACCUSED: [Interpretation] All right. Very well, Mr. May. I just wanted this to be entered into the record, what I've just said, but let's move on. And I don't mind for purposes of cross-examination. It just gives me a few more problems.

MR. MILOSEVIC: [Interpretation]

Q. You say on page 4, point 15, paragraph 15, you're quoting Ratko Mladic and you state the following: [In English] "Stated in a report in December 1992 that," [Interpretation] Then you go into quote [In English] "'Our army is one of the rare ones in history to have started a liberation war with a very solid material base especially as concerns combat hardware, ammunition, and food reserves.'" [Interpretation] And then you quote the exhibit number. Then you add the following: "Mladic's remark is supported by a written statement made by Milosevic concerning the assistance provided to the armies of the RS and RSK."

And then you speak about my complaints with regard to detention, with regard to some sort of construed indictment, but in fact so that I should be handed over to The Hague.

But as you have read through all these documents, Mr. Torkildsen, do you happen to remember, and if you don't I'll help you and show you, that those alleged accusations or, rather, as they said doubts and suspicions that the resources of the federal customs reserves were being used illegally, that this could have applied just to the period after 1995 from all the material and documents you had available that the Trial ¹⁹⁰⁵⁴ Chamber rejected, but you did highlight this and place it in your report to support the correctness of what Mladic says and link this up to the support that I allegedly provided in this way and expressed, actually, expressed, not provided, expressed in this way.

So do you remember in those documents it was the period from 1995 onwards exclusively that was mentioned?

A. You're referring to the period when Mr. Kertes was the head of the customs of the FRY, that was in the period 1994 until 2000, something, if I remember correctly. That is correct, yes.

Q. Well, Mr. Torkildsen, I'm thinking about the period to which this written complaint of mine refers for the unfounded detention. So that's the period that I mean, the period you've just stated. Isn't that right?

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

Q. Well, I assume I was thinking about the reasons for which I was unfoundedly thought to be the culprit on the basis of the statement you made, and it refers to the 1995 period of time, and it says that it deals with 1995 onwards.

JUDGE MAY: I don't know that the witness can help about this, as to what you were referring to. That's not for him to say. But I do notice from a statement which you made, which is our Exhibit 427, tab 3, to the investigating judge that you referred to an investigation against you because it's said you incited officials of the government to work against the law in order to gain benefit for others in the period, it says, from 1994 to the 5th of October, 2000. So we've got that point. I ¹⁹⁰⁵⁵ don't think there's much point asking the witness any more about that. You can give evidence about it, of course, in due course if you want. Don't interrupt.

THE ACCUSED: [Interpretation] Yes. But what I'm asking him is in connection to what he says. "Mladic's remark is supported by a written statement made by Milosevic concerning assistance provided to the armies of the RS and RSK." And that refers precisely to the period of time that you've just read out, that is to say, after 1995.

JUDGE MAY: The question -- the question isn't clear. You ask questions in a way which is not clear for a witness. What he seems to be putting, Mr. Torkildsen, is this: He's putting your paragraph 15 as to Mladic's remark made in a report in 1992 that their army started the liberation war with a very solid material base. That we have in our tab 2. And then you say that remark is supported by the written statement made by Milosevic concerning assistance provided to the armies of the RS and RSK. Perhaps you can tell us what it is that you were referring to when you made that comment.

THE WITNESS: I think what is said by the accused in his appeal to his detention do actually support this. To me it's not exactly clear that he only refers to period covered by the domestic investigation, which is, as far as I know, correctly in the period 1994 until 2000, because he's also making a reference to the RSK army here, and as far as I know, that ceased to exist sometime in 1995.

JUDGE MAY: I think it best if we get the document in front of us so that we could follow the point. ¹⁹⁰⁵⁶ Have you got a copy, Mr. Torkildsen, of your documents?

THE WITNESS: No.

JUDGE MAY: You should have. Right. You should have our tab 2 which is headed "Statement of reasons for the investigating judge of the district court in Belgrade appeal." I'm sorry, it's tab 3. Tab 3, quite right.

Let the witness, for the moment, have it in front of him, please. You have the document, do you, Mr. Torkildsen? If you look at the second page --

THE WITNESS: Yes.

JUDGE MAY: First paragraph or the second paragraph as regards the resources. Do you have that?

THE WITNESS: Yes, I do.

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

THE WITNESS: "As regards the resources spent for weapons, ammunition, and other needs of the army of Republika Srpska and the Republic of Serbian Krajina, these expenditures constituted a state secret and because of state interests could not be indicated in the law on the budget which is a public document. The same applies to the expenditure incurred by providing equipment from a needle to an anchor for the security forces and special anti-terrorist forces in particular from light weapons and equipment to helicopters and other weapons which still remain where they are today. And this was not made public because it was a state secret, as was everything else that was provided for the army of Republika Srpska. In my opinion, these matters could not -- these matters should ¹⁹⁰⁵⁷ still constitute a state secret but court organs can certainly look into them. These anti-terrorist forces today still carry the heavy burden of security-related tasks in the south of Serbia."

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

MR. MILOSEVIC: [Interpretation]

Q. Yes, but the essence here, Mr. Torkildsen, to make matters simple, is that the son can't be older than the father. If we're dealing with matters here that you have described and date back to 1995 or, rather, date from 1995 onwards, and Kertes became the director of the customs administration in 1994, you can't place that in the context of Mladic's statement made in 1992. It is absolutely untenable that something that took place three years later can serve as evidence and proof of a statement that was given in 1992 as to the situation that prevailed.

JUDGE MAY: Would you kindly make the point. You've heard the statement read out that you've made regarding the resources spent for weapons, ammunition, and other needs of the army of Republika Srpska and the Republic of Serbian Krajina. Now, you're referring to those. Now, it's quite unclear what point you're trying to make. It's your statement, you see, about these things.

THE ACCUSED: [Interpretation] Well, the point is that Mladic made this statement in 1992, and Mr. Torkildsen's statement, it says Mladic's remark is supported by a written statement by Milosevic, whereas my written statement or, rather, my appeal relates to the subject that had to do with 1995, 1996, the case in 1995, 1996, 1997, and 1998. So it's the cart before the horse. How can the witness place that as a function of ¹⁹⁰⁵⁸ support to this attitude?

JUDGE MAY: I don't think there's very much more point going on. We've heard your reference to these events in terms. The fact that the investigation was about something else doesn't matter. Yes.

JUDGE KWON: Mr. Torkildsen, if you can read the second paragraph -- the first page of this accused's statement. It refers to the -- some certain period of time, from 1994 to 2000. Is that related, what the accused is currently saying?

THE WITNESS: Your Honour, I understand that his -- the domestic investigation against the accused covered this period. That is correct. If I can also make one more comment regarding this second paragraph on the second page. It is also mentioned that this was a state secret, that it could not be mentioned on the law on the budget. And as I have analysed all these budgets and looked at them, I can't find anything in the budgets regarding the support to the two armies mentioned here. And that also fits in with what the accused is saying here.

[Trial Chamber confers]

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

MR. MILOSEVIC: [Interpretation]

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

JUDGE MAY: Well, it's clear to us, but no doubt you can address some argument on it. Now, let's move on and deal with another topic.

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

MR. MILOSEVIC: [Interpretation]

Q. Mr. Torkildsen, you used, on pages 6 and 7, I think, in what is ¹⁹⁰⁵⁹ again a very distorted light the meeting of the Presidency of the SFRY to which the presidents of the republic were invited to attend, and you state in paragraph 19 and in this report of yours, I -- and it was sent from your side, the complete minutes from that particular meeting, and you say in addition exhibit so-and-so forth, [In English] "Transcript of the SFRY Presidency meeting held on 21 August 1991, contains a discussion about the lack of revenue in the SFRY budget and the financing of the JNA. The president of SIV," that is federal government, "Ante Markovic was opposed to use primary issues for financing the federal budget. Slobodan Milosevic, in contrast, raises no objections to making money available through primary issues. Milosevic said that the National Bank of Yugoslavia should continue to carry out the decisions of the ... Assembly rather than the decisions of the federal government. He explained inter alia..."

[Interpretation] And then inter alia you say that he explained -- he explained inter alia, you say, and then you link that up with my efforts to have from the primary issues to finance the army, which is a complete untruth, and this can be seen from the minutes of that meeting, and I'm going to prove this to you now by asking you questions, of course.

You have the minutes, and you attached them. You quote them. Therefore -- actually, I'm very grateful for having received the minutes, because I myself can't obtain Yugoslav documents. I see that you can. So I'm very grateful to you for that because there are some very useful things in it. ¹⁹⁰⁶⁰ Do you see, for example, Mr. Torkildsen, that in the minutes here --

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

MR. MILOSEVIC: [Interpretation]

Q. It is C4274, Exhibit 4274, C4274, and it is the transcript of the minutes in its entirety from the Yugoslav state Presidency meeting. The discussion that was held relates to primarily the economic situation in the country and even -- let me just find it. I'm going to show you this in just a moment. In the introductory address that was made on page 201 of this original minutes transcript, in the introductory address made by the prime minister, in fact, the chairman of the meeting was Stjepan Mesic, the president of the Yugoslav state Presidency of the day, also from Croatia.

On page 201, then, Markovic is talking about the economic problems, credit arrangements, and so on and so forth, measures of economic policy, and so on. And then he emphasis that there's nothing written here about defence, actually. That's at the end of the central paragraph on page 201.

So he, too, emphasis that it has nothing to do with defence here. Now, as you have quoted me, this will be like my speech in Kosovo Polje for which I am grateful to you too, Mr. May. I mean, I'm grateful to the other side over there, the opposing side. So I'm going to ask you whether you've read it. Have you read it?

JUDGE MAY: Do you know what he's referring to? I think it's -- are you referring to the speech or the minutes? ¹⁹⁰⁶¹

THE ACCUSED: [Interpretation] I am speaking exclusively about the transcript of the minutes that I have been provided with. They are the minutes from the 21st of August, Yugoslav state Presidency meeting, precisely the same ones mentioned by the witness. And he says Exhibit 4274, transcript of the Yugoslav state Presidency meeting held on the 21st of August.

THE WITNESS: I have read the parts of the minutes that's been translated into English. I have not read the parts that's not been translated, naturally. As far as I know, not the whole document has been translated into English.

MR. MILOSEVIC: [Interpretation]

Q. That's your problem. That's not my problem. Because you are distorting matters here, matters that I did not speak about. I didn't speak about the financing of the army of any kind, and here we have the transcript in its entirety.

Now, have you read -- first of all, I say that I agree with Gligorov. I use his first name and say Kiro and it is Kiro Gligorov that he is right in what he said, and that I agree with what he sets forward. That agreements need to be reached on economic and social measures and the function of Yugoslav organs, et cetera --

JUDGE MAY: I'm going to interrupt you so that we can all follow. This is on our page -- again, we haven't got very satisfactory numbering. The best page, I think, would be the registry page which is small and at the top, and it's page 17612. It's about seven or eight pages in. 17612. Can you find that, Mr. Torkildsen? There's a speech by the ^{19062 BLANK PAGE 19063} accused.

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

JUDGE MAY: I think there's no sense in wasting time. "Kiro is very rationally said here," it begins. Yes. We now have it, Mr. Milosevic.

THE ACCUSED: [Interpretation] Fine, because this is a very good transcript. So I speak on one occasion. I take the floor once, and I make several comments on subsequent occasion. I say that I support Kiro - who is the president of Macedonia, Kiro Gligorov - and I say that agreement is needed on the minimum economic and social measures for the functioning of Yugoslav organs and institutions. And furthermore, I state in the next paragraph there is no need for us to view the damages, how far the damages are. They are enormous and there is no dilemma as to whether this serves anybody's advantage. It serves no one. There is no dilemma whether anybody has been spared these difficulties. Do we have reason to ensure free trade, something that is elementary and the evolvement of normal financial transactions for these damages to be lessened as far as possible, and some necessary codes of conduct be set which will be beneficial to one and all. And here I come out in favour of economic and social measures. That's what we talk about. And I say I would rather be prone to have the federal government to focus, narrow down its focus. In this central paragraph I go on to say and you can see, it is 232, my number, for the Federal Executive Council to focus on the main economic and social issues and clear up the functioning of the organs of the federation prior to ¹⁹⁰⁶⁴ that, that is to say the Assembly, the Presidency, and the federal government.

Then I go on to say that I don't share the opinion of the president of the federal parliament who in those days was also from Serbia and who was highly respected and reputed politician and economist, and I say I don't share his opinion that it goes into excessive detail. That is, I'm referring to the proposal of the federal government. On the contrary. I believe that the federal government should provide a precise programme of measures of a social and economic nature, et cetera. And I say that this should be the gist of the agreement, and you'll find that further down, that is, the question of economic and social measures. And then I go on to say without any excessive criticism. On the contrary, my intention is by my questions to contribute to the federal government which was headed by Mr. Ante Markovic. I am presenting a few ideas of mine which are of a critical nature.

So even if you now consider them wrong, please prove me wrong. And I make certain comments regarding the functioning of the monetary and foreign exchange system contained in the document that is being proposed, and I say the thesis that primary issue will be done on the open market to finance the federal budget and through monetarisation of economic development through foreign countries. I say that is unrealistic because by the end of the year, the balance of payments will be unfavourable. And then I add that Pelivan is right, who is the prime minister of Bosnia and Herzegovina. He is qualified.

JUDGE MAY: I'm going to interrupt you so we can follow this. ¹⁹⁰⁶⁵ Mr. Torkildsen, this is on page 17611, if you haven't got it. It's the main paragraph. Now, it's time we came to a question. You've been reading matters for some time. What is the point you're trying to make?

