Private Military Companies in Serbia - Friend or Foe?

This research is published with a kind support of the OSCE Mission to Serbia.
All
analysis and recommendations put forward in this publication are attributable only to
the authors in a personal capacity and do not reflect the policy of the OSCE Mission
to Serbia.
Private Security
Companies in Serbia –
A Friend or a Foe?
Centre for Civil – Military Relations

Belgrade 2008
Private Security Companies in Serbia – A Friend or a Foe?
Authors:
Jelena Unijat
Marko Milošević
Predrag Petrović
Sonja Stojanović
Interns – Researchers:
Ivan Dimitrijević
Maja Maričić
Marina Ilić
Teodora Stanković
Katarina Vasić
Translators:
Dijana Gaćeša, Dragana Dakić, Ivan Kovanović, Ljiljana Nikolić, Novak
Gajić, Vidak Anđelić
Proofreading:
Vidak Anđelić
Copyright:
Centre for Civil-Military Relations, Belgrade, Gundulićev venac 48
Tel: +381 11 32 87 226, office@ccmr-bg.org
Cover design and computer typesetting:

Saša Janjić
Printed by:
GORAGRAF, Belgrade
Circulation:
350 copies, 136 pages
ISBN: 978-86-83543-51-9
Belgrade, 2008.
Acknowledgement
We would like to thank all those who found the time to take part in the interview
process, without them we would not have been able to complete this research
project. Special thanks goes to Milan Nikolić, the president of the Association
of Companies for Physical-Technical Security within Serbian Chamber of
Commerce who made many recommendations, opened many doors and
highlighted the major problems in the Serbian private security sector.
CONTENT
I
KEY RESEARCH FINDINGS AND POLICY
RECOMMENDATIONS
List of abbreviations 8
List of Illustrations 9
Sonja Stojanović
On the Need to Study Private Security Sector in Serbia 13
Marko Milošević
Methodological Framework for Researching Serbian Private
Security Sector 16
Jelena Unijat, Predrag Petrović, Marko Milošević and Sonja Stojanović

Key Research Findings and Policy Recommendations 26
II
Case study: PRIVATIZATION OF SECURITY IN SERBIA
Predrag Petrović
Privatizing Security in Serbia 42
Marko Milošević
The Influence of the Market on Private Security Sector 52
Predrag Petrović
Control and Oversight of the Private Security Sector 74
III
ANALYSIS OF LEGAL SOLUTIONS
Jelena Unijat
Comparative Analysis of the Four Model Laws with Recommendations 90
Katarina Vasić
Table Overview of Model Laws on Private Security in Serbia 102
Ivan Dimitrijević
Overview of the Private Security Legislations in the Countries of
European Union 106
Marina Ilić
Table Overview of Legislation Private Security Sector in the
Countries of European Union 112
Maja Maričić
Table Overview of LegislationPrivate Security Sector in the
Western Balkan Countries 117
IV
ANNEXES
Annex 1: Glossary 122
Annex 2: Initial Questions about Private Security Companies in Serbia 124
Annex 3: List of Interviewees 130
Annex 4: Existing Regulations Relevant for the Operation of PSCs 132
Annex 5: Bibliography and List of Useful Sources 135

List of Illustrations
1. Model 1: PCS environment in Serbia, Methodological framework for

researching private security sector in Serbia, p. 17
2. Figure 1. Actors in the chain, vertical and horizontal distribution,

Influence of the market on the private security sector, p. 55
3. Box 1: Work abroad – Experience from Iraq, Influence of the market on

the private security sector, p. 71
4. Box 2: Struggle for the right to issue work permits is also profit
motivated, Control and oversight of the private security sector, p. 78
5. Box 3: Paradoxical (in) accessibility of arms, Comparative analysis of

four model laws with recommendations, p. 95-96
6. Box 4: Detectives, Comparative analysis of four model laws with

recommendations, p. 100-101
7. Box 5: Profile of a European security officer, Review of private security

legislation in the EU countries, p. 111
List of abbreviations
BiH – Bosnia and Herzegovina

CCMR – Centre for Civil-Military Relations, Belgrade-based civil society
organization
COMSFOR - Commander of Stabilisation Force
CPS – Centre of Public Security
DDOR – Joint stock insurance company
EEC – European Economic Community
EU – European Union
FCC – Federal Constitutional Court
FRY – Federal Republic of Yugoslavia
GPS – Global positioning system
IPTF – International Police Task Force
LCEFM - Law on Control of Explosives, Firearms and Munitions
LEX – League of Experts, Belgrade-based civil society organization
MD – Ministry of Defence
MoI – Ministry of the Interior
NATO – North Atlantic Treaty Organization
OG – Official Gazette
OSCE – Organization for Security and Cooperation in Europe
PR – public relations officer
PRISMA - Program for Resettlement in Serbian Ministry of Defence
PSC – Private security company
PTS – Physical – Technical Security
RS – Republic of Serbia
SALW – Small arms and light weapons
SCC – Serbian Chamber of Commerce
SEESAC - South Eastern and Eastern Europe Clearinghouse for the Control
of Small Arms and Light Weapons
SFRY – Socialist Federal Republic of Yugoslavia
SIA – Security Intelligence Agency
SIA – Security Industry Authority (referring to abbreviation in table overview
of EU laws)
SITO – Security Industry Training Organisation
SSP – Social self-protection
SSQ – Secondary school qualifications
TS – Technical security
UNDP – United Nations Development Program
WBSO – Western Balkans Security Observer
I
KEY RESEARCH FINDINGS
AND POLICY
RECOMMENDATIONS
Sonja Stojanović1
On the Need to Study Private Security Sector in Serbia
Two specific reasons prompted us to start our study into the private
security sector in Serbia. The first and foremost is the absence of relevant
legislation regulating this specific activity. Serbia is the only country in South
East Europe that has not legally regulated the work of numerous private
security companies operating within it. Furthermore, a legal act regulating this
matter is one of the few missing pieces of systemic legislation governing the
security system in general.2 The specific nature of these companies requires a
law regulating their operation. Private security companies are simultaneously
economic agents subject to the rules of the market and security sector actors 13
whose activity may contribute to either an increase or decrease in the feeling
of safety among citizens at large. Their use of force may encroach upon the
human rights of citizens or potentially discriminate against those who cannot
afford their services. Such a sensitive sphere of activity calls for quite a specific
legal solution which would enable the companies concerned freely to compete
at the market level. This would allow them at the same time to observe the
minimum standards and guarantees of human rights as well as to contribute
to the state budget under the law. That is why a large part of our research
deals with the analysis of the existing four model laws addressing the private
security sector, and a comparative review of the legal solutions of the EU and
Western Balkan countries. This analysis resulted in specific proposals that
may serve as a basis to improve the relevant legal draft.
The second reason for the research is found in the increasingly frequent
media speculations concerning the number of companies and people actively
engaged in the security sector. Media estimates are widely different, bearing in
mind that a single registry of private security companies does not exist, since
1
The author is a director at the Centre for Civil Military Relations and a researcher in the
Belgrade School of Security Studies.
2
Barring civilian protection, all “major” actors in the security sector (the army, police, serv-
ices) have so far been covered by newly adopted laws regulating the basics of their operation.
they are, due to the absence of specific legislation, still registered as all other
companies in the municipalities where their seat is located. The media and a
few researches claim that the private security sector currently employs from
20 thousand to 60 thousand workers, who have in their possession up to 47
thousand pieces of arms, and also suggest that the PSCs may be “turning” a
profit measured in million euros, of which only a part is subject to government
taxes.
Bearing in mind that the Ministry of the Interior officially employees
45-46,000 persons 35 thousand of whom are policemen (authorized officers),
while the Army of Serbia provides employment to 28,000 (Milosavljević, 2006),
the apparent advantage of the private security sector arises doubts as to
whether the Serbian state actually has the monopoly on power. The unknown
size and capacity of the private security sector has added to the atmosphere
of doubt where one may rightly wonder if the private security companies in
Serbia are a friend or threat to the security of the country’s citizens. These
doubts and speculations induced us to empirically examine the functioning of
private security companies in Serbia in order to demystify this phenomenon
and offer the legislator and the public the relevant data for an appropriate
analysis.
14 What you will find in this volume is the first empirical research on the
private security sector in Serbia. Previous publications in the Serbian language
mostly comprised the findings based on secondary sources, i.e. study of legal
solutions adopted by other countries or media reports and recommendations
of domestic analysts. This research is, to our knowledge, the first that bases
its recommendations on findings derived from interviews with owners and
employees of companies offering physical and technical security services,
as well as representatives of foreign banks who are their principal clients.
In addition, in order to complete the overview of the sector, we have also
analysed the influence of such actors as e.g.: insurance companies, which
prescribe the conditions for insurance premiums and thereby indirectly set the
standards for the market of private security services; the Ministry of the Interior,
supervising these companies, including the arms in their possession; and the
representatives of the Parliamentary Committee for Security and Defence and
the Anti-Corruption Council, both of which should oversee the operation of
this sector for the benefit of all citizens. Correlating the findings from these
sources with those obtained from written material or direct observation of
PSCs operations, we have tried to map the scope and profile of the private
security sector in Serbia and point to the main problems and their possible
solutions.
The publication Private Security Companies – Friend or Foe is
divided into two main parts. An introduction presenting the methodological
On the Need to Study Private Security Sector in Serbia
framework of the research along with the main findings and recommendations
is followed by specific papers analysing the various features of the security
sector privatisation in Serbia and the best legal solution in this respect. This
inquiry into the private security sector in Serbia starts with the analysis of
the social context and historical circumstances conducive to the weakening
of the state monopoly on the use of power. The next paper addresses the
main characteristics of the Serbian market of private security services, the
interests and limitations for the operation of participants in that market, as
well as models for the promotion of its functioning. The last paper in this part
of the book indicates that the private security sector is impossible to control
in the absence of a single piece of legislation regulating its operation and
an appropriate supervisory body. This text critically presents the existing
mechanisms as insufficient and impracticable and offers solutions for licensing
and standard setting in this area.
The second part of the book gives a complete review of possible
solutions for the legal regulation of private security companies’ operation in
Serbia. It starts with a comparative analysis of four model laws elaborated
by the Serbian Ministry of the Interior (2002), the professional Association
of Physical and Technical Security Companies of the Serbian Chamber of
Commerce (2006) and two civil society organizations - LEX and CCMR 15
(2006). This analysis is followed by an overview of specific solutions adopted
by countries in Serbia’s surroundings as well as the EU, with respect to
licensing of the companies and their employees, use of coercion, possession
and storing of arms, and the PSC relations with the Ministry of Interior and
other bodies concerned with controlling their operation. In addition to leading
researchers in this project, the work on this part of the book included the fellows
of the Belgrade School for Security Studies who have hopefully benefited from
learning more about the methodology of working on research projects of this
kind.
In conclusion, we hope that this book will help all groups and citizens
concerned in mobilising the domestic political elite to promptly adopt a Law
on Physical and Technical Security. We have tried to present the specific
proposals in a way that takes into consideration the often conflicting interests
of various actors in the private security sector and to point to the advantages
and shortcomings of the possible alternatives. We are aware, however, that
being limited by time and finances we have not equally addressed all aspects
of security sector privatisation in Serbia, but nevertheless hope that this
publication may serve as the basis and map for other research inquiries into
this specific phenomenon.
Marko Milošević1
Methodological Framework for Researching the

