Former Serb Minister Probed Over Spy Satellite Deal

BELGRADE - Serbia-Montenegro's former defense minister is under investigation for a "damaging" deal to rent an Israeli spy satellite, the military said yesterday.

Prvoslav Davinic, who resigned last September amid a separate scandal involving the purchase of military gear, signed the deal with ImageSat International in June. The deal was worth $52 million.

The Cyprus-based company was offering imagery gathered by the Israeli-built Eros satellite under a time-sharing scheme that enables partners to "own" the satellite when it passes over their region.

Serbian government officials have accused Davinic of making the "damaging" deal without consultations with government and military officials and of perhaps receiving kickbacks in the process.

Serbian Finance Minister Mladjan Dinkic said the government learned about the deal in June "through intelligence channels." He also alleged that Serbia-Montenegro President Svetozar Marovic was involved in its drafting.

"We immediately said it was out of the question," Dinkic said, adding that the contract was probably not valid and that no payments will have to be made.

Davinic has admitted signing the deal, but said it was made in consultations with the authorities.

The scandal was publicly revealed earlier this month during a visit to Israel by Serbian President Boris Tadic when Israeli and ImageSat officials demanded the payment of $5.3 million as the first installment for the rental of the spy satellite.

Tadic immediately asked for an investigation into the deal. Serbia-Montenegro's new defense minister, Zoran Stankovic, said an investigation was launched into the contract.

The cash-strapped military said it had no need for the spy satellite and that it could find a better use for the funds.