THE ACCUSED: [Interpretation] I am trying to make the point that this is a discussion regarding economic and monetary policies, because I also mention Pelivan who used to be governor of the bank, and I say that he is a professional in the area as well as I am, because the creation of money through foreign exchange transactions will not be done. On the contrary, money will be withdrawn and this will affect primary mission. This is as clear as two plus two equals four. Operations on the open market will not provide results regarding the moratorium because it will -- the funds will mostly be used for for the federal budget. I go on to say that I draw attention to this with the wish that the federal executive council --

JUDGE MAY: You're cross-examining here. Now, Mr. Torkildsen, can you assist us as to this speech as all? The accused is obviously relying on it. He's saying that this contained his attitude about primary issues.

THE WITNESS: Well, basically I don't really have any comment. The bottom line there is that they are discussing the SFRY budget, and as what is stayed by Mr. Ante Markovic here as well is that the budget is actually the army, because most of the budget will go to the army.

MR. MILOSEVIC: [Interpretation]

Q. I quoted Markovic at the beginning when he says that what we are discussing now has nothing to do with the defence. Later on in the ¹⁹⁰⁶⁶ transcript, there is something about the defence, and I don't participate in that discussion. I mention here primary issue. You say that I advocated, contrary to Ante Markovic, that the army should be financed out of primary mission, and you cannot find anything in support of that in this transcript. I say here the idea to free selective credits by banks, and this should have been done for the purchase of wheat in 1991 is also unrealistic, because the banks could not provide credit without the support of primary issue. I'm not talking about the purchase of the autumn harvest. There were 6 million tons of wheat, and I urged--

JUDGE MAY: I'm stopping you. You're to be asking questions. Any comment on that, Mr. Torkildsen?

THE WITNESS: None.

JUDGE MAY: Yes, go on.

MR. MILOSEVIC: [Interpretation]

Q. Well, Mr. Torkildsen, am I talking about support for the primary issue to purchase agricultural products or am I talking about primary issue to finance the army? In those days, I wasn't concerned with the army at all in any sense. And where can you find a single word that I uttered regarding financing the army in this whole discussion? Can you show me that place, please?

A. The budget overall was financed by primary issues. And it's not like I can point at specific items. It's not like saying this specific revenue should go to this and that. So I don't really follow. Are you saying that the primary issues should only go to funding agricultural? I don't really see the point there. ¹⁹⁰⁶⁷

Q. For various purposes it is used. But you are taking out of context a part of my statement, and as a result, you are claiming that I was advocating that primary issue should be used for military expenditures. And there's no mention of any such thing, because this was a principled issue. And as you mentioned it, and you even quote it in your report, I want to ask you now to give me your expert opinion here in public. So please.

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

THE ACCUSED: [Interpretation] I'm, Mr. May, asking the expert, as this is a financial expert who is quoting my words about the attitude of the National Bank -- between the National Bank and the government. I want to ask him a question about it. So allow me to quote, because he too is quoting me here, three different paragraphs taken out of context when I say that the National Bank should be placed under the control of the federal government, that that idea is unacceptable. So allow me to read -- to quote. I say:

"Don't be offended because we are talking frankly now," this is on page 235 in the long paragraph. "This idea as you formulated it to retain the obligatory reserve of banks at a low level is something I cannot understand, so I say please don't be offended. But it is a manifestation of a lack of understanding of the monetary instrument called obligatory reserve."

MR. MILOSEVIC: [Interpretation]

Q. So please tell me, Mr. Torkildsen, if I am opposed to their idea that the obligatory reserve of the banks with the national banks should be ¹⁹⁰⁶⁸ held at a low level, doesn't that mean that actually I'm opposing any increase of the mass of money in circulation? If the compulsory reserves are increased, doesn't the mass of money circulating go down? So aren't I talking about the obligatory reserves being kept at a low level? You know what the obligatory reserve is and when the rate of obligatory reserve is increased, the potential of commercial banks is reduced. The possibility of providing credit for them is reduced. So I'm advocating the opposite, not to have the obligatory reserves low but allowing the National Bank to have flexibility to reduce the quantity of money in circulation if this is threatening to produce negative effects from the expert point of view, professional point of view. Is this acceptable or not?

A. If you are increasing the obligatory reserve, the money supply should be reduced. That is the way that I view this as well. But first to also to the allegation what I mention in the report here actually in paragraph 19, is that the president of the SIV, Ante Markovic, was opposed to the use of primary issues for financing the federal budget. Slobodan Milosevic in contrast raises no objections to making money available through primary issues. That is what I'm saying here.

Q. And where is it that I say that I have no objections to making money available through primary issues? Where did I say that? And then you quote me regarding something else. You just confirmed what I said. Increasing the obligatory reserves reduces the quantity of money in circulation. That is out of dispute. That any professional will confirm. Now, let me read out, as this is a paragraph that you are quoting ¹⁹⁰⁶⁹ from.

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

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

THE WITNESS: Sorry, I got a bit lost.

JUDGE MAY: I think what he's saying -- what he said was: "Where is it that I said I have no objections to making money available through primary issues?"

THE WITNESS: That is that I cannot see any objections are made when Ante Markovic, Jure Pelivan is discussing the primary issues and that the only alternative is to finance it through the Topcider mint and I cannot see that the accused is making any objections as it goes from the transcripts.

MR. MILOSEVIC: [Interpretation]

Q. Mr. Torkildsen, I was always against it. If I hadn't been, then the 1994 programme could not have been enforced. As you know, that was a political decision that the budget must not be financed out of primary issue. That is how we stabilised the situation.

How can a professional be in favour of using primary emission without control?

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

MR. MILOSEVIC: [Interpretation]

Q. You quote me in a completely different context. I'm not going to read out this quotation from paragraph 19. I will read it out in the Serbian language, and I'll read it out in it's entirety, not in the way that you have cut it up here. ¹⁹⁰⁷⁰

JUDGE MAY: No. Well, we can read it. We don't need to have it read. We've got it in front of us. Now, what is the question?

THE ACCUSED: [Interpretation] This is not complete. It's not given fully. "I'm just asking myself whether it is possible, and I can't believe that experts from the central bank did not take part. Is it possible that professionals looked at this, could have made such an idea? And I'm talking about -- furthermore, I think that the idea that SIV should take the central bank under its tutelage is not acceptable. That is not the case anywhere in any market economy, that the government controls the central bank. The central bank answers to the Assembly. It carries out decisions on monetary policy taken by the Assembly. It must have its autonomous position, and it would, so to say, a completely unnatural position if the Federal Executive Council, that is the federal government, were to be given the right to block the implementation of documents adopted by the board of governors of the National Bank, et cetera. In my opinion, that would be quite wrong, as would what is written down here. The little work that is now in more or less competent hands in the National Bank would be transferred to the hands of the government which are certainly not equipped to decide and take measures on such matters."

MR. MILOSEVIC: [Interpretation]

Q. To tell me, Mr. Torkildsen -- tell me, Mr. Torkildsen, in any market economy, is the central government subordinated to -- the central bank subordinated to the government? Is there any such case?

A. No, not that I know. I mean, the central bank should always be an ¹⁹⁰⁷¹ independent institution. And as far as I know, it shouldn't be subordinated to the Assembly either. I mean, the central bank should be outside the political control in order to act independently. That is how it is in most Western countries, as far as I know.

Q. That was what I am advocating. You are placing this position of mine in the context -- in an almost entirely opposite context, because you are linking the financing of the army out of primary issue of which there is no mention, but in fact I'm talking about what you yourself have now confirmed. The governors of the central bank are nominated by the federal parliament. They can't elect themselves. They are nominated by the Assembly, but the bank is autonomous, and there is a board of governors who decide autonomously --

JUDGE MAY: Mr. Milosevic, now you're here to ask questions. Now, if you don't ask questions, you'll be stopped altogether. Now, we've listened to all of this. We've been on this paragraph for a very long time, and I suggest we move on.

THE ACCUSED: [Interpretation] Mr. May, can we please clear a point up? This is not the first time that completely correct positions are taken out of context and described negatively to prove something that those positions do not contain.

JUDGE MAY: You let the witness explain what he means. I think it is you who are taking things out of context and trying to manipulate them. Let the witness explain what he means by paragraph 19. You may then ask him a question about it, and then we'll move on to something else. Time is not totally unlimited, and there are no doubt other important issues ¹⁹⁰⁷² you want to raise.

Would you explain, please, Mr. Torkildsen, since it's suggested you've taken things out of context and misrepresented it, that's the effect of what he's saying, would you explain what you mean by paragraph 19, the effect, you say, of this particular meeting?

THE WITNESS: The importance of paragraph 19 is to highlight that in 1991, the SFRY budget started to be financed by -- by primary issues and that most of the budget at that time was actually for the benefit of the army.

And as the accused, he was actually implicating that he was not in favour of using primary issues, and in the contrary, we can see from what happened in 1992 and 1993 that that was not actually the case. The budgets more or less in total were financed from the use of primary issues. And that means that the army was financed from the use of primary issues as well.

JUDGE MAY: So to understand what you say, you say two things. First of all that the accused was present at this meeting and heard the discussion. And secondly, you say that whatever he may have said -- is this what you're saying? Whatever he may have said, the fact was in 1992 primary issues were used to finance effectively the army.

THE WITNESS: That is correct, yes.

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

MR. MILOSEVIC: [Interpretation]

Q. Very well. Mr. Torkildsen, from your -- in your expert opinion, what I've just said regarding the position of the central bank which needs ¹⁹⁰⁷³ to have autonomy and must not be subordinated to the government, do you agree with that position of mine, yes or no, as an expert?

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

Q. Why then did you put my opposition to the request of the government to place the National Bank under its control, under its tutelage, as some sort of evidence that I was behaving destructively? I was acting responsibly, as you can see from this transcript.

A. I mean, it's simply a quote. And what is interesting in the quote is that you are saying here that the central bank answers to the Assembly. I mean, it's not an issue that I'm elaborating on here, but the question is who controls the Assembly at the time, but that's a political matter that I am not an expert in.

Q. Mr. Torkildsen, the only thing here is that the governors were nominated by the Assembly. So the same body that nominates the prime minister nominates the governors of the central bank. So there cannot be a hierarchy between them because the same body nominates them. I don't know in other countries who nominates governors of the central bank. Probably the parliament. Not the government, surely. And that is not the case in any market economy.

Then you go on to talk about primary issue and my attitude towards it. Please look at the next paragraph. I believe that the proposal to ensure equal position of republics in the use of primary issue, you should at least tell us what you mean by that. "As primary issue is a residual category, and its extent and use are a function of regulating the banking ^{19074 BLANK PAGE 19075} system's liquidity. That is, it is contrary to the nature of the monetary system to determine in advance the regional distribution of the primary money supply. That is impossible. It completely degrades the integrity of the monetary system."

They're asking saying that the right to inflation be distributed among the republics. That's a caricature of monetary policy, and I'm criticising this in an expert way. "It degrades the monetary system and the position of the central bank which has its place in the monetary system, which is actually the only monetary authority." Do you agree, Mr. Torkildsen, with that, that the central bank is the only monetary authority and that the executive authority cannot have any --

JUDGE MAY: Stop talking. You must ask questions. You can answer the question now, Mr. Torkildsen.

THE WITNESS: Well, I will the last part, and I totally agree with you that the central bank should be the only monetary authority. Yes, I do.

MR. MILOSEVIC: [Interpretation]

Q. So that is what I am saying. And then I go on to say that the focus should be on the economic complex that focus should be narrowed down, that we should not engage in principled discussions and discussions of principle and so on.

Did you, Mr. Torkildsen, pay attention or did you analyse the further proceedings when I criticised the federal government? On page 238. "It's better not to talk about it. Let's just take the way the ¹⁹⁰⁷⁶ foreign exchange reserves have been destroyed so that smugglers from east European countries on the basis of the unrealistic rate of exchange have taken away more than $3 billion in their pockets, not to mention the nonsensical import of all kinds of product. And instead of being a net exporter, we have become a net importer in spite of enormous food reserves."

JUDGE MAY: Yes. Keep going. Just keep reading, Mr. Milosevic. Just keep going and then at the end no doubt we'll get to a point. When we get to a point, you can tell us, but if you are, you're going to insist on reading all your speeches out, we are going to take a very long time, and remember your time is limited.

THE ACCUSED: [Interpretation] I want to clear these matters up, Mr. May, because as you see, Mr. Torkildsen in the expert sense cannot disprove any one of these positions.

JUDGE MAY: Well, it's what you said. We notice what you said, and it's obviously something to be taken into account. We'll also note what happened about which you haven't yet cross-examined Mr. Torkildsen at all.

THE ACCUSED: [Interpretation] Mr. May --

MR. MILOSEVIC: [Interpretation]

Q. Mr. Torkildsen, do you know that I was the President of Serbia in those days, at that time?

A. Yes.

Q. So I am attending here upon the invitation of the Presidency of the SFRY to present my views; is that right? ¹⁹⁰⁷⁷

A. I don't know in what -- why you were there, but I know you were the President of Serbia.

Q. In the capacity of the President of Serbia, like all the other presidents of the other republics. At the Presidency of Yugoslavia meeting, and the Presidency consisted of eight men and was presided over by Stjepan Mesic, and I'm presenting my views regarding the positions being proposed by Markovic.

So as you can see, my positions were absolutely correct from the professional point of view and from the point of view of a responsible relationship towards economic policies, and my criticism is absolutely based on principle.

Mr. Torkildsen, as you're working for the Prosecution, aren't you, you know that this is an indictment regarding various wars. You probably know that. Are you aware of that?