Serbian Private Security Sector
Theoretical Model
Peter Singer is one of the more well known authors who has written
on the topic of the privatization of security sector2. He claims that two major
factors influence the development of this sector. The first is the trend of
privatizing the sector, most prominent in the 1980s in Western Europe and
North America, which is characterized by the phenomenon of outsourcing
services to the private sector. One of the services outsourced was linked to
16 the security sector. The second major factor emerged as a consequence of
the end of the Cold War. Large armies, typical of that era, are cut back in
an adjustment to the new environment. The excess of military, police and
intelligence personnel seek employment in the now growing private sector.
This trend of privatizing security sector services has been prominent

during the last few decades in countries in transition as much as in the
developed democracies. In this paper an attempt has been made to research
the main characteristics of the Serbian private security sector, the main
actors therein and the specific problems the sector faces, specifically those
that emerge due to a lack of regulation and legislation. Considering the
stated aims, the success of the research was dependent in large part on the
preliminary definitions of elementary terms, the established hypotheses and
the methodology selected.
Before an analysis of the specific characteristics of the Serbian private

security sector can begin it is necessary to determine the field of study. In
1
The author is a reascher in the Belgrade School of Security Studies
2
Peter W. Singer, Corporate Warriors: The Rise of Privatized Military History, Ithaca: Cornell
University Press, 2003.
Methodological Framework for Researching the Serbian Private Security Sector
other words, in order for Private companies that provide so-called physical-
technical security (PTS) to be understood properly as actors on the market, it
is necessary to define their interactions with other actors on the market.
17
Fig. 1: Interactions of Serbian PTS Companies
How can the term private security company be defined? Private

security companies can be defined as clearly structured and hierarchical,
registered corporate associations that offer services of a security based nature
and which compete with other such firms on the open market.
In academic literature, legitimate security providers can be divided

into two groups: private military and private security companies3. This division,
however, does not apply to the private security sector in Serbia. The concept
3
Fred Schreier And Marina Caparini, “Privatising Security: Law, Practice And Governance
Of Private Military And Security Companies”, Occasional Paper – № 6, Geneva Centre For
The Democratic Control Of Armed Forces, Geneva, March, 2005; takođe, P.W. Singer, “Cor-
porate Warriors: The Rise and Ramifications of the Privatized Military Industry”, Interna-
tional Security, Vol. 26, No. 3, Winter 2001/2002
of “security” in Serbian has a broader meaning and encapsulates both terms:

military and security. As these divisions do not strictly apply to the Serbian
case a new division has been compiled. Private security companies have
been divided into:
1. Private military companies

2. Private companies that provide so-called physical-technical security (PTS)
3. Private detective agencies
Currently in Serbia there are no private military companies in existence.

This concept describes companies that perform operations of a military nature
and which employ equipment, personnel and hierarchy that correspond to
military organizations. These are the companies most frequently thought of
when the topic of security privatization is being discussed. Recently these
firms have been involved in the wars in Iraq, as well as other low-intensity
conflicts.
In Serbia, the most common form of private security company is the

physical-technical security company, and so this research study will focus on
18 this type of company. These companies offer physical and technical protection
for individuals, buildings and property primarily in non-conflict areas. Their
equipment and training differ from those of private military companies. Lower
standards, as well as a lower risks, combine to result in the lower the cost of
wages and contracts which makes this a less attractive profession.
Private detective agencies are often small businesses with only a

handful of employees. They are not covered by this study. In most cases they
are registered as companies that offer missing person finding services or
physical-technical security. However, the activities of these companies also
include “rescue from sects” and “checks on a partner’s fidelity”. They are most
frequently run by former police or intelligence officers.
Hypothesis
The aim of this study, the first empirical study of the Serbian private
security sector, is to describe the functions of this sector. The drive behind this
study is a lack of specific legislation for this sector which could characterize
the operation of private security companies in the region and further abroad.
This lack of appropriate legislation has led to the formation of a grey security
zone4. The research team, therefore, worked to find answers to questions that
are key to this non-transparent sector in Serbia.
The initial hypothesis was that the lack of a law to regulate this
sector in Serbia is creating space for a large number of deviations. It is
necessary, therefore, to determine what kind of deviations are transpiring as a
consequence of insufficient regulation.
A alternative hypothesis is formed around the lack of control over the

sector. If the state has a monopoly over the use of force the private security
sector is either illegal or is subject to control by state organs. Considering
the fact that this sector is regulated by a number of more general laws, a
hypothesis is that functional unintegration within national security system is a
consequence of lack of an all encompasing law about PSCs.
One more additional hypothesis has been established. In the absence of

proper legislation, there are other mechanisms that can influence the sector.
Research Methodology
19
The majority of information collected for this study was obtained
through open interviews: the interviewees were provided with the questions
and thematic scope before hand but were allowed to add additional topics
themselves. The questionnaires contained basic questions on the problems
caused by the lack of legislation and control in this sector. Subsequently,
questions on the storage and use of fire-arms, questions on the organization,
storage and use of audio-visual records, as well as questions on the quality
of personnel working in the sector were asked. In addition to these questions,
room was made for any independent comments the interviewees might have.
During the compilation of this questionnaire, the SEESAC organization’s 2005
paper, “SALW and Private Security Companies in South Eastern Europe: A
Cause or Effect of Insecurity?” was consulted. As well as the interviews, other
works on this topic5, brochures, information from the PSCs’ websites and
examples from the annexes of insurance contracts were also used.
4
Unijat Jelena (2007), Grey Security Zone, Western Balkans Security Obzerver 4/2007, Bel-
grade, Centre for Civil-Military Relations, p. 22
5
Articles in the WBSO journal, number 4, and Security Sector Reform In Serbia – Achieve-
ments and. Prospects, in CCMR, p. 123-138
Planned and Realized Sample
By examining newspaper articles and consulting relevant research

studies both in Serbia and abroad, the size of this sector has become apparent.
Various researchers, academics and journalists put the number of workers
employed in this sector as somewhere between thirty and sixty thousand.
This impressive figure is greater than the number of servicemen in the army
or the number of police officers6 and indicates that this sector is exceptionally
important. The aim of this study is to measure the qualitative indicators of this
phenomenon and not to measure the representation of certain indicators in
the sample. During initial phase of interviews, we established that there are six
larger companies operating on the Serbian market, each of them employing
over 1000 people. These companies were then selected to form the sample
group as they are the largest and wield the greatest influence on the market.
All six are members of the PTS Company Association in the Serbian Chamber
of Commerce7.
During the completion of any study of this kind there are always
deviations from what is initially planned. This particular study was limited
20 because conducting the planned number of interviews was not achieved.
In addition, it was thought prudent to examine the opinions of some

smaller companies that fall outside the initial sample group. The intention was
to examine companies that are not in the aforementioned trade association so
that it would be possible to find out why some companies have chosen not to
operate within this (non-compulsory) institution. Furthermore, some security
companies in Serbia remain state-owned, that are the remnants of the now
discarded concept of social self-defense. The companies that offer purely
technical security services are a special case.
Three of the six largest companies responded to the request for

interviews. The remaining three, as well as some smaller companies and
some self-defense companies, either failed to respond or continually re-
scheduled the interviews. Considering the fact that interviews with half of
the largest companies were conducted it is fair to assume that the sample is
6
Lethal Legacy – SALW survey, UNDP, 2005, p. 10
7
This association has as its members a large number of Serbian PTS companies as well as
companies that deal with self-defence, private detective agencies and bank security managers.
The Association is of a professional character and is campaining for legal regulation of the
security sector.
representative for these companies. To balance their views, an interview was

also conducted with a smaller company with around 50 employees, which is
not a member of the association. The other smaller companies contacted did
not respond to the requests for interviews. However, some of the information
obtained during this interview gave an insight into the type of deviation (but
not its representation) in the PTS sector.
At least one interview with a representative of a technical security

company was planned in order to determine the specific characteristics of this
part of the sector. An interview was conducted with a representative of such
a company which is a member of the Association and which influences on
decisions that affect this sector. The specific characteristics of this part of the
sector are that companies within it employ a small number of technical staff
who does not come from the traditional security backgrounds. The majority
of PTS companies also offer technical security services and so this interview
was an opportunity to check some of the problems these companies deal
with, such as protection of privacy, bugging and access to information (this
information was confirmed by other interviewees).
Financial constraints confined interviews to being conducted in 21

