GIANT COCAINE BUST LINKED TO MILOSEVIC UNDERWORLD

A YUGOSLAV intelligence official has been caught trying to smuggle
cocaine with a street value of up to UKP4m out of Venezuela. Diplomats
say the case reveals a murky world of multi-million-pound drug
smuggling that helped to prop up the regime of Slobodan Milosevic, the
former president.

Officers of Venezuela's Policia Tecnica Justicia (PTJ) tried to seize
Miloslav Markovic as he headed for Caracas airport on September 28, a
week before Milosevic was ousted.

Hours earlier, in a joint operation with the American Drug Enforcement
Agency, they had found 40 kilograms of cocaine stashed inside a
container full of furniture and South American art that Markovic was
shipping to Belgrade from the port of La Guaira.

Markovic fled to the Yugoslav embassy, where he claimed diplomatic
immunity. Apparently shocked at the quantity of cocaine involved, the
Yugoslav foreign ministry dispatched a senior ambassador, Misha
Ivanovic, to Venezuela to negotiate with the PTJ.

The ministry regarded Markovic as a relatively lowly official, and was
prepared to hand him over to the Venezuelans. However, he told
Ivanovic he had been shipping the drugs under orders from high-ranking
officers in the Yugoslav army.

The stand-off with the PTJ ground on for 20 days, with Markovic
refusing to move from the embassy compound. Jose Vicente Rangel,
Venezuela's foreign minister, issued a detention order and there was
little protest from Belgrade. But officials were overruled by
Markovic's military protectors, who arranged for him to be flown home
from Caracas last weekend.

The embarrassment of the Belgrade authorities intensified when the
German Federal Intelligence Service, the BND, issued a report last
week claiming that Milosevic, his family and regime had profited from
a range of trafficking operations during the past 10 years.

The BND has made few details public, but western diplomats say its
evidence, combined with the Markovic case, could throw light on
drug-running channels and bring their operators to justice.

"I think there are some people here who would like the Markovic affair
relegated to page 20," said a foreign ministry official. "But there
will be a public trial, and it will be on the front page of the
newspapers."

The ministry has said it will not be intimidated by the Yugoslav army
and hopes to have the evidence compiled by the Venezuelan PTJ in the
next three weeks. Charges will then be brought against Markovic.

"It'll be a hell of a trial," said one insider. "I just hope Markovic
survives that long. Remember that someone has lost these drugs and
that someone is very angry right now."

Western diplomats say that when Ivanovic suggested to Markovic that he
give himself up, he produced a coded message known as a cryptogram. He
said it was an order from a senior Yugoslav army officer for the drugs
to be shipped.

Officially, the foreign and defence ministries in Belgrade claim
Markovic was acting on his own initiative. Privately, however, few
officials doubt that he was obeying orders.

Although the foreign ministry says its intelligence operation, known
as the Service for Research and Documentation, has no links to the
military, many observers believe they are intertwined. "Look at the
way the Soviets operated in the past, and more recently the North
Koreans," said one diplomat. "The foreign ministry was often used to
provide the logistics for the military."

Momcilo Perisic, the former chief of staff, and General Vuk Obradovic,
the two retired officers with the closest political ties to President
Vojislav Kostunica, are said to be anxious that the army should be
cleaned up. Military sources say several senior officers active in the
force want a general purge of the ranks, particularly of the
intelligence service, which until recently was headed by General Geza
Farkas.

Milosevic had tried to replace Farkas, but it is thought the general
could now be critical in providing incriminating evidence at
Markovic's trial.

The cocaine found at La Guaira was destined for Amsterdam, and is
believed to have been part of a much larger shipment, some of which
may already have reached Bosnia.

Yugoslavia was a crossroads for traffickers throughout the Milosevic
era, with the Kosovo Albanian mafia heavily involved in bringing
narcotics from Turkey into western Europe.

Police intelligence officials in Belgrade say the regime's ability to
profit from the Albanian trade has withered since the Kosovo war,
making trafficking from South America important for Milosevic's
financial survival. Elections in Kosovo this weekend are likely to
point it on the path to independence, making it more difficult for
Yugoslav drug networks to profit from those operated by the Albanian
clan mafias.

The BND's report said it had "evidence indicating Milosevic and his
entourage are engaged in drug dealing, money-laundering and other
criminal acts".