A. Yes, I am.

Q. How then did it not occur to you to quote, for instance, there was the whole Presidency sitting there and all eight members, all the presidents of the republics including, including the president of Slovenia, Milan Kucan, you can see on page 239 another observation of mine to Markovic?

JUDGE MAY: We haven't got the same numbers. Now, is this after the bit that you've been quoting?

THE ACCUSED: [Interpretation] Yes, yes, after it, because this goes on. There are several exchanges between me and Markovic when I say that they have sold foreign exchange reserves at a low price. And then I ¹⁹⁰⁷⁸ say that something needs to be said about the functioning of the borders. And then I'm reading: "Failure to respect this provision regarding the payment of customs duty," and then I say, "On the basis of such an approach, you started the war in Slovenia over customs and borders. In fact, over customs duty."

MR. MILOSEVIC: [Interpretation]

Q. You know that I am being charged with blame for the wars, Mr. Torkildsen. Why didn't you quote this, for instance?

JUDGE MAY: Yes, let us find the page.

MR. NICE: Page 17603 at the top.

JUDGE MAY: Pardon?

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

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

THE WITNESS: No.

JUDGE MAY: 17603, we are told.

MR. NICE: It's at the conclusion of a number of interventions and exchanges, but I think it must be the passage the accused has in mind because it ends "Based on this approach you started the war in Slovenia over customs and borders, actually over customs," which is his most recent quotation.

JUDGE MAY: Yes, we have it.

MR. MILOSEVIC: [Interpretation]

Q. So, Mr. Torkildsen, you have received the transcript, the one which I do not have. You are a professional and an expert of this unlawful Prosecution accusing me of wars, and you see what this -- we're ¹⁹⁰⁷⁹ talking about here. It is the war in Slovenia that is mentioned, and you make no mention of that yourself although it is linked to the financial aspects of the whole matter and customs are being talked about here, mentioned, and I say, "on the basis an approach of this kind, you started that war in Slovenia over customs and borders, actually, over customs." That's what I say?

JUDGE MAY: What is the point, Mr. Milosevic? What point do you want us to understand about this?

MR. MILOSEVIC: [Interpretation]

Q. I'll give you the point. Did you note that at the meeting Milan Kucan, president of Slovenia was also present? And he was the president of Slovenia then and still is now.

A. Yes. If that's what you're saying, I probably noted that when I read through this, yes.

Q. Well, then I'd like you to bear in mind the following: This whole discussion took place after the war in Slovenia, and Kucan attended the meeting just like all the other presidents of the republics, and I say to Ante Markovic that, "You began the war in Slovenia," and they were people that accused me of that here. So have you read what Kucan says? And that is page 243 or 005236 according to your numbering. So the first time that Milan Kucan takes the floor in the transcript, he says: "I'm not going to be responsible to the president of the government who quite obviously wants now that he's lost the war to win all the rest." And then he goes on to say that first he agrees with the proposal made by Slobodan Milosevic that the federal Executive Council or ¹⁹⁰⁸⁰ Yugoslav government should proceed in that manner.

JUDGE MAY: Yes. Let us find this passage. I've got Mr. Kucan saying, "Let me explain. I didn't speak about that." Yes, Mr. Nice. Can Are you help with this one?

MR. NICE: The only passage I can find at the moment is the same passage Your Honour has found at 17599, and that follows on in case there's any text that's been omitted for any reasons of translation, that follows on from Stjepan Mesic saying, "You started a discussion." Kucan applied to speak. Then there seems some textual confusion. "During the discussion of other topics as agreed." That's all I can find at the moment.

The accused will probably be able to help us whether we are roughly at the right place, because the next intervention by Stjepan Mesic referred to the SIV.

THE ACCUSED: [Interpretation] Yes.

MR. NICE: And Kiro Gligorov is the next speaker, so he'll tell us if we're at the right place.

JUDGE MAY: Yes, Mr. Milosevic.

THE ACCUSED: [Interpretation] No. Move on from what we've already found. When I speak about customs and boundaries, that the war was started over that issue, you've found that, where I say that to Markovic. After that, Markovic takes the floor. After Markovic, the next speaker is Gracanin, one sentence there. Then Gracanin again and then Mesic. Markovic again, Mesic, Markovic, and then Mesic goes on to say that Kucan has asked to take the floor. And that is on page 243 of the transcript, ¹⁹⁰⁸¹ and my page is 00526136. Those are your markings. That's what I have. And then it says Milan Kucan in capital letters as you would when you are recording a transcript. Have you found it now?

JUDGE MAY: It seems there are some pages missing here because we don't have what the accused is referring to.

Is that right, Mr. Nice?

THE INTERPRETER: Microphone, please, Mr. Nice.

MR. NICE: Sorry. If one looks at the page 5365 and 5365 and 4, it does indeed appear that there is a long passage of Kucan which is not reflected in the English translation, because on page 17534, there's a whole -- well, it's the beginning of about three sides of Kucan or four sides of Kucan speaking. We don't seem to have that. However, I did find -- Your Honour, I've lost it again, I'm afraid. I did find what I think was the observation by Mesic, "You started a discussion," Kucan allowed to speak. Let me just see if I can find that. I think that's probably the words we see at the foot of page 17535, in the accused's version. I imagine that is in translation. "You start a discussion," Kucan allowed to speak. Correct me if I'm wrong, in which case there is therefore a large passage of Kucan which has not been translated.

JUDGE MAY: Yes, that should be translated. Yes, Mr. Milosevic. What is you wanted to refer to there?

THE ACCUSED: [Interpretation] I'm going to place it on the ELMO. And I'm referring to Milan Kucan's part in the discussion, who also states -- he begins with saying: "I'm not going to answer to the prime minister," that is to say, Ante Markovic, "Who quite obviously wishes now ¹⁹⁰⁸² when he has lost the war to win everything else," all of that.

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

THE INTERPRETER: Microphone please, Mr. Nice.

MR. NICE: If the registry's copy of this document at page 17534 could be placed on the overhead projector as the accused suggests, it may be that the interpreters can help us. We've clearly found the right passage.

JUDGE MAY: Mr. Nice, I think it would be easier -- just a moment. If you handed over your pages. There seems to be some confusion.

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

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

THE ACCUSED: [Interpretation] Do you have Kucan?

JUDGE MAY: Would you help the usher, please, Mr. Nice? Would you point out to her where it is --

MR. NICE: It's on the top of the page that's on the overhead projector at the moment. It's on the overhead projector at the moment. Thank you very much. Starting there. If the accused would like to turn to his video evidence button, he can make sure we are following at the right part of the transcript and then he can either read it out or it may even be possible to ask the interpreters to read out the passage he wants to be translated.

THE ACCUSED: [Interpretation] Yes. We have the same portion. Can the interpreters follow whether I'm reading correctly? Is says Milan Kucan. Let's go back to the beginning please and then the interpreters ¹⁹⁰⁸³ can follow and see if I'm reading it properly. "I am not going to respond to the prime minister who quite obviously wants now when he's lost the war to win..." All that. And then you can skip over two lines where I go on to say: "I agree with the three proposals put forward here. They have their logic, and they are linked to each other. First, I agree with the proposal made by Slobodan Milosevic that the Federal Executive Council should compile realistic minimum economic and social measures," and so on and so forth. But the point of this is on the war in Slovenia. Now, turn the page, please. Turn over to the next page, please, because on the following page, we have an extremely important portion there too which I should like to read out to you. Lower down, yes. Thank you. A bit -- place the page lower down, please. Down. Down. We have here towards the end of this paragraph, and you can see it on the screens, it begins with the word "trece," third. And as the question has been raised as to why the members of the federal government from Serbia will no longer attend government meetings, Kucan says the following, and I'd like to ask you to interpret that. "I do not have to convince you that you will not find in Slovenia a single man including these two men here who will go back to the Federal Executive Council and work there. That means they won't be able to find anybody in the Slovenia to go back to the federal government. And then he goes on to say this key statement: "That is the federal government which we know in Slovenia began the war in Slovenia. Slovenia knows that that federal government began the war in Slovenia."

So let's carry that point up or at least one of these wars. At ¹⁹⁰⁸⁴ the Yugoslav state Presidency meeting, this is what has been said, Mr. May. And I'm very grateful to Mr. Torkildsen himself for having made available this transcript of the minutes, because we have it clearly here. We have what I say and what others say set out quite clearly here, what Kucan says clearly too, who was the president of Slovenia and he says this after the war in Slovenia, why people don't want to go back and it's the federal government and I say that the war was waged for customs reasons.

JUDGE MAY: Have you finished with that passage? In which case, the usher can --

THE ACCUSED: [Interpretation] Yes, I have.

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

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

MR. MILOSEVIC: [Interpretation]

Q. Now, have you noticed, please, Mr. Torkildsen, that I do not ask to take the floor after that, after the lunch break, because I didn't stay for the luncheon itself. I had other duties to attend to. And as you can see, this was a very lengthy meeting and the Yugoslav state presidency members have to formulate the text of a document themselves and not myself. I presented my views, and it was up to them to compile the document. So I had nothing more to do there.

Now, for the first time in the transcript of the minutes, you can see on page 289 and 290 and 92, that is the first time that the question arises of the financing of the army, and the crops up in a fairly - how shall I put this? - in a sort of cafe talk, cafe speak style, because it doesn't deal with any serious matters, but it is almost in the form ¹⁹⁰⁸⁵ of - how shall I explain this? - very brief interjections on unclear comments that don't indicate any solutions. They just indicate the absurdity of the whole position.

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

JUDGE KWON: [Previous translation continues]... Page 17591, maybe. Is it remarks by Markovic?

THE ACCUSED: [Interpretation] Yes. Markovic says that the bulk of the budget is the army.

JUDGE KWON: Yes, it's right.

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

MR. MILOSEVIC: [Interpretation]

Q. I'm just mentioning this because this is the first time -- it is only on page 289, the first time in the transcript. And that was way after the lunch break that the army is mentioned at all and the exchanges between Ante Markovic and Pelivan. That is true. What they say is quite true. That would mean Topcider, that would mean --

JUDGE MAY: Let the witness answer. It's been put that this is the first time that anybody mentions the army. Is that right, and do you have any comment about it, Mr. Torkildsen?

THE WITNESS: Well, to be honest, I don't know whether it's the first time the army is mentioned.

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

THE WITNESS: I do not remember that.

THE ACCUSED: [Interpretation] Well, read the whole thing. Read ^{19086 BLANK PAGE 19087} the whole transcript of the minutes. It's your own document. You -- it was made available to you.

JUDGE MAY: The next point is do you have any comment as to what is said here?

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

JUDGE MAY: Yes.

MR. MILOSEVIC: [Interpretation]

Q. Well, I have a question to ask you. So you put all this into paragraph 19 of your report. Now, tell me, how as a professional, as an expert can you be quite improper in your conduct, especially as you have confirmed the matters of principle which I --

JUDGE MAY: You're not getting away with that. Allegations of impropriety are far too serious. Now, don't make those comments. A difference of opinion, of course you can put to the witness, but to accuse him of impropriety is quite wrong.

What is the point, Mr. Milosevic?

THE ACCUSED: [Interpretation] Well, the point is that in paragraph 19, something has been put out of context, my position with which otherwise the witness agrees, about the fact that the central bank cannot be subordinated and subjugated to the Federal Executive Council. And then from that same minutes pulled out of context a brief passage between Ante Markovic and Pelivan, and it starts at 289, 290, 91, 92. Those are the pages. That's where it starts. And not even if you use the biggest possible scissors, you can't clip this portion on and stick it in here.

MR. MILOSEVIC: [Interpretation] ¹⁹⁰⁸⁸

Q. So what do you wish to draw from this, Mr. Torkildsen? Can you seen that I have spoken about Topcider and taken issue with it?

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

THE WITNESS: What I wanted to highlight with this was how the SFRY budget was financed in 1991, at least from the second half of 1991. It was financed by the use of primary issues. And that's what continued and was actually enhanced in 1992 and 1993, and again back to the fact that the major part of the budget was for the use of the army. And again, that was totally different from what was the situation in 1990 when the budget was not financed from primary issues.

MR. MILOSEVIC: [Interpretation]

Q. Well, tell me this: Do you see anything - how shall I put this? - unusual in the fact that your whole paragraph 9 has been compiled from my correct attitude and position with respect to the position of the National Bank which should be independent and autonomous. And 200 pages later, an exchange between Markovic and Pelivan, and then you combine it all together to explain how I have something to do with the financing of the army from primary issues. And you know that I was president of the Serbia, not president of the federal government, nor was I governor of the National Bank. So where do you see here any links and ties with the way the federal government operated which was composed of all the republics and led by a Croat, in fact and the Federal Presidency which was led once again by a Croat as we're discussing this with the presence of the president of Slovenia who was a Slovene, where do you see any wielding of any influence on my part to have the army financed through primary ¹⁹⁰⁸⁹ emission, through primary issues?

JUDGE MAY: Let the witness answer the question.

THE WITNESS: It is clear from some of the exhibits that were discussed yesterday that obviously the accused had influence on this financing. I think that's particular highlighted in paragraph -- I think it was -- it is 98 to this report and also paragraph 102 to this report.

MR. MILOSEVIC: [Interpretation]

Q. Mr. Torkildsen --

JUDGE MAY: I think we'll adjourn. We will consider how long you're to have left for your cross-examination. You've spent more than an hour, probably an hour and a half, on this document, and we can't waste time. But we'll consider how much longer you should have. We will adjourn. Twenty minutes.

--- Recess taken at 10.42 a.m.