Belgrade, thus small companies in the provinces could not be part of the
sample group. Furthermore, during the research conducted for this study a
trend of ‘Belgradisation’ became apparent on several occasions. Nonetheless,
many private security companies in Serbia operate on a national basis and
employ personnel from outside the urban centers. Considering this fact, the
aforementioned shortcoming of the sample group, already manifested in
the design of the research project, does not necessarily lead to errors in the
conclusion. One interview was conducted outside Belgrade8, with a state-
owned self-defense company. These two differences relative to the other
interviewees (location and ownership) manifested themselves also in the
framework of problems connected to the private security sector.
In addition to the research into the views and opinions of companies

that operate in the private security sector, research was conducted into the
environment these companies operate in. The first group of interviews made it
clear that the main clients of Serbian PTS companies are foreign owned banks
and the appearance of these banks on the Serbian market represented a
8
Because the anonimity of interviewees was guarantees the names of companies or informa-
tion that relates specifically to a company was not used in the text
significant stimulus for the private security market. Two verbal interviews were
conducted with bank managers of two separate banks and one PR manager
responded to the written questionnaire. The assumption that foreign banks,
which desire the establishment of international standards for security, can
influence the development of the private security sector has been vindicated.
In order to fully understand the influence the market has over this
sector it is necessary to examine the role of the insurance companies and
their (non-)stimulating influence on the private security firms. The Serbian
insurance market is dominated by two large companies – Dunav and DDOR
Novi Sad. These two companies command 60 and 30 percent of the market
respectively9. Obtaining interviews with these two companies was not possible.
A number of smaller companies and one larger company10 also failed to
respond to requests for interviews. The insurance company Dunav, the largest
on the Serbian market, did provide a document on the formal conditions for
insurance policies against burglary and robbery. One of the banks contacted
also passed on a document describing the conditions required by insurance
companies for the storage of valuables. Using a comparison of these two
documents and responses to interview questions an analysis of the policies
22 of insurance companies and the role they play in the private security market
became possible.

This sector could also be affected by the actions of organized trade
unions, where they have been established. Unions in this sector exist in just
one segment, the self-defense departments of state-owned companies. An
interview was organized with a former security union representative who
worked in a state-owned company. This interview provided information on
the functioning of unions in this sector and the potential influence they could
wield. The interview also served to confirm previously received details on the
differences in working conditions between the private security companies and
the state-owned companies.
The intention was to interview those responsible for the control and
monitoring of the private security sector in Serbia. In the attempt to contact the
relevant parties an insurmountable problem was encountered; namely, that it
was not possible to discover who is responsible for the control and monitoring
9
From the information obtained from one interview
10
This company is significant because of the proportion of the market it commands but was,
in the period when this study was being compiled this company was in the process of chang-
ing its ownership structures and, as a result, failed to resond to the request for an interview.
of this sector. The PTS companies directed our enquiries either to the police
or to security management. However, when the Ministry of Internal Affairs was
contacted regarding this matter no response could be obtained. Views and
opinions on the Ministry of Internal Affairs could, therefore, be presented only
on the basis of second-hand information.
Parliamentary oversight of this sector, conducted by the National

Security Council, does not exist. As a result interviews with members of the
Council were foreseen so that the views of this body on the current state of the
sector could be ascertained. Interviews with three members of the Council,
from three separate political parties, were conducted. The questions given to
the interviewees were about the size and significance of this sector in Serbia,
in which way we tested the interviewees’ awareness of this issue, and about
potential mechanisms for control over the sector.
The Serbian Army is the last in the line of state actors that has an
effect on the private security sector. Cutbacks in army personnel are relevant
in Serbia as much as in the rest of the developed world. Attempts were made
to assess the flow of personnel from the military into the private security sector.
In order to achieve this, persons responsible for the PRIZMA11 project were 23
contacted directly. The one interview that was conducted attempted to discover
the number of former military personnel and the type of former servicemen
who seek employment in the private security sector. Due to the similarity of the
skills required in the military and in private security the transfer of personnel
is frequently direct and, as a result, is not covered by this project. Even so, as
this tendency does exist, a course for the re-qualification of military personnel
wishing to be employed in the private security sector has been developed,
though the number of applicants to this course is still small.
Once this phase of the research was complete, it was decided that the
initial planned sample size should be broadened to include a representative
of the Council for the Fight Against Corruption. This was done in order to
establish the potential for black market and grey market activity in the private
security sector.
A separate part of the study was the comparative analysis of proposals

for legislation regarding this sector, including a comparative overview of
11
PRIZMA is a re-qualification project for military personnel who have been forced into early
retirement and which seeks to re-train them for work in the civilian sector. See http://www.
mod.gov.yu/02ministarstvo/023-sljudsker/prisma/prisma.htm
legislative solutions applied in the European Union as well as in other Western

Balkan countries.
In order to obtain as comprehensive a picture as possible of this sector
an interview was conducted with an employee (of Bosnian citizenship) of a
foreign private security company with operations in Iraq. The intention was to
determine and examine the perspective of employees of foreign security firms
(and to compare these with conditions in Serbian companies), as well as to
discover why it is that Serbian citizens can work abroad only on an individual
basis and not through the operations of domestic companies.
Scope and Shortcomings of the Study
The phenomenon of security sector privatization in Serbia has

attracted remarkably little attention. Including the SEESAC study conducted in
the whole South-Eastern European region, which was not sufficiently detailed,
this is the second study of this sector conducted in Serbia. This study, as
opposed to the aforementioned SEESAC study, focuses on the characteristics
of privatization in Serbia and approaches the subject matter from a number of
different angles. In addition to the phenomenon of privatization the study also
24 analyses the dynamic of the sector and the inter-connections linking the PTS
companies and other actors on the market. Understanding these relationships
is necessary for the compilation of recommendations for a policy paper of
a high standard. This study includes comparative analyses of the legislative
solutions applied in the region (due to the similar socio-economic conditions),
in the EU (due to the necessity of adopting EU standards) and four models
of proposed laws regulating the private security sector. The aim was to make
recommendations, based on the research compiled, to the legislative branch
of government that would enable it to form and pass an effective legislative
solution.
The shortcomings of this research are related to the survey sample

in both its planned and realized forms. The intended sample was constrained
by the available financial resources and was, therefore, limited to the wider
Belgrade area. The generalization of the situation in Belgrade and the
application of this model to the rest of the country is methodologically incorrect.
During the compilation of the study, however, it was discovered that the vast
majority of contracts are signed in Belgrade and that client companies do not
employ the services of security companies from across Serbia. A contract is
awarded to a company which then has the responsibility of providing personnel
for work in the field.
The problem with the realized sample is that the intended sample
was not fulfilled completely – this is another shortcoming of the study. This
shortcoming came about due to the fact that not all of the intended interviews
were conducted, primarily those with representatives of the Ministry of Internal
Affairs and the insurance companies. This shortcoming was reduced through
the interpretation of the views of other actors on the possible activities of the
MoI and the insurance companies as well as through an analysis of the existing
documents and regulations. Further, number of the interviews conducted
contribute to the shortcomings of the study. As has already been mentioned
a representative sample of the leading private security companies was taken.
Other interviews, however, had certain shortcomings, in other words some
companies consulted represented very specific cases: a small company that is
not a member of the Association of PTS companies, a company that provides
exclusively technical security services, a company from outside Belgrade that
is state-owned and one employee who is a member of a union. As this study
is of a qualitative nature the fact that the samples are not representative is not
necessarily crucial, the type of the sample is more significant than whether it
is representative of the whole sector.
Private detective agencies did not form part of this study even though 25
it was originally intended to include these actors in the Serbian private
security sector. A number of private detective agencies failed to respond to
requests for interviews, even though they were recommended to do so by the
Association of PTS Companies in the Serbian Chamber of Commerce. Also,
there are no Serbian private military companies but they could not be left out
of the theoretical framework as they are a significant phenomenon elsewhere
in the world. During interviews with PTS companies operations abroad were
mentioned so this topic was not entirely excluded. As has been mentioned,
an interview was conducted with a security professional from the region
who works in Iraq (in a foreign company that also employs Serbian citizens)
which in the understanding of advantages and disadvantages of employment
for persons from the former-Yugoslavia. Private military companies are not
thought to be a threat to security in Serbia, primarily because there are no
Serbian companies of this kind. Even so, their appearance in the future should
not be excluded and any legislation that will regulate this sector ought to take
this into account.
Sonja Stojanović, Jelena Unijat, Predrag Petrović and Marko Milošević 1
Key Research Findings and Policy Recommendations
The genesis of privatisation of security in Serbia