--- On resuming at 11.50 a.m.

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

MR. NICE: Your Honour, there is a further English translation of the document that we were looking at with the accused before the adjournment. I'm not -- haven't yet tied up where it goes to. I see. It's the English translation pages 6136 to 6157, so that's of some use I hope. And the second point is this: The interpreters have, I think, been having a difficult time this morning because although they have in their booths the report of the witness, they don't have the attached exhibits, and therefore I think they would ask probably that things are taken more ¹⁹⁰⁹⁰ slowly when exhibits are placed on the overhead projector.

JUDGE MAY: Yes. Ideally they should have copies of these exhibits, particularly in complicated evidence like this.

MR. NICE: Yes. Probably easier said than done with the quantities of material that we're dealing with and the limited prospect of much of it being looked at in detail, but I entirely take the point.

JUDGE MAY: Mr. Milosevic, we've considered the time you should available. You can have an hour and a half more if you want it with this witness. Yes.

THE ACCUSED: [Interpretation] As far as this witness is concerned, in view of all the documents that have been provided, I could go on cross-examining him not for an hour and a half but at least a week and a half.

However, I'll use the one and a half hours I have been given, Mr. May.

MR. MILOSEVIC: [Interpretation]

Q. Now, your main point, Mr. Torkildsen, is it, therefore, in the transcript clear, based on my examples as to the needs to include the fundamental reserves, that I advocate a position against inflation and against increasing the money mass? Is that position of mine clear?

A. I can't really understand what you're claiming here, because you're saying that you're against inflation. You can't be against inflation at the same time as you are in favour of using primary issues for financing the federal budget.

Q. I am not supporting primary issues. Where do you find a single ¹⁹⁰⁹¹ word to support that claim that I support primary issues as an instrument of the federal budget? I mentioned it only in the context of buying up agricultural produces, and of course only partially. If 6 million tons, if there are 6 million tons of wheat then the National Bank with its selective credits and loans to commercial banks helped them buy this up. Then the wheat is sold and then the money recuperated. So there is no negative effect in this procedure.

So where in this entire transcript, which numbers several hundred pages as you can see, is there a single word mentioning primary issues as a function of the federal budget? All I talk about is the buy-up of agricultural produces and they don't go through the federal budget but are financed by the banks along with assistance from the central bank, of course, and I'm sure you ought to know that as a professional man yourself?

A. I am basing this on what actually happened later on in 1992 and 1993 when the whole of the federal budget was financed from primary issues. But I do not specifically see from this document that you say anything about financing primary issues over the budget. The only thing I can see is that you do not raise any objections to making money available through primary issues.

Q. That's great. But that isn't true either, Mr. Torkildsen, because quite obviously my insistence upon an increase in compulsory reserves is quite contrary to the idea of any kind of primary issue, because the increase in primary -- in issues would annul the effect of raising the compulsory reserves in the expert sense. That's right, isn't it? So if ¹⁹⁰⁹² somebody who is an expert doesn't understand this, then I don't have anything further to ask.

A. Well, I do understand the document, but I mean, basically you didn't raise any objections against the use of primary issues when this was mentioned by Jure Pelivan and Ante Markovic.

Q. Well, I wasn't there then either, and that took place at the end of the meeting when they had this discussion.

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

Q. I don't think Kucan was there after that either. They had other business to attend to and left it to the Presidency to discuss that with the prime minister.

But let's move on. As you say that practice has shown that primary issues were in fact used, what I'm asking you is this: Are you aware of the fact that I was the President of Serbia at the time and not the president of the federal government, the prime minister?

A. Yes.

Q. And do you know that based on Yugoslav provisions who it is who proposes the federal budget, who deals with the federal budget? Is it a matter done by the federal government to propose a budget and to put the budget before the Yugoslav Assembly?

A. As far as I know, the budget process would be like -- if we start with the army here, it would be the Federal Ministry of Defence, meaning the SSNO who would suggest a budget for the army. That would be passed on to the SIV, the federal government, and they would again incorporate this into the total budget, and they would further then pass on the total ¹⁹⁰⁹³ revised budget to the Presidency. That again would pass this on to the Federal Assembly for the final decision on the budget. I think that's at least how I have understood it.

Q. Well, you didn't understand it in the best of ways, but let's make things simple. Is it clear to you that according to the constitution of Yugoslavia, the proposer in the Assembly of the budget is the federal government? The federal government proposes the budget. That's a simple question. Is that clear to you?

A. I have not read the constitution, but it makes sense that the federal government proposes the budget, but I also thought that the Presidency had a say in this.

Q. Mr. Torkildsen, I assume you know that with issues of budget in every parliamentary democracy a vote of confidence or a vote of no confidence is voted to the government. If not, if they get a vote of no confidence, the government tenders its resignation. The government is no longer able to function if somebody proposes a budget which the government does not accept, and that is the case in each and every country.

A. Yes, that's my understanding as well.

Q. Well, now take a look at Exhibit C324, your own exhibit. And the date is September 1991. That is to say after these meetings and after this quite correct reaction on the part of both Markovic and Pelivan that primary issues cannot be a solution to the problems. Does it not say up at the top the federal government or the Federal Executive Council, the SIV, that's its document?

JUDGE MAY: Tab 7? ¹⁹⁰⁹⁴

THE ACCUSED: [Interpretation] It is C324, your exhibit.

THE WITNESS: Yes, that is correct.

MR. MILOSEVIC: [Interpretation]

Q. And isn't the heading "Proposal, or draft law" -- "proposal for a new law"?

A. Yes, it says: "Draft law on revenue sources for financing certain national defence requirements in 1991".

Q. Yes, it's a draft, a proposal. So I assume that you are aware of the fact that laws are first drafted, there is a draft law to begin with, which is then discussed by the federal government in detail, and then it is sent in the form of a proposal to the federal parliament. So here we already have the final product, the final document of the federal government which takes the form of a proposal and is addressed to the federal parliament.

And what does it say, Mr. Torkildsen? What does this proposed law say? It says: "Proposed law for the sourcing of finance for the needs of national defence in 1991," and we're dealing with a proposal that was brought in on September 1991 by the government, by that same person, Mr. Ante Markovic for whom you say was against primary issues and yet is tabling a proposal of this kind. This is the proposal he's submitting. Look, see what it says.

Article 2: "In order to ensure resources from Article 1 of this law," and this is the crux of the matter, "The National Bank of Yugoslavia will allow for a credit to the federation which will amount to the difference between the resources determined by law from Article 1 of this ¹⁹⁰⁹⁵ law and the incoming accrued by the balance federation to finance the JNA. "Credit, pursuant to Article 1, will be paid back in ten yearly annuities which fall due on the 15th of December of each year beginning as of the 15th of December, 1993."

I see that the interpreters are asking me to slow down. And then it goes on to say: "The amount of credit not used will incur a 5 per cent interest rate per year, per annum."

So you can see, that same federal government, that same man Mr. Ante Markovic is submitting a proposal to this effect. So what does the Republic of Serbia and I myself have to do with a proposal tabled by the federal government, a proposal which we have no influence on because in the federal government of Serbia can have several people representing it as do all the other republics. So what links do you see there and on the basis of what are you able to state anything like that?

A. Yes, that only Ante Markovic would be able to answer that question. And also, just to make that clear, I have understood that this was basically the reason for why Ante Markovic later went from his position as the SFRY prime minister at the time. In his resignation statement on the 20th of December, 1991, he's saying that he is not willing to support a budget that comes from primary issues and most of the expenditure is for the army.

Q. Let us not turn things upside down. This proposal that I'm showing you now under your exhibit number C324 is not dated December but September. So it was after this Presidency meeting. And as far as I can see from what you say here, because I don't ¹⁹⁰⁹⁶ remember that, Ante Markovic, in his resignation, said, among other things, that he did not agree with the budget for 1992. And we're talking here about 1991.

In your documents here --

A. Yes, I agree, but this is when the financing using primary issues started. It only accelerated with the 1992 budget which was cleared later the same year.

Q. Yes. But you didn't -- you were not right when you said that that is why he resigned, because this draft was submitted by him, his government. And he mentioned something in his resignation relating to the 1992 budget, and I assume you're aware of that.

A. Yes, I am, but this is the same issue.

Q. Now, please look at this note marked C43279, where the service for legal affairs informs the Presidency in connection with a proposal of the Federal Executive Council regarding provisional financing of the JNA until the end of the year. Is there any dispute that the service is informing the Presidency in connection with the proposal of the federal government of Ante Markovic and not in connection with anybody else's proposal?

JUDGE MAY: This is tab 9.

THE WITNESS: That is correct. They are referring to the proposal of the federal government, yes.

MR. MILOSEVIC: [Interpretation]

Q. They are actually informing the Presidency about it, and they say: "The significantly reduced revenues of the budget of the federation, due to failure to pay in taxes, import duties, and contributions by the ¹⁹⁰⁹⁷ republics which have seriously affected the financing of defence, and for those needs, the Federal Executive Council in the past period used short-term loans from the National Bank of Yugoslavia," et cetera. And then there is the proposal that a law be adopted on sources of financing through a credit of the federation if it is not possible to provide the necessary resources from the federal budget. Is that what it says in that document?

A. Yes.

Q. And as this is the legal service, you can see that it has two footnotes here to provide legal explanation to members of the collective head of state. And in the first footnote, this is on page 2, on the other side of the document I received, in this connection the Chamber of Republics and Provinces decides by a majority vote at a session at which all delegations of the assemblies of republics and provinces are represented and which is attend by a majority of delegates of the Chamber. So not only is it the federal Executive Council and nobody of Serbia that is submitting the proposal, but a decision about it is taken by the Chamber of Republics and Provinces which means that delegations of all the republics and provinces need to be present. And that is the legal explanation of the legal service of the collective head of state. Then the second footnote says: "Pursuant to Article 319 of the constitution if the competent chamber of the Assembly does not accept the proposal of the Presidency for determining the domestic or foreign policy or a draft law or any other regulation or by-law which the Presidency considers necessary, then the Chamber and the Presidency will, by ¹⁹⁰⁹⁸ agreement, agree on a procedure, and the Chamber will set a deadline not longer than six months for a coordination of views. If, even after that agreed deadline, agreement is not reached, the disputed issue is removed from the agenda of the Chamber and is put on the agenda again at the request of the Presidency or upon the initiative of the competent Chamber. "If upon a second review agreement is not reached within a period of three months, the competent Chamber of the SFRY Assembly is disbanded and the Presidency of the SFRY ceases to exist. Its mandate expires." So all the bodies' responsibilities here are clearly indicated. Draft law is submitted by the federal government, in this case that of Ante Markovic. The Presidency sends it to the Assembly, and the decision is taken by a Chamber at which all republics and provinces need to be represented. Is that at issue or not, Mr. Torkildsen?

A. It would be interesting to actually have an overview of the delegates in the Assembly at that point in time, in September 1991. I -- I find it unlikely that the Croatian delegates and the Slovene delegates to the Assembly were still there, but I may be mistaken.

Q. You may not be mistaken, but what has that got to do with what you are claiming, that a decisive role in that is played by Serbia?

A. Didn't Serbia have its delegates to the SFRY Assembly? And if the SFRY Assembly was made up with a majority from Serbia and Montenegro...

Q. No. In the Chamber of Republics and Provinces -- in the Chamber of Republics and Provinces, you have delegations of the republics and provinces. So there can be no majority. But let us not move away from this other question, please. ^{19099 BLANK PAGE 19100}

A. Sorry. Can you repeat the question, please?

Q. I've just found it in your report that you call a finding. You say that the resignation of Ante Markovic was explained in exhibit, I don't know which, 4911. I'd like to see the whole resignation so that I could see at least the date it bears.

He says that the budget for 1992 was proposed in such a way that 81 per cent was intended for the JNA. Et cetera. Since you have that document, may I see it, please?

Could you place it on the ELMO, please? Not just this small passage but the whole document, please, if I could see the document of his resignation. Or if you could let me have a look at it and then I can ask you a question about it.

I can't understand this. But this is a report. This is not Markovic's resignation.

JUDGE MAY: Read on. You'll see it's a report of it.

MR. MILOSEVIC: [Interpretation]

Q. I see it's a report from the press, as far as I can see. Now, tell me, please, what is the date? I can't see any date on this document.

JUDGE KWON: It's dated December 20, 1991.

THE ACCUSED: [Interpretation] Very well.

MR. MILOSEVIC: [Interpretation]

Q. It is quite clear that since he submitted this resignation on the 20th of December, that this resignation relates to a period that is from mid-September, October, November, December. So more than three months ¹⁹¹⁰¹ after this draft that I showed you a moment ago, the draft law on the sources of financing in which there is the proposal that the army be financed through primary issue.

So it came more than three months later and is allegedly linked to the 1992 budget. And do you know --

JUDGE MAY: Let the witness answer that. Mr. Torkildsen, you see what comment the accused has made.

THE WITNESS: Yes.

JUDGE MAY: Is he correct in what he said?

THE WITNESS: I agreed that this is later. The other document is from September 1991, and this is from December. But the issue is still the same, the financing of the army through the use of primary issues, and that's, according to this document, why Ante Markovic is resigning.

MR. MILOSEVIC: [Interpretation]

Q. Do you see on this document that the note for the Presidency of the SFRY, 4279, is dated the 12th of September? The draft law was obviously before the 12th of September, 1991, this draft law of Ante Markovic's government to finance the army out of primary issue. Then from the 12th of the September until the 20th of December, it is three months and eight days. Is my calculation right?

Therefore, the practice implemented by that government, that is financing out of primary issue cannot be called in doubt at all. Is that right, Mr. Torkildsen, or not?

A. It is correct from the document dated the 12th of September, 1991, that they suggest primary issues as the tool of financing, yes. ¹⁹¹⁰²

Q. So we've cleared that point up. And now, since you say regardless of the fact that we haven't found in these minutes that you have offered as evidence what you say but quite the opposite, you say that it was the practice to finance thing out of primary issue. We see who the proponent of that practice was, that is the Federal Executive Council. And do you know that even after Ante Markovic, pursuant to the same regulations, the federal government continued to be the proponent of proposals for the budget which -- of what became later the Federal Republic of Yugoslavia? Are you aware of that?

A. Yes, the use of primary issues actually increased. It became much more extensive in 1992, and in 1993 this was as good as entirely financed by primary issues.

Q. That's fine. Now, who was president of the federal government which proposed the budget for 1993? We see that Ante Markovic completed 1991. Then he referred to the budget in December 1992. And do you know that Germany recognised Croatia in December 1992? It recognised it as an independent state. Are you aware of that?

A. I think I've read that somewhere, yes.

Q. And do you believe that Ante Markovic's resignation was prompted by the budget or by this rather larger political issue?

JUDGE MAY: The witness can't answer that question.

MR. MILOSEVIC: [Interpretation]

Q. Let us then focus on the financial legal issues then. Who was the president of the federal government that proposed the budget for 1993?

A. I know that in 1993 there were several revised budgets because of ¹⁹¹⁰³ the high inflation. So it would probably depend on -- on the -- on a specific time when the revised budget was issued. I mean, it was Mr. Zoran Lilic who came on as the federal president in the summer - I think it was July 1993 - and he was replacing Cosic, I think his name is. Please correct me if I'm wrong.

Q. I will have to correct you. The president of the federal government or the prime minister from 1992 until the elections in Serbia in 1993 was an American of Serbian origin, Milan Panic and my main counter-candidate at the elections for the Presidency of Serbia in 1993. There is no doubt, therefore, in view of the period whenever the prime minister, the Federal Prime Minister, that Milan Panic's government proposed the budget for 1993. The election took place in 1993, towards the end of 1993.

JUDGE MAY: Do you accept that?

THE WITNESS: Yes, sorry. I got a bit confused using the term president of a government and prime minister. So that's why I mentioned Mr. Lilic.

JUDGE MAY: Yes. Don't worry, Mr. Torkildsen, it's not a memory game or a test of general knowledge.

Yes, Mr. Milosevic. What's the next question?

MR. MILOSEVIC: [Interpretation]

Q. It's not even that important, but it is a fact that Milan Panic, an American of Serbian extraction, my main opponent at the elections for the Presidency of Serbia in 1993, which were also early elections, was the proponent of the draft budget for 1993. But federal president of the ¹⁹¹⁰⁴ republic of Yugoslavia was Dobrica Cosic, our well-known writer. But the president had no competencies regarding the budget. That was up to the federal government.

JUDGE MAY: Have you got a question for the witness?

MR. MILOSEVIC: [Interpretation]

Q. So do you know that in view of the fact that Milan Panic was my main opponent that could I not have had any influence over the federal government of Milan Panic which proposed the budget for 1993?

A. Well, I can only refer to the documents I have looked at, and to me it seems like you had an influence of -- on directing funds. And I would particularly like to draw to your attention paragraph 98 in my report and paragraph 102. That indicates that you do have influence.

Q. I will find that paragraph. Let me find it. We are talking here about the assistance of the Republic of Serbia, not about any federal budget. Which other paragraph did you mention? 102 and 58?

A. No. I mentioned 98 and 102. Can I please elaborate on that?

JUDGE MAY: Yes, by all means.

THE WITNESS: It is stated on page 36 of this report, paragraph 98, and it's an exact quote from this document that was discussed yesterday. It is stated here in the last paragraph, I quoted that: "The president Milosevic stated his attitude that the means for the maintenance of the technical devices should be planned via the Yugoslav army, and he said that he will help in realising it and that he will initiate the Yugoslav army to finance the active officers and the civil personnel that stayed in Krajina." ¹⁹¹⁰⁵ I think that paragraph speaks for itself, and it talks about influence.

MR. MILOSEVIC: [Interpretation]

Q. Very well. You are speaking here about some document. We'll find it later. But as far as I recollect, yesterday that document was quoted. Did you leave out a critical word, and that is the peacetime composition of the army of the Republic of Serbian Krajina? Because in fact, we were endeavouring quite the opposite, that is, to find a peaceful solution to all this. And reference is made to our assistance to maintain the peacetime level of the army of Republika Srpska. I think you omitted to quote that word "peacetime." It is in a letter from the Minister of Defence of the RSK, Spanovic, that I remembered from yesterday.

JUDGE MAY: Where is the document? What is the document that you're referring to, Mr. Milosevic?

THE ACCUSED: [Interpretation] I'll find it, but I assume it is 4682. I'm not able to find it now here in my documents. But never mind, I will find it. Because it refers to the peacetime strength, and there is no issue with that. There was no secret that we extended assistance to both Republika Srpska and the Republic of Serbian Krajina.

JUDGE MAY: Let us --

THE ACCUSED: [Interpretation] And we would be the worst scoundrels if we hadn't.

MR. NICE: Tab 11.

JUDGE MAY: Tab 11 of the binder that we have. Have you got it, ¹⁹¹⁰⁶ Mr. Milosevic? 4682.

THE INTERPRETER: Microphone, please. Microphone.

JUDGE MAY: A copy is coming up.

MR. MILOSEVIC: [Interpretation]

Q. Here it says --

THE INTERPRETER: Microphone, please.

MR. MILOSEVIC: [Interpretation]

Q. The fourth paragraph, it says: "President Milosevic accepted the concept." And then it says the number of men which should form the peacetime basis of the army and should provide security on the border. It means that it should be reduced to peacetime strength because all our efforts were designed precisely to find a peaceful solution and for everything to be reduced to peacetime levels. As you can see from the information presented by witnesses, the forces were much greater, much stronger, but it was as a result of our endeavours that the effort was to reduce them to peacetime strength hoping that the problem would be resolved by peaceful means, the problem of the RSK.

JUDGE MAY: Yes. Now, what is your question of the witness.

MR. MILOSEVIC: [Interpretation]

Q. Therefore, is it clear, Mr. Torkildsen, that we are not talking of any wartime situation but rather an effort to maintain a balance and the peacetime strength to obtain a peaceful solution?

A. That is your interpretation, but my basic point by highlighting this document now today was to -- because you were saying that you had no influence on the federal budget or the federal army, but to me this ¹⁹¹⁰⁷ document indicates the opposite, because it is stated here that he will initiate the Yugoslav army to finance the active officers and the civil personnel that stayed in Krajina, and that, at least to me, indicates some influence. And remember that the Yugoslav army was financed through the federal budget.

Q. Yes, that is quite clear. It says that I would endeavour or urge or intervene with the army. It doesn't say I would order, because I can't order, but that I would endeavour, yes.

And do you know that even after Dayton and after the war, since you were reviewing the financial documents, the Federal Republic of Yugoslavia continued to assist in financing the army of Republika Srpska.

JUDGE MAY: The English translation has: "He said he would help in realising it and that he will initiate the Yugoslav army to finance the active officers," et cetera.

Do you challenge that, Mr. Milosevic, as a translation?

THE ACCUSED: [Interpretation] Of course. That is a free interpretation by Mr. Spanovic, Mr. May, which is contained in his letter. But it's only possible in real terms that I can urge or stand in support of something, because up until 1997, I had no competence over the army.

JUDGE MAY: That, no doubt, will be one of the issues we're going to have to try. But you're saying that this was a misinterpretation of whoever made the record. Is that what you're saying?

THE ACCUSED: [Interpretation] I am saying that it is his free interpretation because it is his letter, but no record of the conversation itself. It is his interpretation that he hopes that measures would be ¹⁹¹⁰⁸ taken along those lines. But generally, that was our position. There is no dispute over that, that people who voluntarily remain in the army of the RSK or the RS cannot be punished by their families going hungry. And their salaries were a kind of social relief that we extended to the Republic of Serbia. So there's no need to go into any detailed explanation. There was no secret over that.

JUDGE MAY: Yes. Let's move on. The next question.

MR. MILOSEVIC: [Interpretation]

Q. We're talking about cooperation between the national banks of Yugoslavia, the Republika Srpska, and the Republic of Serbian Krajina; is that right?

A. Yes. It was a cooperation, yes.

Q. It is page 14 and 15. And then you go on to say at the top of page 15 that there was a report by Miletic, the director, the National Bank of Yugoslavia provided expert assistance, you say. [In English] "As we read in the 1992 NBRS annual report" [Interpretation] and so on?

A. Yes, that's correct.

Q. I'm sure you're familiar with the structure of management for the National Bank. You know that there's the governor for the National Bank, the deputy governor, the vice-governor and directors. Four different departments. I assume that's something you are familiar with.

A. I don't know the detailed structure of the National Bank, but I know there's the NBY governor, and it's logical he's got his deputies and his assistant staff, yes.

Q. I would like to clear this up for those who are not familiar with ¹⁹¹⁰⁹ this. When you say the director of the National Bank, then people would think that that is somebody who manages the National Bank. There are several directors, and this man is without doubt a professional, and he assumed the post of one of the directors. He's not the governor or the deputy governor or the vice-governor. So that, in fact, testifies to the fact that cooperation was on a professional expert level and that expert assistance was provided. So what's bad in that, Mr. Torkildsen? Why shouldn't there be assistance granted?

A. That is precisely what I am claiming in this report. It was assistance from -- from the FRY to the RS and to the RSK in this respect.

Q. Then you go on to say the following: During the period of banknote replacement the National Bank of Republika Srpska collected, and then you go on to explain 12.000.506, the equivalent of 12.506.000 German marks, the banknotes, dinars. [In English] "The said banknotes are hereby delivered to the treasury of the National Bank of Yugoslavia in order to be replaced by an appropriate amount of valid banknotes." [Interpretation] So the replacement of money moving from old dinars to the new dinars. Now, this whole operation, if someone has German marks, for example, and lives in South Africa and then they're moving to the euro and then he has to exchange the German Marks via some bank for euros because the German marks will not be valid after a certain period of time, so where is that operation different from this one? It's a technical operation. You can take anyone. It can be an American, a Norwegian like yourself who for example is in possession of old dinars and he has a time limit up until which he can transfer those dinars. ¹⁹¹¹⁰ So where is the difficulty there if this financial transaction is being conducted?

A. I agree it's a technical cooperation, but it's limited to the area of the RSK, the RS, and the FRY.

Q. Of course. Now, do you constantly forget the environment and circumstances under which all the Serbian people lived and all the other inhabitants who are inhabitants of Serbia, the RS and RSK? They were completely isolated, faced with international sanctions that had been imposed exclusively against Serbia, Montenegro, rather, the Federal Republic of Yugoslavia and the RS and RSK. Are you forgetting all that?

A. No, I'm not forgetting it. And I guess that that was one of the reasons for this monetary integration. I mean, the RS and the RSK were in an isolated area and that's why you had to cooperate financially. But this cooperation was very much of a subordinated nature with the NBY in the decision-making role and --

Q. Oh, come on, Mr. Torkildsen. You know full well that in trade, in commerce, one exchanges an equivalent for an equivalent. If a company in Serbia, for example, is purchasing something from the RS, it pays the price of those logs, for example, and there is no subordinate relationship. This exchange is done on the basis of the price that is prevail on the market, goods for goods or whatever you like to call it. So what kind of subordination are you talking about? When you talk about financial institutions, when you look at them in your professional capacity you can only talk about cooperation here. They are three financial institutions. I hope that's not in dispute. ^{19111 BLANK PAGE 19112}

A. That is definitely in dispute. If we go to Exhibit C4779, we will definitely see the subordinated relationship I'm talking about.

JUDGE MAY: Let us find that document. 18 --

MR. MILOSEVIC: [Interpretation]

Q. Mr. Torkildsen --

JUDGE MAY: Just a moment. Let's get it. Eighteen, I think. Yes. Mr. Torkildsen, what do you refer to here that we have at tab 18?

THE WITNESS: Well, I would like to go to the second point. There are listed quite a number of points, 1 to 15. And in the second one it is stated there that: "The National Bank of Republika Srpska and the National Bank of the Republic of Serbian Krajina operate as main branch offices of the Yugoslav National Bank and under its authority alone." And as further stated in paragraph 4: "The National Bank of Republika Srpska, the National Bank of Republic of Serbian Krajina shall implement the decisions of the Yugoslav National Bank in a disciplined manner."

And in paragraph 7 it's mentioned: "The governor of the National Bank of Republika Srpska and the governor of the National Bank of the Republic of Serbian Krajina are required to attend the sessions of the council of the Yugoslav National Bank without the voting right." I think that this illustrates very much that this was not the relationship between equals.

MR. MILOSEVIC: [Interpretation]

Q. Mr. Torkildsen, you've just said without the right to vote, without voting rights. So they are not the main branches. But we're ¹⁹¹¹³ talking about cooperation in which efforts are made to keep the same criteria. That is to say, not to reduce or increase interest rates, for example, to the disadvantage of the other side, the others involved, and to adhere to discipline in financial undertakings and financial discipline is a very vital characteristic, I'm sure you'll agree, for successful financial transactions, that is to ensure that clients are not at a disadvantage through the irresponsible behaviour of any one of those three banks. And quite certainly, most of the professional potential and economic potential lies in the hands of the National Bank of Yugoslavia. That is not in dispute. Is that in dispute from your professional expert point of view, Mr. Torkildsen?