The size and profile of private security sector in Serbia
The control and oversight of private security sector
The public police and private security sector
Politics and private security
Clients and market-regulation
The rights of employees
The comparative analysis of existing model laws
Recommendations for new Law on PSC
The Genesis of Privatisation of Security in Serbia

26
The factors influencing the process of privatisation of security provision
are not the same in consolidated democracies and in post-socialist states,
Serbia in particular. The main incentive for security privatisation in developed
Western countries was the demand to increase the efficiency of state
institutions that brought about the marketisation of the public administration.
In Serbia, however, this incentive derived from the complete inefficiency
(failure) of the state to provide basic public goods. Security sector privatisation,
although initiated in the late 1980s with the establishment of the first private
detective agencies, gained full momentum in the mid-1990s, coinciding with a
rampant overall social crisis. The privatisation of security during nineties was
accelerated after the Serbian National Assembly in 1993 revoked the Law
on Civil Self-Defense, along with a number of other laws. This law regulated
the duties and responsibilities of business actors in a state security system.
The state-owned companies who had been operating according to this law
continued to do so even after it was invalidated. The problem this created
was that the revoking of this law had left a gap in the security sector that state
actors failed to fill and which was instead filled by private companies. As these
companies operated in the absence of any regulation and were influenced
1
The authors are researchers in the Belgrade School of Security Studies.
only by market forces the entire private security sector could not be integrated
into a unified Serbian security system.
After the fall of Milosevic’s regime on 5 October 2000 and the start of
democratisation significant efforts were made to ‘sober’ the private security
industry. The second wave of the privatisation of the security in Serbia was
after democratic changes. Most private security companies (PSC) flourished
when foreign companies entered the Serbian market at the end of 2000.
Foreign banks became their most significant clients. During the process
of privatisation in Serbia numerous foreign companies hired the services
of Serbian PSCs, often conditioning it with clauses about the transfer of
nightwatchmen employed in the privatised state company to the PSC. Such
clauses were a handy way for foreign companies to make cut-backs in staff
numbers without having to pay out dismissal wages. Until then many Serbian
companies employed a large number of people within the suport units (e.g.
company’s security unit) that had little or nothing to do with the core business
area of the company. However, the transition process made this practice
unacceptably cost-ineffective or otherwise the new legislation did not make
it obligatory to keep all employees. Simply by changing the uniforms of their
old state company with the uniforms of their new owners, the employees 27
of privatised companies appeared to be transferred to ‘new’ jobs. In this
way, foreign companies in cooperation with local PSCs, could avoid paying
redundancy compensation. Serbian PSCs, in turn, protected their interests by
agreeing to employ the transferred employees only for a limited period, after
which they would refuse to renew their contracts.
The third cause for increase in the number of people working for
private security sector after the start of democratisation process was personnel
reductions made in the military and police. In the interview with a representative
of a PRISMA2 project for re-settlement and retraining of military personnel
who have been forced into early retirement, we found out that the Ministry of
Defence does not have overview of the number of former military personnel
who were employed in the private security sector. At the same time, having
conducted job market analysis, the Ministry created course for the retraining
of military personnel wishing to be employed in the private security sector.
In 2005 the Association of Companies for Physical and Technical

Security was established within the Serbian Chamber of Commerce, aimed
2
http://www.mod.gov.yu/02ministarstvo/023-sljudsker/prisma/prisma.htm
primarily at promoting private security companies and advocating for their

interest representation. This association has as its members a large number
of Serbian PSCs, private detective agencies, individual bank security
managers, as well as former state companies that deal with health and safety
issues arising out of work activities. The Association gathers individuals and
companies of the same trade and it was formed to campaign for the adoption
of a single Law that would regulate the work of the private security sector.
The Size and Profile of Private Security Sector In Serbia
There is no exact data on the number of companies and people

actively engaged in the private security sector in Serbia. The procedure
and conditions for establishment of PSC are the same as those required for
opening any other business, although PSCs provide specific services which
also include the use of weapons. These companies are registered at the
municipal level, while licenses for obtaining and holding firearms are issued
by the municipal branches of the Serbian Ministry of Interior (MoI). There are
no central records on PSCs kept in any state institution, not even in the MoI.
The media and the few research surveys claim that the private security sector
28 currently employs between 20 and 60 thousand people, who possess up to 47
thousand pieces of weapons, and also suggest that the PSCs may be earning
profits measured in millions of Euros, of which only a part is taxed. After
triangulation of information from different sources we estimated the number
of people working in the private security sector in Serbia to be approximately
30 000.
In Serbia, the most common form of private security company is the

physical-technical security company, and so this research study will focus on
this type of company. These companies offer manned guarding and technical
protection for individuals, facilities and property primarily in non-conflict areas.
Serbian private security sector consists of six large private security companies
– each of which employs over 1,000 people and a number of smaller companies.
All six are members of the Association of Physical and Technical Security
Companies of the Serbian Chamber of Commerce. Some security companies
remain state-owned, that are the remnants of the now discarded concept of
‘social self-defence’. In brief, the ‘social self-defence’ referred to preparedness
of ordinary people to react in the case of natural disasters, technical incidents,
as well as for the companies to deal with health and safety issues arising
out of work activities. In the Serbian private sector there are also companies
specialising in technical protection (CCTV, surveillance with the use of ICT)
and private detective agencies. The latter are often small businesses with only
few employees. In most cases they are registered as companies that offer the
following services: search for missing persons or manned guarding. However,
the activities of these companies also include ‘rescue from religious sects’ and
‘investigation of a partner’s fidelity’. They are most frequently run by former
police or intelligence officers. Private detective agencies are not covered by
this study.
During the research conducted for this study a trend of ‘Belgradisation’

became apparent on several occasions even so many private security
companies in Serbia operate in whole country and employ personnel from
outside the urban centres. This is because the decision on which company will
provide a bank’s security is made at their head offices in Belgrade. The banks
invite a tender for a specific kind of service and for a certain sum, and the
approaval of tender usually leads to contracting for services to all of the bank’s
branches around Serbia. PSCs then provide security to all branches recruiting
local personnel or taking over the security personnel already employed by the
privatised bank.
The Control and Oversight of the Private Security Sector 29
The very fact that there is no exact data on the private security sector
indicates that the extent of institutional control over this sector is not at a
sufficient level. This is a consequence of several factors: lack of legislation
regulating general and specific conditions for registering private security
companies (PSCs), lack of authorities dealing exclusively with oversight of
the PSCs activities, weak regulation by market mechanisms and existence of
systemic opportunities for corruption and disloyal competition. However, this
does not imply that PSCs operate in a completely unregulated zone or that
their functioning is not in any way controlled by state institutions, but rather
that existing legal mechanisms are insufficient, that they are obsolete and only
partially obeyed in practice. The parliamentary oversight of private security
sector through the Security and Defence Committee is inexistent.
The Public Police and Private Security Sector
The Ministry of Interior (MoI) is formally in charge of the control of the

work of PSCs, but there is no department within the Ministry whose single
task would be to perform inspection of the PSC’s work. The Ministry of Interior
does not have a central database on private security companies, the number
of their employees or the weapons licensed to them, this information is to be

found in the local police stations where the companies are registered. The MoI
is also in charge of vetting new personnel in regards to their previous criminal
records, licensing for carrying firearms, and issuing approvals for routes that
will be used for the transport of valuable goods. So far, the Ministry of Interior
has not performed effective control over the private security sector due to
the inefficient work of police bureaucracy. One should not overlook the fact
that procedures for obtaining licenses for weapons often take a lot of time,
which is unacceptable in case where actors depend on the market and not
the state budget. In order not to “waste time” waiting for bureaucracy to do its
job, PSCs engage people despite the fact they have not obtained a license to
carry firearms. The inefficiency of MoI’s bureaucracy is an incentive for PSCs
to evade legal regulations and hire staff in the ‘black market’. Such a neglect
of oversight of private security sector by state actors is counterproductive to
the integration of PSCs into a coordinated security system at the national
level.
1. It is necessary to establish an organisational unit within the MOI

which would be in charge of keeping the central registry on PSCs
30 and weapons in their possession. This unit would also perform
inspection control of these companies. In order to ensure
efficient law enforcement, timely and a proper oversight by such
a unit, it is important to allocate enough resources to such unit
and to man it with an adequate number of staff. Private security
companies represent a market subject and for them “the time
is money”. Therefore, it is necessary to prescribe compulsory
deadlines for resolving demands submitted by PSCs to the MOI
which would be short, as well as that the penalties for failing to
meet these deadlines would be put in place.
The second problem is that the Serbian police force is entitled to