A. First of all, I would like to say that this document speaks for itself and I don't really have any comments to this.

Q. All right, Mr. Torkildsen. Let's take the liberal economy of the United States. Who topples the prime rate, for example, or raises the prime rate? One of the leading commercial banks. Isn't at that right? Morgan Chase for example. Or one of the other leading banks. Actually, it doesn't even have to be the first. It reduces the prime rate, or raises the prime rate, one does that, one bank does that and the others follow suit.

So there's always a leading bank which makes a move which is respected by all the rest. Isn't that so, even when you're talking about commercial banks and not cooperation between central banks as it is here between Republika Srpska, Republic of Serbian Krajina and Yugoslavia.

A. It would be the central bank that sets the interest rate. ¹⁹¹¹⁴

Q. Well, do you not consider that it is necessary, if it is narrowed down, if the economic environment is so narrowed down to the extent to which daily some 12 million people are struggling for their survival, for mere existence, on a market which has been restricted under sanctions where it has been closed off by sanctions, that full cooperation is necessary to service the limited possibilities that the economy has and that is functioning under quite impossible circumstances and conditions? Is that clear to you? And where is the problem if the central banks cooperate amongst themselves? Is it a crime?

A. I'm not saying that it is a problem at all, and I'm not saying that it is directly a crime either. But it depend on what this financial assistance facilitates, and it ultimately facilitated the financing of the RS army and also the RSK army.

Q. Mr. Torkildsen, I assume you know as well that apart from the army, the Republika Srpska and RSK have their educational system, they have their health system and health service, its public services. It has their -- its pension funds and intervention for social allotments for refugees and so on and so forth. And for a series of other things that every state or even every municipality, if you will, must needs have. So how can you boil that down to the army alone? Well, the people over thereby the people living over there, so many people. They didn't only have military needs. Military needs in that respect were the least of their needs because they had too many arms, too much weapons, especially in this area.

So why are you forgetting about the all the other needs that the ¹⁹¹¹⁵ budget has to provide for?

A. I'm not forgetting about them, but it is a fact that the major part of the budgets went to the army. And that can be demonstrated by documents. And I don't think that's in dispute.

Q. Well, it's always -- the budget always sets aside the largest portion for the army, for example. But you're losing from sight the fact that Yugoslavia has two republics, Serbia and Montenegro, and that in the budget of Yugoslavia, which is financed by Serbia and Montenegro, the largest portion is set aside for the army. And within the budget of the Republic of Serbia, and the Republic of Montenegro and the budget of Serbia is bigger than the federal budget, there's not a single dinar earmarked for the army. All the other needs are catered to. So do you have any idea that when you look at the general public and joint consumption picture that you must bear in mind the sum total of all these parts of the budget, not only that portion financed from the budget. The army is financed by the budget of Federal Republic of Yugoslavia because there's only one army. But the army is not financed from the budgets of either Serbia or Montenegro.

JUDGE MAY: I've stopped -- I've stopped you, Mr. Milosevic. You're supposed to be asking questions, not making speeches. What is the question?

MR. MILOSEVIC: [Interpretation]

Q. Is it clear to you that when we're talking about Yugoslavia, the army is financed from the federal budget?

A. Yes, that is clear to me. ¹⁹¹¹⁶

Q. And is it also clear to you, for example, that the health service and education is not financed from the federal budget?

A. Then I would have to look at the actual budgets again, but I would assume that you're correct there. I haven't seen anything to contradict that.

Q. So as we said, the health service, education, public services, pension funds, and many other things are financed at the level of the republics. Is that something you're aware of?

A. Again, I'm -- I'm just assuming that what you are saying is correct and -- I'm absolutely sure that the economic and financial sacrifices made by the Republic of Serbia in supporting the RSK and the RS with the humanitarian aid and so on were great, and I got no reason not to believe that that was not the case.

Q. But, Mr. Torkildsen, I assume you are also bearing in mind the hundreds of thousands of refugees that Serbia took in based on the principle of non-discrimination and it took them in from all parts of Yugoslavia, which is also that invisible aspect and portion which requires an enormous amount of funds to be secured to cater to the needs of those refugees in addition to the everything else. And not only in the Republika and the RSK but hundreds of thousands are in Serbia. So apart from this humanitarian aid this humanitarian aid would come under this heading too. Right? Are you bearing all that in mind?

A. To me that sound like a fair assumption. I got no detailed knowledge about the humanitarian aid provided, but I with just assume it must have been great and representing enormous amounts of money and ¹⁹¹¹⁷ ultimately sacrifices made by the Serbian people.

Q. The Serbian people in Serbia and the inhabitants of Serbia of non-Serb origin, that is people of all the ethnic groups, have taken upon themselves an enormous burden to help the RS and the RSK. Did you delve into an analysis of those facts at all? Who else could have helped them?

A. I have not conducted an analysis of that. And as you are correctly pointing out, who else could have helped them? I don't think there was anybody else to help them than the Republic of Serbia and or the FRY.

Q. Therefore, what is it we're talking about? And secondly, Mr. Torkildsen, I have gain the impression that an atmosphere is being promoted here where there seems to be some sort of secret with respect to the assistance we gave to the RS and RSK. You have an exhibit here. I apologise, Mr. May, but I can't see the number. It's been taken out of a binder, but page number is 00435081. And it is a photocopy, in fact, of the Official Gazette of the Republika Srpska Krajina, number 3, page 205, Tuesday the 25th of April, 1993, is the date. It's your exhibit, but it has -- it's come out of my tab, so I can't give you the tab number. I just have the page number, 00435081. It is the Official Gazette of the RSK. And that is a public document that is printed, is published, and is available to one and all.

And this is what it states: "Decision" --

JUDGE MAY: [Previous translation continues]...

MR. MILOSEVIC: [Interpretation]

Q. "Decision on allocation of funds for financing." It is the ¹⁹¹¹⁸ English translation. The RSK in the period from January until June 1993. 2004356130043/5688. Those are your -- that is your numbering. OTP team 5, 1 and 2, et cetera.

And when it says is the following: "Decision on the distribution of the resources for financing --

JUDGE MAY: [Previous translation continues]...

MR. NICE: Give me one minute.

JUDGE MAY: Go on, Mr. Milosevic, while we're looking for it. Just read out what it is you want to put.

THE ACCUSED: [Interpretation] Well, let me read it out. They're your documents, so there is nothing there that is in dispute. It says: "The funds to finance the competencies of the RSK," the amount doesn't matter, "shall be ensured" and then it has a colon, "from the source funds of the Republika Srpska Krajina to the total amount of such-and-such." And then the next point states: "From additional funds of the Federal Republic of Yugoslavia, in areas under UN protection," and the amounts are stipulated.

JUDGE MAY: We're told it's 64. 20th of April, 1993.

THE ACCUSED: [Interpretation] Mr. May, the point is as follows, not to waste time, the point is this, Mr. May: This Official Gazette is a publish document, and it publicly states that from additional funds of the Federal Republic of Yugoslavia are used to finance, et cetera. And then the other points, once again relying on the funds of the Federal Republic of Yugoslavia, the credits of the national -- from the National Bank of Yugoslavia, because having a credit from the National Bank of Yugoslavia ¹⁹¹¹⁹ was in part, I suppose, supported by the National Bank of Yugoslavia, credits from the National Bank.

MR. MILOSEVIC: [Interpretation]

Q. So why do certain aspects of assistance to the RS and RSK seem to be made a mystery of, as if we're dealing with some sort of discovery, the discovery of some secret facts which are public knowledge?

A. Yes. I think this is a very interesting document, as the accused is pointing out. It is stated here that a large proportion of the budget is obtained from additional funds of the Federal Republic of Yugoslavia. And also as he's pointing out, an even larger amount is actually originating from credits here, being a different word for primary emissions, again originating from the National Bank of Yugoslavia. And, basically, if you add these two figures, you will see that more than 90 per cent of the total proposed budget was financed from the Federal Republic of Yugoslavia. And looking at -- it is suggested what this is going to be spent on. It is a breakdown on the second page of the translation here, where we can see that the two-thirds of --

JUDGE MAY: [Previous translation continues]...

THE WITNESS: -- This proposed budget, the expenditure would be for education and self-protection and a part of that would be the funds for military salaries, comprising about one-third of the total budget ultimately provided by the FRY.

JUDGE KWON: But the question was it was made public at the time.

THE WITNESS: Yes. It was made public, yes.

MR. MILOSEVIC: [Interpretation] ¹⁹¹²⁰

Q. Why then this mystification, Mr. Torkildsen, as just we're uncovering what the papers say on the 20th of April, 1993? Do you have the need to uncover or discover anything that has been common knowledge for anybody who wanted to read about it in the papers, for example?

A. If we are talking about anything being a secret, then we would have to go to the item concerning National Bank credits, which actually financed about two-thirds of this budget. Because the right way that I have understood this, and I'm absolutely sure that this is correct, is that the National Bank credits you're talking about here, they are here referring to National Bank credits from the National Bank of Republika Srpska Krajina. But this would again ultimately originate from the National Bank of Yugoslavia. And that is not straightforward clear from the document that these credits originate from the National Bank of Yugoslavia.

Q. All right. Fine, Mr. Torkildsen. Let's -- I'm really interested in this. I'm really interested in hearing your professional expert opinion. It's not in the document because they are referring to their own National Bank.

And let me add that most probably the National Bank of the Republika Srpska Krajina would not be able to fulfil that obligation had it not received assistance from the National Bank of Yugoslavia and had it not taken out a credit with the National Bank of Yugoslavia, although that's not what it says expressly.

Now, explain this to me, please: As we are facing isolation and we were in isolation and some kind of cooperation and assistance was ¹⁹¹²¹ established, where, in principle but just in principle from the professional expert stance, is that different from the assistance by the International Monetary Fund to the country XYZ to ensure economic stability and any kind of stability at all, in fact? Where is that different when the International Monetary Fund, for example, decides to grant country XYZ a credit amounting to such-and-such under favourable conditions to maintain its country's economic stability. So from a professional point of view, where is that different in principle? And who makes the decision? Is the decision made by the recipient of the credit or is it the decision made by the International Monetary Fund? That is an expert question for you who are an financial expert yourself?

A. I would think the difference would very much be that the International Monetary Fund, I don't think would provide assistant to an army of such a magnitude.

JUDGE MAY: Yes. I think we will adjourn now. Mr. Milosevic, you'll have twenty minutes left, if you would organise your questioning.

THE ACCUSED: [Interpretation] That's too little, Mr. May. Will you please let me have the rest of the day?

JUDGE MAY: You take up a long time dealing with irrelevant matters and arguing with witnesses. If you organised your time better, then you would be able to get on to the most important things first. Yes.

THE ACCUSED: [Interpretation] Well, the war in Slovenia probably is insignificant. It probably doesn't apply to financial documents but it ¹⁹¹²² does refer to other exhibited documents. So I couldn't refrain from the satisfaction of drawing your attention to that but I agree with you, it is irrelevant.

JUDGE MAY: We will adjourn.

--- Recess taken at 12.21 p.m.

--- On resuming at 12.46 p.m.

JUDGE MAY: We've considered your application, Mr. Milosevic. You can have half an hour more. We'll then hear any examination by the amicus there might be, and, Mr. Nice, we won't start any other witness today.

MR. NICE: There are 92 bis matters for consideration.

JUDGE MAY: There are 92 bis matters, yes.

MR. NICE: And Ms. Uertz-Retzlaff will be available.

JUDGE MAY: Yes, Mr. Milosevic.

MR. MILOSEVIC: [Interpretation]

Q. As I have so little time, I will cover a few very specific points. Mr. Torkildsen, clearly that in the interest of supporting the positions of the opposite side, you're using an excerpt in your report from a speech of the commander of the staff of the army of Republika Srpska from September 1992, and it is B5507. So what should conform -- confirm the allegations of the opposite side. It is on page 0104299, and it says in part --

JUDGE KWON: [Previous translation continues]...

MR. MILOSEVIC: [Interpretation]

Q. "Our army is among the few in history which started a liberation war with a very sound material base particularly with regard to material ^{19123 BLANK PAGE 19124} equipment, food reserves, and so on. Is that right?

A. Yes, that should be the quote. I can't exactly see it there, but --

JUDGE MAY: Just help me with this, please: Whereabouts is it in the document, Mr. Torkildsen?

MR. MILOSEVIC: [Interpretation]

Q. Tell me, please, since I received from the party opposite --

JUDGE MAY: Just a moment. We want to find the passage. Mr. Nice, can you help us, please?

JUDGE KWON: Microphone.

JUDGE MAY: Well, we'll find it then. Yes, Mr. Milosevic, go on.

MR. MILOSEVIC: [Interpretation]

Q. Tell me, please, as these are also financial, economic aspects of what you are quoting here, why didn't you include in your report the rest of what is stated there, the very next sentence in which Mladic says, and I'm quoting now -- you can take the document, Mr. May, and check it for yourself. The document is tab 2. It is the report of the Main Staff of the army of Republika Srpska, submitted by Ratko Mladic. I received it from you.

And he says: "A large part of that, and especially food and fuel, in addition to the army, is being used by the civilian population and its institutions. According to rough estimates, the army with its material reserves is financing 20 per cent of the civilian population. But it should be the other way around. It's the people who should finance the army. Of course, such a situation will is not prevail for long because ¹⁹¹²⁵ reserves are running out."

MR. NICE: Page 5 at the bottom or.

JUDGE MAY: Yes.

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

JUDGE MAY: Let the witness find it. Have you got it, Mr. Torkildsen?

THE WITNESS: Sorry, it is on page 5? Is that correct?

MR. NICE: Page 5 at the bottom.

JUDGE MAY: Page 5.

THE WITNESS: Yes. The paragraph started with "Logistic security"; is that correct?

JUDGE KWON: Yes.

MR. MILOSEVIC: [Interpretation]

Q. Tell me now, Mr. Torkildsen, what is the financial effect or the monetary or economic component? You see in this fact that the army is supporting a large proportion of the population, maintaining it, keeping it alive in Republika Srpska precisely on the basis of the material possibilities that it had at that point in time.

A. I mean, the consequence would be less resources for the army if they are using of their own resources to feed the population. That's the only logical answer.

Q. Why didn't you include in your report the statements from paragraph 1, page 01042298, in which he says: "In accordance with the law on the army, the Presidency of the Serbian Republic in June this year decided to form, organise, and establish the army of Republika Srpska? ¹⁹¹²⁶

MR. NICE: Page 4.

THE WITNESS: Because I'm looking at financial matters. I mean, I haven't included every quote that's mentioned in every document that I have submitted. But that's why I submitted the documents in full as attachments.

Of course there could be other parts of these documents that are of interest and of value.

MR. MILOSEVIC: [Interpretation]

Q. In your report, you did not speak only about the support and assistance sent to Republika Srpska in financial terms, but you also mentioned in manpower, professional cadres, et cetera, didn't you?

A. That is correct, yes.

Q. Then tell me, why didn't you incorporate in your report, as you did mention this, the first and second paragraph of this same report on page marked 01042299, where it says: "A problem in its own right is the lack of active-duty officers in the army. Out of the total number of officers, Serbs from Bosnia and Herzegovina, our army has so far been joined only by --

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

JUDGE MAY: Yes, what is the reference, please, page?

MR. NICE: Page 5, or 18132, paragraph at the top of the page.

MR. MILOSEVIC: [Interpretation]

Q. So it says: "Out of the total number of Serbian officers native to Bosnia-Herzegovina, only about 21.3 per cent have joined our army so far." In brackets it says: "There were 4.206 and only 900 came over. ¹⁹¹²⁷ That is one-half of the establishment needs of the army." And in the next paragraph is says: Although those 21 per cent of officers of the former JNA joined our army from patriotic and the most humane reasons, and it is indisputable that they have reorganised the army with their expertise and sacrifice thus freeing Serbian territories, they have often fallen victim to individuals lacking awareness or even organised groups whose primary aim in this war is personal gain without regard for the defence of the Serbian people."

So you've seen that paragraph?

A. Yes, I've seen it.

Q. Where in these statements, I've quoted several now, is it possible even to discern or find any clue of the existence of a plan or a financial construction or any aid in officer cadres when it is quite visible that only 21 per cent of the total officer staff joined from among the ranks of the inhabitants of Bosnia and Herzegovina who used to be officers of the JNA before?

JUDGE MAY: Were you asked to look into that, Mr. Torkildsen?

THE WITNESS: Not that I remember. I mean, of course I haven't, as I pointed out, included every quote. The quote that I included from this document by Mladic I think was very telling, and that's why I included it in short.

MR. MILOSEVIC: [Interpretation]

Q. Yes. But I quoted them in greater length, and does it appear to you that when one does that, then what you wanted to attribute to those quotations taken out of context is lost. ¹⁹¹²⁸

A. I wouldn't say so. I mean, here we are specifically talking about the officers in the army. But as I understood what I quoted in the report, here is also referring to all the material and equipment that was left by the JNA when they pulled out of Bosnia and that this material and equipment was used by the newly-formed VRS army.

Q. Did you, Mr. Torkildsen, have as your assignment or did it occur to you to analyse the material and equipment which was left behind after the withdrawal of the JNA in territories controlled by Croatian forces, Muslim forces? Not just in weapons and equipment but entire military factories manufacturing explosives, various other supplies for the army. And they also were left behind, though they were the property of the former JNA, and they remained in territories under control of the Croats and Muslims.

JUDGE MAY: Did you examine that?

THE WITNESS: No, I did not.

JUDGE MAY: Was it part of your assignment to do that?

THE WITNESS: No, it was not, because the way I understood it was that that would not directly be part of the -- of any evidence relative to the indictment of the accused.

And further, I haven't seen any evidence, as far as I know, to the respect of that. Whether any quantities of equipment, material, et cetera, were left by the JNA for Croat or Muslim forces.

MR. MILOSEVIC: [Interpretation]

Q. You hadn't heard of the takeover of entire brigades and corps and their equipment, weapons, ammunition factories, military factories, ¹⁹¹²⁹ airports, and everything else that was in the possession of the JNA and was left behind in those territories? You had none of that in mind?

THE ACCUSED: [Interpretation] I really haven't touched anything so it can't be my fault.

JUDGE MAY: Yes, Mr. Torkildsen.

THE WITNESS: I have not looked at that aspect, no.

MR. MILOSEVIC: [Interpretation]

Q. Will you please read now paragraph 3 on the page marked 01042296 of this same report when it says: "By decisions of the --"

JUDGE MAY: Just a moment. We're not going to find this. We've got different pagination. Can you help, Mr. Nice.

MR. NICE: It was very early on but if the accused reads out the first line we'll probably get that.

THE INTERPRETER: Microphone, Mr. Nice, please.

JUDGE MAY: Go on reading Mr. Milosevic.

THE ACCUSED: [Interpretation] By decision of the Assembly of Republika Srpska.

MR. NICE: Page 2, third paragraph.

MR. MILOSEVIC: [Interpretation]

Q. "The decisions of the Assembly of Republika Srpska of the 12th of May 1992 enabled, provided the conditions for the armed people, the Serbs in the former JNA and the available material and equipment to be used to transform the units and form the army of Republika Srpska." Since, therefore, you say that you analysed the financial aspects of the military documents, does it follow from this an answer to the ¹⁹¹³⁰ question as to who created the army of Republika Srpska? Was it somebody in Serbia or in SFRY or in FRY, or is it quite clear from this quote how the army of Republika Srpska was formed? And also from the standpoint of the finances of the military documents --

JUDGE MAY: There are two questions.

MR. MILOSEVIC: [Interpretation]

Q. -- What are the financial consequences of those documents?

JUDGE MAY: There are two questions there. The first question is can you help as to who established the army? The second one is can you help as to how it was financed? If you would deal with those separately.

THE WITNESS: I got no competence or really no knowledge of how the army of the Republika Srpska were established. When it comes to the finances, it's not a particular point in this document that this aspect. The reason why I included this document in the first place was to put the financing itself that I talked about in other documents into some sort of perspective, because of course when you provide someone with a lot of material, equipment, that allows them to form the army, that would constitute a lot in monetary terms.

MR. MILOSEVIC: [Interpretation]

Q. Very well. But Mr. Torkildsen, on page 03077397. And at point 6, you indicated that the support extended was directed to Serb military units that were established in areas under Serb control in Croatia and Bosnia-Herzegovina, and also for organs of Serbian civilian authorities established in these areas; is that right?

A. Yes, that's correct. ¹⁹¹³¹

Q. Very well. And since you say that the support was directed, tell me, who directed the support that you are talking about towards military units and towards civilian authorities, or to be more specific in my question, as you explained credits, loans, financial assistance, surely the person who takes a loan, who receives financial assistance, is the one who directs it, who distributes it.

JUDGE MAY: Do you understand the question?

MR. MILOSEVIC: [Interpretation]

Q. Is that right or not?

JUDGE MAY: Do you understand the question at all.

THE WITNESS: Partly. It depends on what sort of for instance, of a loan, if you were the receiver of a loan. It depends on what terms you were supposed to use it. It could be that you receive a loan for a specific purpose.

And the same thing goes for whatever was provided towards the budget. I mean, I would assume that it was the receiver of the funds that partly took the decision. But it should be clear to the ones that gave this assistance to the budgets that most of it could be used for military purposes since most of the budgets were actually for the military.

MR. MILOSEVIC: [Interpretation]

Q. I'm just asking you who directed those funds. If the Republic of Srpska Krajina or the Republika Srpska is given a credit, a loan, to cover the deficit in its budget, surely the recipient of that loan and who takes the decision about the budget is the one who will direct those funds. Is that right or not? ¹⁹¹³²

A. That is right that they would direct the funds, but it should also be clear from the provider side of the loan that they obviously knew what the loan was going to be used for. That is absolutely clear.

Q. I asked you one thing, and you're giving me a different answer. The credit was used to assist the people living there. That's quite clear. That was the motive why Serbia, Yugoslavia, and Montenegro were extending assistance to assist the people. And surely those people have their own government who will take care of the use of those funds.

JUDGE MAY: Wait a moment.

MR. MILOSEVIC: [Interpretation]

Q. But tell me, Mr. Torkildsen.

JUDGE MAY: Let the witness answer. You're making these assertions.

It's asserted that the money was to be for the people, that Serbia was making loans for the people. Is that consistent with what you saw or not?

THE WITNESS: Definitely not. I think that one of the -- let's take, for instance, the -- the revised budget for the Republika Srpska in 1993. It's a very good example of what the use of the money was for. And I mean, its an obvious for the provider of the money, meaning here the FRY, that when more than 90 per cent of the budget is for the army, it's not only for the good of the people.

MR. MILOSEVIC: [Interpretation]

Q. And you do not believe it is in the interest of the people for lives to be protected if the people are attacked but only thing that have ¹⁹¹³³ nothing to do with protection and defence?

A. Well, of course I always think that the budget should be a mixed picture, but I also think that is rather telling in terms of the priority was given when more than 90 per cent of the money in the budget is actually given to the army. I mean, how much would that be left for schooling, hospitals, and so on?

Q. Very well, Mr. Torkildsen. Let us move on to be even more precise about certain matters. Was it unconsciously or unintentionally that you omitted to mention medical aid, aid in medicines, sanitary supplies, assistance in doctors as a certain expert profile that helped the most in taking care of what was most in jeopardy and that is the health of the people. And many doctors went to help their people in the areas of the RS and the RSK. Do you consider that also, that is medical aid, medicines, sanitary supplies, foodstuffs, and all other material and financial assistance, did you analyse all those forms of assistance as well?

A. No, I didn't, basically because I don't think it's very relevant to the case whether they received medical aid and so on. As I mentioned before, I'm sure that your sacrifices in terms of providing humanitarian aid were great, but I don't know how relevant it is to the case.

Q. Tell me, please, in view of the fact that in -- under paragraph 8 you say that the aid varied in the period from 1991 to 1995, tell me, according to your findings, when was it highest? When was it less intensive, and in what period was it more in the form of financial aid and less in material aid?

So could you please break that down and convey any conclusions ¹⁹¹³⁴ that you made regarding those time periods? I'd like to hear that from you.

A. Yes. I will try to do my best. In my view, the financial assistance seemed to be very much on an ad hoc basis. I note that systematically in the year -- in 1991, as we can see, there were numerous requests coming for financial and material assistance through the Serbian Ministry of Defence. And then when we move into 1992 and the entities of the RS and the RSK were established, and when they finally managed to get their budgets together, then it seemed like this was much more in a planned and consistent manner. To me, it seemed like a lot of the assistance was provided for directly into the budgets. But of course in 1991, no budgets existed for those entities.

And I think that assistance into the budget was at its greatest in 1992 and in 1993. And at least from what I can see, when we moved into 1994, when the printing of money, basically the primary issues were put to an end in January 1994, then obviously the assistance that the RSK and the RS received through primary issues were less than they had been before. I have to point out that I have not located any of the -- or seen any of the budgets or annual accounts for the RS in 1994 and 1995, so I can't really comment on what they received through primary issues in that period. I have seen the RSK budget for 1994 that I think was tendered through Milan Babic that he commented on during his testimony. And in that budget, there are a proportion originating from primary issues but it was much smaller than it had been previously.

But as far as I know and that the accused pointed out as well ^{19135 BLANK PAGE 19136} today is that the assistance given by paying the officers of the RSK army and the RS army continued during that period. And as far as I know, it only ended in the year 2002.

I hope that was of some kind of assistance.

Q. Yes, it is of assistance, even greater assistance than may appear to you.

Do you know that after the Dayton Accords in 1995, November 1995, there was absolutely no conflicts, not even individual incidents anywhere in the territories of Bosnia-Herzegovina or Croatia? Are you aware of that?

A. No. I got no knowledge regarding that issue.

Q. Let us assume that it is so. Let us go on the assumption that that is so. And just now, you said that up until 2002, Yugoslavia extended material aid to officers, that is, the army of Republika Srpska. Isn't that fact in itself sufficient for you as a financial expert to draw the conclusion that that was not in the service of any kind of war but simply in the service of the maintenance of the army within the frameworks and conditions within which it was defined by the Dayton Accords? No one was waging war after the signing of the Dayton Accords. And for another seven years, the aid continued.

JUDGE MAY: Just a moment, please. Did you study these things after the time of the Dayton Accords in 1995?

THE WITNESS: No, I haven't. When I'm referring to the financing of the officers in the Republika Srpska after 1995, I rely on press articles, and it is sort of common knowledge that FRY continued to finance ¹⁹¹³⁷ those officers out of the FRY budget.

JUDGE MAY: Yes. Mr. Milosevic, your time is now coming up, but you can ask two more questions.

THE ACCUSED: [Interpretation] I'm sorry that I have to be restricted to such a degree, but let me just try and ask a broader question.

MR. MILOSEVIC: [Interpretation]

Q. I didn't get the answer to my question. You stated that the aid continued until 2002 from the FRY to the army of Republika Srpska; is that right?