provide security services just like any other PSC (e.g. securing transport of
money)3 and to make profit in such a way. In the case of a new law allowing
for a situation where the MoI is issuing work licences for PSCs, there is a
great possibility for the police force to use this right in order to eliminate the
competition and possibly put itself in a monopolistic position on the market.
The problem which occurs regarding this is that Serbian citizens do not pay
3
the Rulebook on Types of Services Provided by the Ministry of Interior for Purposes of
Obtaining Additional Funds (Official Gazette of the Republic of Serbia, No. 64/2006, 71/2007
and 14/2008)
revenue in order for the MoI to gain profit on the security services market, but
rather to take care of public security. Putting itself on the market like any other
PSC, the MoI is reallocating human, material and financial resources which
in that case cannot be used for purposes for which the citizens allocated their
money. The general public is not informed of the scope of business in question
or about the amount of income obtained in this manner and furthermore – for
what purposes this income is being spent. The only way out of this situation
is to ban the police force from providing services performed by PSCs or to
reduce services to a limited range of situations (for instance, the police force
can only secure the transport of money for the National Bank of Serbia).
Recommendations for Issuing Licencies for PSCs and Their Employees
2. The decision on who should be entitled to issue PSC with work

licenses must directly depend on whether the MoI is entitled to
provide security services on a profit basis just like any other
PSC. If the MoI can put itself on the market as a PSC, then the
prerogative to issue PSC work licenses should lie with the
professional association. In this case, the MoI’s competencies
would include inspection control over PSCs, as well as the 31
security assessment of people who want to work in these
companies.
3. The decision on who should be entitled to the license training

of people who want to work in the private security sector must
directly depend on whether the MoI is entitled to provide security
services on a profit basis just like any other PSC. In order to
avoid a creation of monopoly over security services market by
either the MoI or the Association of Private Security-Technical
Companies, we recommend decentralised provision of training
for PSCs. This would create a sort of a market that would give
people who want to work in the PSC an opportunity to choose
where they want to be trained and their decision would be based
on information on the quality of training that a certain company
can offer.
Politics and the Private Security Sector
Some of the interviewees pointed to the fact that political connections

often influenced the outcome of tenders, but this always applied to “some other
companies”, and not their own. During the interview with PSCs representatives,
we have established that majority of them think that the political influence
exists and that politicians can significantly influence that certain companies
get more jobs. Nevertheless, we also found out that political influence could
also be indirect and based on the fact that certain companies (e.g. banks)
make agreements with those PSCs which are in their opinion close to certain
governmental centres of power. By doing so, they hope to gain governmental
support and get better deals in an easier way. In the absence of concrete
empirical evidence, it is possible only to talk of a perception of political influence.
We believe that percpetions matter and that they may be incentive for PSCs
to look to buy contracts by brybing state officials. It is possible, therefore, to
conclude that confirming whether party politics influences the market is very
difficult but that measures should be taken to prevent this kind of influence.
Recommendations for Depolitisation of Private Security Sector
4. Relations between politics and the private security sector

need to become transparent and public. For this to happen it
is necessary to envisage in new law the consultancy services,
so that public would know which politician or public servant is
32 acting as intermediary between PSC and a company, what their
rate is, as well as who the other actors in this relation are.
5. Serbian Law on Financing of Political Parties should be amended

so as to make the monitoring of political parties finances
genuinely possible, i.e. establish an independent oversight
authority consisting of people who are not members of parties
whose finances are under review. This should be done by
establishment of an independent Anticorruption Agency which
would have extensive authorities when it comes to combating
corruption, based on comparative experiences from other states,
particularly Australia and Hong Kong.
Clients
During the first interviews for this study it became clear that the main
clients of Serbian PSCs are foreign owned banks and the appearance of these
banks on the Serbian market represented a significant stimulus for the private
security market. It is worthwhile examining why banks are the most significant
clients. As well as the fact that they deal with money that needs protection
on a day-to-day basis they are also significant because they have branches
across the whole of the country. The service security companies provide for
banks is usually manned guarding and technical protection in the premises of

the branches, as well as security of cash and valuables in transit.
The insurance companies are one of the actors which can wield the
greatest influence over the private security companies. They can influence both
the PSC companies and the clients, i.e. the banks. By applying stimulative or
punitive measures in their insurance policies they can raise standards in the
entire sector. By having in place a prescription of the risks that will be coverd
and the necessary self-protection measures insurance companies influence
clients to demand a certain standard of service An increase in quality raises
standards but also raises costs – it also affects the level of qualification
demanded of the security personnel. Insurance companies active in Serbia
do not have developed policy for private security services, so it is very easy
to fulfill security conditions the companies must meet in order for an asset to
be insured.
The banks themselves are less inclined to invest greater sums of

money in improving the quality of security service they receive, mostly due
to the fact that the insurance companies are not giving them an incentive
to do this. In fact, the banks frequently report smaller sums of money for 33
money transfer simply to reduce the insurance costs. The presumption that
market actors can to a large extent control the quality of services provided
by PSCs can be confirmed by the fact that it was the private economic
entities, foreign banks in particular, who had significantly raised the quality of
services provided by PSCs by setting higher standards. The PSC companies
themselves are determined to provide the quality of service demanded by
their clients, however, the overriding factor, when it comes to bidding for
a contract is the, plummeting, hourly wage of the personnel. On the other
hand, the policies of the clients, in combination with the insurance companies,
can lead to a complete professionalisation of security personnel. As things
stand, applicants to private security companies are not obligated to prove that
they have any kind of qualification. As a result, applications are esentially a
formality, requiring only a medical examination and proof that the applicant
doesn’t have a criminal record.
Market Mechanisms of “Control” – Recommendations for Insurance

Companies
6. Insurance companies could have a much greater role in

controlling PSCs activities. For starters, it is necessary for
insurance companies to provide more detailed elaboration of

existing rules for setting conditions for securing the transport
of money, and subsequently control that these rules are being
obeyed.
7. Insurance companies might significantly influence the quality of

services the PSCs provide to their clients by making the amount
of the insurance premium rate depend on the level of security
risk related to the insured asset. When employing the services of
a private security company the standards and conditions of the
contract should be clearly defined and the quality of the service
should be closely monitored. During the process of drafting an
insurance policy, an insurance company should take into account
the resources invested in security and risk reduction and build
in the contract accordingly stimulative and punitive measures
which will motivate the clients to invest in their own security.
8. In order to meet both of the above mentioned demands,

insurance companies must have qualified staff who knows this
34 area well. An effort should be made to train personnel in the field
of security management so that they will be able to carry our risk
assessments and to effectively assess the quality of security
measures employed by private security companies.
The Rights and Profile of Employees
The employees are the main actors in the private security system.
So what are the employees like? Applicants for work in the security sector
are not faced with rigorous requirements and even those that exist are
largely a formality. An applicant must be able to confirm that he has no prior
convictions, that he has completed a medical examination, and a fire-arms
course and, in some cases, the applicant is required to have a driver’s license
and proficiency in martial arts. Today future PSC employees are not required
to have had completed training or acquired inidividual certification prior to
getting employed in PSCs. In order for an applicant to gain employment in a
security company, or more precisely, in order for him to be able to carry a fire-
arm, future PSC employees must pass a Ministry of Interior’ security check.
This check is the same as for any citizen wishing to obtain a firearms license
and can last from three to six months. This is an unacceptably long period
for a security company to wait. For this reason and because PSCs ususally
hire people on short-term contracts, companies often employ people without

waiting for security checks. Such personnel are employed as unarmed guards
or drivers, but there is always an element of risk. The employment of “black
market workers” has economic incentives too but the trend leans towards the
employment of workers in the ”grey zone”, meaning that they are employed
on short-term contracts through youth employing agencies, or similar, thereby
reducing the taxes that need to be paid for them. Moreover, because of the
condition to pass security vetting before receiving a licence to carry firearms,
PSCs often hire active police officers and soldiers. The Law on Police and the
Law on Military do not prohibit active staff to seek additional income through
part-time jobs. The main distadvatage of such regulaton is that it creates space
for misuse and unloyal competition due to the strong personnal connections
which police officers and military staff have in state security institutions.
The requirements applicants for the job in PSC face can be fulfilled
by a large number of people. This leads to an increase in supply, of human
resources, and, therefore, a fall in wages. Low wages affect the quality of
the service and the high personnel turnover. In Serbia there are currently no
functioning labour unions in the private security sector, except in the health
and safety departments of state-owned companies4. Therefore, it is very hard 35
for employees to negotiate in an organised way for better working conditions
and higher salaries. Labour unions could play an important role especially in
countries, such as Serbia, where employees in PSC are not recognised by the
law as sworn officers. The status of ‘sworn officers’ would be disincentive for
criminals to physically attack them due to the higher penalties prescribed by
the law. In the absece of legal protection of PSC employees, labour unions
could take more active role in negotiating with employers for greater protection
from risks arising from work, as well higher compensations for work-related
injuries. At the global level, however, there is an association of unions for
private security sector workers5. In Serbia these unions share the same fate
as other post-socialist unions in countries in transition.
The Recommendation for Employers and Owners of PSC
9. In order to improve quality of their companies’ services and to

allow for greater specialisation within private security market,
we recommend to the PSC employers to invest more resources
4
Previous departments for self-defence.
5
See http://www.asisonline.org/
in staff retention programmes and improvement of working