A. That is correct. And again, it's based on press articles.

Q. So for seven years after the end of the war. Is it possible then to claim that that was intended for war purposes?

A. That question I can't really answer what was the intention of continuing to finance them.

Q. Very well.

THE ACCUSED: [Interpretation] Please, Mr. May, this is within the framework of one and the same question and I have another one after that.

MR. MILOSEVIC: [Interpretation]

Q. Are you familiar with the fact that within the framework of the peace arrangement, primarily Dayton, the obligation was established to limit weapons and military effectives in the whole region? And this applied to both the Federal Republic of Yugoslavia and to Bosnia and Herzegovina separately to Republika Srpska, the Muslim-Croat federation, Croatia, and so on? And do you know that following instructions of the ¹⁹¹³⁸ international control commissions, the FRY fully abided by its obligations regarding military effectives and everything else? It fully complied with those restrictions. Did you have those facts in mind when preparing your report?

A. I'm not familiar with the details of the Dayton Agreement, no.

Q. Very well. So you know nothing about that. Is that related to the fact that you were asked to investigate?

THE ACCUSED: [Interpretation] Since you said that I have only one more question, Mr. May.

MR. MILOSEVIC: [Interpretation]

Q. So, Mr. Torkildsen, you analysed the aid of Serbia to Serbs across the Drina in Republika Srpska and in the Republic of Serbian Krajina. That is the aid of Serbia to Serbs.

Did you collect any information at all, any data at all, not to say did you analyse at all the aid of Saudi Arabia, Turkey, or some Western countries, Germany, Austria or countries like Pakistan, Malaysia, Indonesia to the war conflict in the territory of the former Yugoslavia? Did you do anything along those lines and did anyone give you any assignment to collect information about that?

A. No. I have not analysed such data because I do not have any documents in that respect.

JUDGE MAY: Yes, Mr. Tapuskovic.

MR. TAPUSKOVIC: [Interpretation] Your Honours, I have just one topic that I'd like to discuss and to ask questions. Questioned by Mr. Tapuskovic: ¹⁹¹³⁹

Q. [Interpretation] Mr. Torkildsen, for 1991, you looked carefully into the enormous number of financial documents that attended financial trends in that particular year and several years prior to that and a few years after that; isn't that right?

A. Yes. I mean mainly the period that I've been concentrating on is 1991, including 1995.

Q. 1991. In 1991, Yugoslavia was still in existence. I don't think you dispute that, do you?

A. No, of course not. But it was a transitional period.

Q. In the documents that you studied, did you come across facts and figures into the funds for development of the underdeveloped regions, Krajina, Bosnia, Kosovo? Did you come across information about these funds through which the underdeveloped regions were financed?

A. Not that I remember, but I have reviewed a lot of documentation.

Q. According to the financial documents and economic indices, was it in dispute at all that up until 1991, the most developed regions were the Republic of Croatia and the Republic of Slovenia? Economically speaking, they were the most developed of Yugoslavia's republics; is that right?

A. I have heard that myself, but I can't remember where I read it.

Q. And my last question: In all the documents that you examined and in all the exhibits that you arrived at, did you come across any information stating that one of the main reasons for which Slovenia and Croatia decided to launch their operation for independence was precisely because they no longer wished to assist the underdeveloped regions of the country? Did you come across information to that effect? ¹⁹¹⁴⁰

A. I cannot remember having seen any documents regarding that.

MR. TAPUSKOVIC: [Interpretation] Thank you. Thank you, Your Honours.

Re-examined by Mr. Nice:

Q. A few things, Mr. Torkildsen. You've been asked extensively about tab 6, the transcript of the meeting. The accused has taken you extensively over the passage that we find on page 4 or Registry page 17610 about obligatory reserves. A simple question that you may be able to help us with is this: Does that passage affect, in your judgement, at all that which you explained at paragraph 19 of your report, namely that the accused did not object to making of money available through primary issues?

A. I cannot give you a definite answer to that. The way as the accused pointed out as well, if you are increasing these reserves, that means that the monetary supply gets lower. But on the other hand, when we are looking at this in a broader context, it's obvious that the policies that were conducted later on were basically the use of primary issues, and that's how these institutions were financed.

Q. Yes. But reserves of the reserves of what to what? The reserves of -- it used to be gold, I suppose, but it's probably something else; hard currency as a proportion of money in circulation, is that it or?

A. No, I think the reserves that the accused was referring to were the reserves that the commercial banks had to keep with the National Bank of Yugoslavia.

Q. Very well. But in any event, and this was the longest passage of ¹⁹¹⁴¹ your cross-examination, does that modify about what he asked you about? Does that modify your conclusion or not?

A. Yes. If I understood this correctly, it not -- modifies the conclusion, but the result in the end is the use of primary issues.

Q. Very well. We're just concerned with that meeting at this stage and his representations of it. In the budget did you find any evidence of income other than that which came from the sources you've identified of the RS or the RSK? It's been suggested by the accused that they had income of their own.

A. Yeah. I mean, it depends on what area we are talking about. In the RS budget for 1992 or, actually, the annual accounts for 1992, they had some original income. But most of the -- these annual accounts came from primary issues, but they did have some original income as well. But then when we move on to 1993, the period of hyperinflation, I mean, as good as all of their income was from primary issues. And that goes for the FRY as well.

Q. You've been asked this question I think to some degree already by Mr. Tapuskovic, but when the accused was asking you about the republic, Federal Republic of Yugoslavia, raising money to be allocated to underdeveloped parts of the former Yugoslavia, did you find anything in the documents you've reviewed where money was earmarked for underdeveloped areas or for the purposes of underdeveloped areas?

A. I can't be a hundred per cent sure of this. I -- it could be that I've read articles. I know that there was something called underdeveloped areas, that is correct, but I don't know any details of what was provided ¹⁹¹⁴² or not provided.

Q. In the materials that you looked at and the way that the money was broken down or the money provided was broken down, you dealt with the salaries of officers and soldiers, and the accused was suggesting there was some kind of social relief other than supporting an economy by paying people who happened to be soldiers, did you find any posting of monies particularly to issues of social relief?

A. I think it's like for all of us. When we receive salaries, I wouldn't call it social relief.

Q. Very well. One or two other questions. He likened or sought to liken the Bank of Yugoslavia's relationship to the likes of the banks of Republika Srpska and Krajina to the relationship of a central bank I think to Morgan Chase, setting a rate. What can you say to that comparison?

A. I really couldn't understand the comparison that the accused was making at all. I mean, the bank he was referring to is a commercial bank and the central bank is something totally different.

Q. Finally, I shan't ask you to do the exercise now, but we can through your documents track down money raised in the way you've described and allocated to the Republika Srpska. For example, we can track the money down to a particular cause, can't we, in the army?

A. Yeah. I think in the -- one of the first exhibits we looked at yesterday, that was C4712, that gives a breakdown of the money allocated to the different cause of the VRS.

MR. NICE: Your Honour, we'll come to that when we look at a particular cause of a particular area. That's all I ask by way of ¹⁹¹⁴³ re-examination.

JUDGE MAY: Mr. Torkildsen, that concludes your evidence. Thank you for giving it to the Tribunal. You are free to go.

[The witness withdrew]

JUDGE MAY: I'll deal first of all with a ruling on the last selection of applications in relation to 92 bis witnesses. This ruling deals with the following witnesses: C1154, 1068, 1187, 1230, 1232, 1234, 1197, 1210.

The Chamber holds that the statements of all these witnesses are admissible under Rule 92 bis (A) for the reasons set out in our ruling of earlier this week, on the 7th of April.

The statement of Witness C-1154 will be admitted without cross-examination since it's the statement of a doctor dealing essentially with the autopsies and examinations of dead bodies which she carried out. As such, her evidence does not deal with the crucial or live issue between the parties.

The statement of Witness C-1187 will also be admitted without cross-examination. The evidence for the purposes of this case is of peripheral significance and not relating to a crucial or live issue. The remaining six witnesses must attend for cross-examination, also for the reasons set out in our ruling of the 7th of April.

[Trial Chamber confers]

JUDGE MAY: Well, we'll make a start on the next selection of witnesses. We won't be able to finish today, and we'll simply hear the Prosecution on those that we can in the time available. ¹⁹¹⁴⁴ We were going to start with 1072 and 1073. They both deal, according to my notes, with the attack on the village of Skabrnja. 1072 also gives evidence or makes a statement about the murder of his parents, about the destruction and looting in the village. And 1073, I have a note, gives some direct evidence concerning Mladic, visits by him either to the village or to Knin.

Ms. Uertz-Retzlaff, perhaps you could expand on that if you would, please.

MS. UERTZ-RETZLAFF: Yes, Your Honour. And I have to say I will only be here today, and next week I will not be available. Therefore, I would like to address if possible all the witnesses, and I have actually to make a distinction between the two witnesses that you mentioned right now and also some others.

We have altogether four witnesses who will mention either Mladic or Seselj, that is members of the joint criminal enterprise, and the position of the Prosecution is so far, concrete example C-1073, in the last paragraph speaks about Mladic, and we think that this paragraph needs to be live, live evidence of the witness, and the rest should be 92 bis. That same applies to the Witness C-1102, who also refers to Mladic and his visits to a detention facility. And that's actually page 4, first paragraph and the last paragraph of this witness statement. And we would also say that these two paragraphs should be live evidence, the rest 92 bis.

Further on, the same applies to C-1166. That is a witness dealing with the attack on Skabrnja and refers to Mladic and his participation in ¹⁹¹⁴⁵ this attack and his actions on page 3 of his statement and page 5 of the statement, and our proposal would be to have this again live and the rest 92 bis.

And there is the witness 1186, referring to what occurred in Vocin. And this witness also refers to a member of the joint criminal enterprise, that is Seselj and his presence in Vocin at the time. And this sequence should also be live evidence and the rest 92 bis.

JUDGE MAY: So I get the numbers right. So this is 1073, 1102, 1166, 1186.

MS. UERTZ-RETZLAFF: Yes, Your Honour.

JUDGE MAY: And those will be giving evidence and therefore will be available for cross-examination.

MS. UERTZ-RETZLAFF: Yes, Your Honour.

JUDGE MAY: We will consider that.

MS. UERTZ-RETZLAFF: And in relation to the other witnesses, it should, according to our position, be 92 bis without cross-examination. And, Your Honour, you may be wondering why we have so many people dealing with Skabrnja, but the point is that the witness that Your Honour mentioned first 1072, is the only witness who speaks about the second incident of Skabrnja. Therefore, he is needed. And the Witness C-1205 is the only witness on our list who speaks about what occurred to the victims of Nadin, which is a smaller settlement attached to Skabrnja. Then a person to be mentioned is also the Witness C-1160. This person speaks about detention facility not related to Skabrnja but Bjelci camp in Serbia, and it's actually a witness the witness Grujic referred ¹⁹¹⁴⁶ to. And he should be 92 bis without cross-examination. And the witnesses -- the Witness C-1192 refers to Vocin but only as a crime base witness without any special reference to members of the joint criminal enterprise.

And that's actually all I need to add as arguments of the Prosecution.

[Trial Chamber confers]

JUDGE MAY: Two minutes, Mr. Kay.

MR. KAY: I can do it in two minutes because I think the position is clear, and looking at the rulings of the Trial Chamber as we've progressed through this large number of 92 bis witnesses; all save 1192 have a JNA issue within them. And that has been the point that we have been making in relation to the issue of cross-examination. I follow the earlier rulings of the Trial Chamber in relation to details that have been given through the testimony of the witnesses such as Babic, C-025, and following the rule of the Trial Chamber, I'm not going to repeat the objections that we made in January of this year. But the issue that remains live is the JNA issue, although in 1192 that couldn't be said to exist.

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

MR. NICE: Sorry.

JUDGE MAY: We're dealing with the eight witnesses to which I've referred to. Is there anything you want to add to your usual objection? Certainly four of them will be cross-examined. The Prosecution have conceded that, but we'll have to decide about the other ones. ^{19147 BLANK PAGE 19148}

THE ACCUSED: [Interpretation] Mr. May, I understood the lady to say a moment ago that she had explained, in fact, something which I hear for the first time, that there was some sort of camp in Serbia. She says some camp called Bjelci in Serbia, as I understood it, and she even goes on to propose that I do not cross-examine that particular witness. I think that is untenable, because we're looking at a phenomenon here which must be investigated and cross-examined. As far as my relationship goes towards 92 bis, my attitude to that, I don't know how to state it in more categorical terms than I have done, more energetically to protest against the use at all of a type of testimony in this form or written testimony in this form which serves as a screen, a smoke screen, to present an even greater number of false testimony and also to restrict my time for cross-examination, both, and I am energetically opposed to that. And in this particular concrete case witness, I am flabbergasted by the idea that anybody has mentioned an alleged camp in Serbia and then to go on to say that the witness need not be cross-examine but that his written statement should be taken and that the Court should move on.

JUDGE MAY: Have we. We will consider these submissions. Yes, Mr. Nice.

MR. NICE: Very briefly. It relates to protection. 30 seconds in closed section if I may.

JUDGE MAY: Yes, as I say we will consider the submissions and rule on those witnesses. Yes, we will go into private session.

[Private session] ¹⁹¹⁴⁹

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[Open session]

THE REGISTRAR: We're in open session.

JUDGE MAY: Do you want to raise something about the private session matter? Do you want to raise something about what's just been said in.

THE ACCUSED: [Interpretation] Yes, in private session

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--- Whereupon the hearing adjourned at 1.51 p.m., to be reconvened on Monday, the 14th day of April, ¹⁹¹⁵¹ 2003, at 9.00 a.m.