conditions. We also suggest to adhere to agreements on the
minimum wage, while also taking into account the costs of
security services outside of urban centres, if they want to
decrease the turn-over rate in the private security sector. If a
employer would compensate staff with better education and
specialised training with higher salaries this would probably be
incentive for employees to invest in their own education and in-
service specialisation.
The Reccomendation to Employees in PSCs
10. We recommend to employees in PSC to seek and protect their

interests through represetation in an organised manner through
labour unions. Through labour unions they could negotiate
higher minimum wages, better working conditions and promote
their profession in the public eye. We recommend them to study
the best practices from abroad, as well as to seek membership
in international associations of PSC employees.
36
Comparative Analysis of the Four Model Laws on Private Security
Companies in Serbia
Serbia is the only country in the SEE region wherein the private security
sector remains unregulated despite the large number of companies providing
security services already operating in it. The initial attempt to legislate this matter
was made in 2003 when a legal proposal developed by the Ministry of Interior
that is responsible for regulating this area, was submitted to the Parliament6.
The specific reason for this proposal not being adopted is unknown, but it is
clear that there was a lack of political will. In addition to this, at the moment
there are three model laws regulating the operation of the private security
companies. Two draft laws were prepared by the civil society organisations:
Model Law on Private Security Services (Centre for Civil Military Relations,
2006) and the Draft Law on Private Security for the Protection of Persons
and Property and Detective Activity (LEX, 2006), and the third one by the
professional association that assembles private security firms – Draft Law on
Private Security for the Protection of Persons and Property (the Association of
Companies for Physical-Technical Security attached to the Serbian Chamber
of Commerce, 2006).
6
Draft Law on the physical – technical protection (MoI, 2002)
Recommendations for New Law:
11. It is of key importance to adopt a law which would comprehensively,

substantially and precisely regulate the private security sector.
12. It is necessary to inform decision makers, particularly MPs in the

parliamentary Security and Defence Committee and the chairs of
party caucuses in the Serbian National Assembly, about the key
features of the private security sector in Serbia, and by doing so
to stimulate them to put the issue of adoption of laws regulating
this sector on the National Assembly’s agenda.
13. As the existing four models have been developed from different
perspectives, it would be best if they could be merged into
one proposal that could be put on the agenda of the National
Assembly. The best solutions from each of them should be used,
as this would produce middle ground solution that would satisfy
different interests and make it more implementable. We would
recommend following solutions:
• If the MoI keeps the right to commercially (for profit) provide 37

the security services, then we suggest to adopt the solutions
proposed in the model laws of the Association and LEX
which envisage that issuing and revoking of the licence is to
be under the jurisdiction of the Association of Physical and
Technical Security Companies within the Serbian Chamber
of Commerce. Another choice would be for the MoI to have
jurisdiction over issuing or revoking the licence under the
condition to end commercialisation activities of the police.
The latter is proposed in the models proposed by the MoI
and the CCMR.
• The licences for PSC should have limited time validity as it is
proposed in the MoI model law.
• The foreign legal entities (e.g. companies) and physical
entities (e.g. individuals) can provide security services
under the condition that there is reciprocity. Such solution is
envisaged in the model laws put forward by the CCMR, LEX
and Association.
• The PSCs should be obliged to have their staff pass
standardised training. This is proposed in all models in
different forms.
• The PSCs should be obliged to reserve financial resources

for training of their staff. This is proposed in the model law
developed by the CCMR.
• We recommend incorporating in the future Law the principle
of proportionality in use of force so to deter from excessive
use of force by the PSC staff.
• PSC should acquire at least the amount of weapons for one
half of the employees as suggested in the models proposed
by the CCMR, LEX and Association.
• PSC should be obliged to keep the record on the use of fire
arms as it is recommended in the models proposed by the
LEX and Association.
• Secret filming should be prohibited as it is envisaged in the
models proposed by the CCMR, LEX and Association.
• The Ministry of Interior should be authorised to perform
regular oversight of work of PSCs as it is recommended in
all four model laws.
14. After the law is enacted, it is necessary for a number of by-laws

38 to be passed, which would make this law specified. We would
recommend the following by-laws:
• Code of rules for uniforms and badges of the security

operatives
• Rules of business ethics
• Programmes of organising and carrying out the training
• Standards for setting the quality level of the services
• The decision on the price of services
• Procedure for money transport and other valuables
15. Alongside the passing of the new laws, it is important to change

the existing laws on (fire) arms and ammunition which would
prohibit PSCs to use automatic and semiautomatic weapons.
16. Having in mind the fact that the private security sector is a
unique type of business if activity and that it should not be left
to the mechanisms of self-regulation in the open market, we
suggest that the Law Against Corruption should incorporate
provisions about the prevention of corruption in the private
security sector.
II
Case study
PRIVATIZATION OF
SECURITY IN SERBIA
Predrag Petrovic1
Privatizing Security in Serbia
The sudden increase in the number and importance of companies

providing services of military nature and physical-technical security2 is a global
phenomenon at the turn of the 21st century. After almost four hundred years
the state and its institutions are no longer the only actors concerned with
the external and internal security of their citizens. “This Westphalian system
of nation states as the unchallenged pillar of international order (…) has
been superseded by a much more complex reality that has brought back the
privatization of war and conflict”.3 Continuing erosion of state monopoly on all
forms of organized violence is, among other things, caused by the impossibility
42 of the state to respond to modern challenges, risks and threats that emerged
with the end of the Cold War in the traditional way.
That is also indicated by the trend that states, corporations, international

organizations and NGOs, as well as individuals and communities, increasingly
rely on the private sector for their security needs.4 According to the Confederation
1
The author is a researcher in the Belgrade School of Security Studies.
2
For more on the difference between private military and private security companies see:
Fred Schreier And Marina Caparini, Privatising Security: Law, Practice And Governance Of
Private Military And Security Companies, Occasional Paper - №6, Geneva Centre For The
Democratic Control Of Armed Forces, Geneva, March, 2005. For the purpose of this paper the
difference between private military and security companies is not crucial since it is primarily
concerned with the security sector privatization in Serbia. Peter Singer, author of one of the
best known books addressing security sector privatization Corporate Warriors, does not even
differentiate between private military and security companies and refers to private military
firms, including both types.
3
Fred Schreier And Marina Caparini, Privatising Security: Law, Practice And Governance
Of Private Military And Security Companies, Occasional Paper - №6, Geneva Centre For The
Democratic Control Of Armed Forces, Geneva, March, 2005, p. 1.
4
Michelle Small, Privatisation of Security and Military Functions and the Demise of the
Modern Nation-State in Africa, Occasional Paper Series: Volume 1, Number 2, ACCORD,
Durban, 2006. p. 4.
of European Security Services (CoESS), 23 CoESS member countries

have as many as 27,318 operating private security companies employing
over 1,200,000 people.5 States wherein security sector privatization is not
underway are few and the SEE countries, Serbia included, follow the global
trend. Actually, the process of security sector privatization in this region has
been and still is one of the most intensive in the world.6
However, the factors influencing this process are not completely

the same in mature democracies as they are and in post socialist states,
Serbia in particular. The main incentive for security privatization in developed
western countries was the demand to increase efficiency of state institutions
that brought about the marketization of the state administration. In Serbia,
however, this incentive derived from the complete inefficiency (collapse) of the
state in the exercise of its basic functions.
Why is this distinction important? Privatization of the security sector

also entails a series of problems related primarily to the role of private
companies in the security system, and the oversight of their operation by
institutions of the state and society. Still other problems are found in the
evaluation of individual companies from the point of view of the services they 43
render, their ownership structure, organization, size, recruitment and training.7
Although the above-mentioned problems are found in all countries that have
private security companies, their gravity (and management) is influenced the
most by the manner of security sector privatization. Thus, for instance, the
issue surrounding the role of these companies’ in the security system does not
carry the same weight in developed western states as it does in those wherein
security sector privatization developed with a high degree of criminalization
of private security services providers. In view of this, the following text shall
attempt to present the specific characteristics of the security sector privatization
in Serbia starting with a review of the process in developed western societies,
for comparison purposes.
5
Its member countries are EU states and Turkey. http://www.coess.org/stats.htm.
6
Michael Page, Simon Rynn, Zack Taylor and David Wood, SALW and Private Security
Companies in South Eastern Europe: a cause or effect of insecurity?, SEESAC, 2005, p. 3.
7
McCarthy, J. “Expanding private military sector faces structural change and scrutiny”.
Jane’s Intelligence Review 18(02), 2006.
“Western” Model of Security Privatization
Rapid development of private security companies is attributable to a

combination of several factors. Namely, with the end of the Cold War and the
abandoning of the security dilemma model, as well as the shift in politics from
“risk avoidance” to “risk management”, the concept of large armies lost its
rationale. That is precisely why all liberal-democratic states embarked upon
radical reforms of their armed forces to make them smaller,8 better equipped
and capable for fast reaction to modern challenges, risks and threats. That
gave substantial momentum to the privatization of the security sector because
the armed forces’ redundancies made use of their security knowledge and
experience precisely in private companies.
Furthermore, new conflicts and warfare with “intelligent” weapons, like

the one in Iraq, imply large dependence of modern armies on sophisticated
technology which advances almost by the day. Only a few decades ago state-
of-the-art technology was under the sole “ownership” of the army, which means
that it could not reach the civilian market before the army made the most
of it. This process has today been reversed. The armies find it either overly
44 demanding or not worthwhile to provide the expertise for the maintenance of
technologically sophisticated systems themselves, and relinquish the job to
private companies.
Finally, we should not forget that the spiritus movens of these factors
lies in the neoliberal demand for economic development unrestrained by the
state. This demand imposed efficiency, competitiveness and technological
progress as global criteria to both private and public actors. Marketization
of the public sphere, initiated already in the 1980s with “Reaganism” and
“Thatcherism”, and gained full momentum with the end of the Cold War and did
not bypass the armed forces. Hence military and security work appeared on the
market. Almost everything the armed forces cannot efficiently do themselves
is contracted out to private companies, thus making outsourcing the key
word in the public sphere. This enabled the armed forces to focus on core
8
US army today numbers about 1.4 million compared with 2.1 million in 1989. For more on
downsizing of armed forces see: Fred Schreier And Marina Caparini, Privatising Security:
Law, Practice And Governance Of Private Military And Security Companies, Occasional
Paper - №6, Geneva Centre For The Democratic Control Of Armed Forces, Geneva, March,
2005.
activities9 and entrust those considered “peripheral” – e.g. the maintenance of

technologically sophisticated systems, training, securing of facilities, etc. – to
private firms, thereby increasing the profitability and efficiency of the security
system as a whole. Therefore, security sector privatization in the developed
western countries, as Herbert Wulf notes, developed from the top down
representing a deliberate government effort in a large number of cases.10
Weak State as the Cause of Security Privatization
Schneckener’s distinction between three types of fragile states may

help in understanding security sector privatization in Serbia. Namely, every
state is characterized by three basic functions – security, public good/welfare
and legitimacy/rule of law. A state executes its first function by securing
the external and internal security of its citizens, ensuring public access
to natural resources and enforcing tax administration. The second state
function, according to Schneckener, implies a functioning macroeconomic
policy, resource management, education and health care, maintenance of
infrastructure and environmental protection. Depending on the disruptions in
the performance of these functions states may be weak, failing or failed.11
Failed states can hardly be called states bearing in mind that, the existence 45
of a central government notwithstanding, they are incapable of performing
any of the above mentioned functions. The most salient examples of such
states are Somalia and Afghanistan. Failing states are mostly those wherein
the ongoing process of political system democratization is endangered by
separatist groups (e.g. Sri Lanka). They cannot safeguard the security of
their citizens, but the central government still provides public services to the
bulk of its population and enjoys a certain degree of legitimacy.
The Security sector in weak states is formed, streamlined and financed

by state institutions (security governance through government), but in a
9
The professional public does not agree on what are the core - mission-critical and peripheral
activities of the armed forces, and therefore can neither agree on the scope of the private sec-
tor’s “breach” into the public.
10
Herbert Wulf, Reconstructing the Public Monopoly of Legitimate Force. U: Alan Bryden
and Marina Caparini, Private actors and security governance, DCAF, Geneva, 2006, p. 4. The
phenomenon is apparent primarily in Anglo-Saxon states and is far less prominent in conti-
nental European states like France and Germany.
11
Ulrich Schneckener, Fragile Statehood, Armed Non-State Actors and Security. U: Alan
Bryden and Marina Caparini, Private actors and security governance, DCAF, Geneva, 2006,
p. 31-35.
remarkably inefficient manner. Inefficiency of the security system is directly

related to the inability (or unwillingness) of the government to perform the
other two functions. These states characteristically display serious financial
and economic disruptions, uneven distribution of goods, declining state
revenues, high unemployment rate, inefficient public administration, a high
level of corruption and clientelism, absence of an efficient and independent
judiciary, systemic exclusion of certain groups from the decision-making
process, restriction of political liberties and electoral frauds.
The inefficiency manifested by a state in the execution of these

functions may be used by non-state actors (organized criminal groups, leaders
of paramilitary units, rebel groups) to impose themselves as successful
alternative procurers of these services. They may, therefore “provide a limited
degree of security (...) albeit often in an arbitrary and unreliable manner,
which could further undermine the state’s legitimacy”12 and worsen security
in society. Thus for instance, an inefficient judiciary is characteristic of weak
states. Many individuals and economic actors are therefore precluded from
collecting their claims through legal channels and turn to those that could
efficiently help them achieve this.
46
However, those who offer these kinds of services and represent an
alternative to state bodies often come from a world of crime and resort to
arbitrary violence in doing their job. In this way, they aggravate the security
situation, despite their efficiency in serving their clients.
Furthermore, the state apparatus often instrumentalizes non-state

actors as a lever for the suppression of political opponents.13 Serbia of the
late 1990s is almost the ideal match for Schneckener’s model of a weak state.
Serbia of the late 1990s is almost an ideal match of the description of a weak
state according to Schneckener’s model.
The Case of Serbia
Security sector privatization, although initiated in the late 1980’s with

the establishment of the first detective agencies, gained full momentum in
the mid-1990s, coinciding with a rampant overall social crisis. Namely, during
12
Ibid. p. 32
13
Michael Page, Simon Rynn, Zack Taylor and David Wood, SALW and Private Security
Companies in South Eastern Europe: a cause or effect of insecurity?, SEESAC, 2005, p. 87.
the 1990s all indicators of the objective social situation in Serbia took a
sudden downward turn. An all-comprising social-economic and political crisis
– “entrenched” already in the SFRY - reached its height with the disintegration
of the country, war and imposition of sanctions against the FRY. In the 1989-
1993 period alone the country’s GDP was halved, industrial production and
per capita income were reduced almost threefold, while unemployment
increased from 17 to 24 per cent. In 1993 already close to 40 per cent of the
FRY population was on the poverty line.14
UN-imposed sanctions dealt a particularly hard blow to the functioning

of the FRY’s state institutions. Bearing in mind that it was impossible to legally
ensure the importation of resources and goods necessary for the functioning
of the system a dense network of illegal sales channels was created. This
resulted in the development of a huge zone of grey (and black) economy,15
which accounted for as much as 50 per cent of the 1994 GDP. Thus a “grey”
state was created to perform all the systemic functions the official state was
impotent in exercising. Activities completely outside the “grey zone” were
almost non-existent. The burgeoning of the grey economy encouraged the
privatization of the security sector in Serbia. As Fray points out, that was due
to the fact that “operations in the grey economy do not enjoy the protection of 47
the police and the judiciary”, and therefore “rely on private security”.16 Thus a
former high police officer and long-time owner of a detective agency Božidar
Spasić told the daily “Dnevnik” that Jezdimir Vasiljević and Dafina Milanović17
were founders of private security in Serbia. He also said that while he still
worked for the federal ministry of interior he saw many of his colleagues leave
their offices and salaries of 200-300 German marks for jobs paying four or five
thousand.18
14
For more on the social and economic situation in the 1990s see: G17 plus, Bela knjiga
Miloševićeve vladavine (White book of Milosevic’s rule), Beograd, G 17 plus, 2000, http://
www.g17plus.org.yu/srpski/files/knjiga/knjiga.pdf, retrieved 7. 2. 2007.
15
For more on the difference between the grey and black economy and their respective roles
in Serbia in the 1990s see: Jens Stilhoff Sörensen, War as Social Transformation: Wealth,
Class, Power and an Illiberal Economy in Serbia, Taylor & Francis. 6: 55-82, 2003.
16
Timothy Frye, Private Protection in Russia and Poland, JSTOR. 46: 572-584, 2002. This
calls for a clarification. Namely, part of grey economy operations primarily related to the
purchase of energy was organized by state bodies (security services) which therefore enjoyed
their protection.
17
Jezdimir Vasiljević and Dafina Milanović are founders of pyramidal banks Jugoscandic
and Dafiment.
18
Dnevnik http://www.dnevnik.co.yu/arhiva/01-09-2003/Strane/dogadjaji.htm 30. 8. 2006.
A large number of “entrepreneurs” in the grey economy network, as

well as in the private security sector, were criminal groups19 which, along with
experience and efficiency also acquired a high degree of organization. In this
way organized crime positioned itself in the society in direct competition to the
state’s social control function. Namely, the area wherein the state performance
became increasingly inferior was the control of deviant behaviour, which
was partly the result of the changed social norms and standards of sound
and socially acceptable conduct. This situation resulted in the erosion of the
functioning of the police, prosecution and judiciary as opposed to criminal
syndicates which started to take over some paracontrol social functions.20 It
so happened that due to the blocked operation of the judiciary and inefficiency
of executive power in the enforcement of court decisions, individuals and
economic agents turned towards alternative and efficient solutions, i.e. looked
for those who could collect their payments, and these individuals usually had
a history of involvement in wars or criminal activity. One of the well known
“firms” of this kind - “Tiger” was owned by Željko Ražnatović Arkan.21
These social circumstances and war surroundings offered easy

possibilities of obtaining firearms which led to an increase in almost all forms
48 of violence, even homicides as its extreme-most manifest form. The early
1990s registered a surge in the number of both expressive and instrumental
murders, accompanied by the beginning initiation of start up of professional
liquidations (popularly “waylays”) as a novelty.22 However, a matter of greater
concern was the inefficiency of state bodies in solving these murders. Thus
the rate of unsolved murder cases in Belgrade in 1993 reached almost 32%,
19
“Embryonic PCSs in Serbia were predominantly informal groupings of armed men that as
well as providing private security services engaged in racketeering, money laundering and
trafficking”. Michael Page, Simon Rynn, Zack Taylor and David Wood, SALW and Private
Security Companies in South Eastern Europe: a cause or effect of insecurity?, SEESAC, 2005,
p. 87.
20
Aleksandar Fatic, Organizovani kriminal u najizraženijim pojavnim oblicima u Srbiji, (Or-
ganized crime in its most striking manifest forms in Serbia),CSS, Beograd, 2002, http://www.
cbs-css.org/orgkrim.php. Retrieved: 1.2. 2007.
21
Željko Ražnatović Arkan was commander of the “Tigers” armed formation “operating_
in Croatia and Bosnia and Herzegovina. He was also repeatedly arrested and convicted for
diverse criminal offences in the country and abroad.
22
“Expressive murders are affective, reactive violence wherein the primary motive is ex-
hausted in the manifestation of violence and injury, i.e. destruction of another person, while
instrumental murders use violence primarily in order to obtain another objective which is as
a rule reduced to material benefit,” Biljana Simeunović-Patić, Ubistva u Srbiji u kontekstu
tranzicije i rata, Temida br.4, Žrtve i globalizacija: 12, 2003, p. 34.
compared with only 1.5% in 1985.23 Widespread assassinations and a high

rate of unsolved cases are indicators of an internal security crisis and important
causes of the fear of crime. That, on its part, added to the need for private
security services. Just how large this (potential and/or actual) demand was is
also revealed by the fact that despite the poor social and economic situation
and the existent parallel economy 270,000 new private firms were registered
during the 1990’s, 60,000 of which operated successfully.24
However, security services were only a screen for criminal activity of

many individuals and groups. Numerous economic subjects were forced to
enlist the services of security “firms” to guarantee that their businesses, e.g.,
would not accidentally catch fire. Thus they “fuelled demands for their services
by creating perceived threats of insecurity simply through their agency”.25 But
due to the high competition in the private “security market” only the strongest
“firms” could actually provide security to their clients. One of them, the above-
mentioned firm “Tiger Security”, had stickers on the shop-windows of many
companies which repelled the large and aggressive competition of security
procurers. In this way they actually guaranteed clients a certain degree of
physical security in their operation.
49
Although all security firms were not criminal organizations or
involved in criminal activities, the domination of those that were, helped to
create the prevailing public perception of the entire security sector as deeply
criminalized.
Furthermore, the favourable market position of private security firms

came about as a consequence of their links with the political, economic and
security “elite”. Thus, for example, Željko Ražnatović-Arkan was elected to
the Serbian parliament in 1992 on an independent ticket while, according to a
B92 journalist,26 the armed unit he commanded was part of Serbia’s security
system.
23
Ibid, p. 36. Data originate from the Belgrade District Prosecutor’s Office.
24
Jens Stilhoff Sörensen, War as Social Transformation: Wealth, Class, Power and an Illib-
eral Economy in Serbia, Taylor & Francis. 6: 55-82, 2003.
25
Michelle Small, Privatisation of Security and Military Functions and the Demise of the
Modern Nation-State in Africa, Occasional Paper Series: Volume 1, Number 2, ACCORD,
Durban, 2006, p. 16.
26
Švarm, F, “Jedinica.” (Unit), B92, Beograd, 2006, Retrieved 5. 2. 2007, http://www.b92.
net/specijal/jedinica/
In conclusion, we must not disregard the fact that war surroundings, in addition
to providing “armed support”, also created a powerful “personnel” base for the
newly established private security firms. A large number of men returned from
the battlefield trained to use arms, after having participated in the actions of
military, paramilitary, police or parapolice units on the territories of Bosnia and
Croatia. These people therefore saw employment with private security firms
as the only way to earn a living.27
***
After the change in power on 5 October 2000 Serbia set out to

implement comprehensive social-political and economic reforms and achieved
substantial results in the process. Firstly, the policy of confrontation with
developed western countries ceased and the sanctions were lifted. Inflation
was curbed within normal limits, dinar was stabilized and major foreign
investments were registered.28 There has also been some progress in fighting
corruption29 and crime and shifting the economy into legal channels. Thus
some of the problem generators were eliminated. Moreover, significant efforts
were made to “sober” the private security industry. In 2005 an Association
50 of Companies for Physical and Technical Security was established with the
Serbian Chamber of Commerce, aimed primarily at promoting private security
firms and advocating their interests. The Association has developed a model
law of to comprehensively regulate physical and technical protection30 and
adopted a Code of Business Ethics of companies engaged in services of this
kind. The degree of actual “sobering” in this line of work is evidenced by the
fact that an increasing number of embassies have been contracting security
services with local companies. It appears that in addition to quantity related
criteria for operation (number of staff and weapons…) the quality of services is
increasingly valued at market level. That notwithstanding, the field of security
services still reveals the existence of problems characteristic of the 1990s:
27
Treća oružana sila u Srbiji (Third armed force in Serbia). Dnevnik. http://www.dnevnik.
co.yu/arhiva/01-09-2003/Strane/dogadjaji.htm. Retrieved 2. 9. 2006.
28
“According to the director of the republic agency for foreign investments and export
promotion Jasna Matić, investments in Serbia in 2006 totalled four billion euros, of which the
first ten greenfield investments account for 1.2 billion”. http://www.zrenjanin.org.yu/aktuelno/
NajveceGrinfildInvesticijeUSrbiji2007.htm retrieved 11. 2. 2007.
29
For more on the index of corruption in Serbia see: www.globalintegrity.org.
30
Government institutions and NGOs have both contributed to the regulation of this sphere,
e.g. the Ministry of Interior of Serbia, League of Experts and the Centre for Civil-Military
Relations have each developed their model laws.
criminalization,31 market domination of certain firms based on political ties,32

inadequate training, and inferior selection of personnel and absence of legal
regulations. Thus in addition to the fact that a law regulating the physical and
technical protection has not been passed to this date, the existing legislation
governing this area is not observed.33 That is why the mere act of passing the
law will not be a large step forward if the state institutions are incapable of
ensuring compliance and enforcement. This shows the need for further reform
of state institutions to increase their efficiency in the performance of their
essential functions, as well as a different approach towards the examination of
the private security sector in Serbia - an approach which will take into account
all the features that make this sector in Serbia specific and different from those
in developed western countries.
51
31
E.G. security personnel participating in robberies. “Kamuflaža za ljude na ivici zakona”
(Camouflage for men on the verge of law), Glas javnosti, Beograd, http://arhiva.glas-javnosti.
co.yu/arhiva/2005/11/10/srpski/T05110901.shtml. Retrieved 11. 2. 2007.
32
Široko polje za pravo jačeg (Wide leeway for the right of the stronger). Danas. http://www.
danas.co.yu/20060825/terazije1.html. retrieved 30. 8. 2006.
33
Primarily the Law on Weapons and Ammunition.
Marko Milošević1
The Influence of the Market on Private Security Sector
Private and Secure – The Free Market or Controls on the Use of Force?
In terms of legislation, the privatisation of security is a unique concept.

On one hand, this process can encroach upon the state’s monopoly on the
use of force, yet on the other hand, the market demands the liberalisation of
existing legislation. The fact that a group other than the state would be able
to apply force in an organised manner would certainly necessitate some form
of oversight, if not the complete prohibition of such activities. Thusfar, the
52 state has been a garanteur of security for all citizens in equal measure. Now,
however, the market has thrown up security firms which offer security services
only to those how can afford it. Such a division of the populace, into those
who can afford security2 and those who feel less secure because they cannot,
must be resovled through legislation.
A second function of these private security firms is that they are

subject to market forces, selling their services – i.e. security – on the market
and competing for contracts and market share with other private security firms.
With some exceptions, they are neither founded nor owned by the state and,
as a result, they are not subject to the same oversight mechanisms as state
security actors such as the police, army or intelligence agencies. The private
security firms are caught up in a competitive market and ought to be allowed
to function in the same way as other market-based actors. All countries in
transition are inclined to liberalise aspects of their legislation in order to attract
investment and private security companies (PSC) are in a position to use this
fact in their favour.
1
The author is a researcher in the Belgrade School of Security Studies
2
Some of these firms do not even attempt to portray themselves as providing a service that
will benefit society as a whole, instead they are happy to be seen as available only to the
privileged.
Absence of Legislation – Who Loses Out?
Estimates put the number of people employed by private security

firms in Serbia somewhere between 20,000 and 60,000 and the number of
firearms used by such firms at 47,0003. Such figures must surely catch the eye
of legislators. Certainly, it cannot be claimed that the private security sector
in Serbia is completely unregulated, it would be more apt to say that what is
lacking is one unique law that would regulate the entire sector. There is broad
agreement that the operating of the private security sector is inefficient and
full of imperfections and contradictions due to the existence of ten laws, each
covering only certain parts of this sector. This is primarily due to most of these
laws not being designed specifically to regulate the security sector alone but
apply to all private firms4. This is a result of the fact that the law does not yet
recognise the provision of security as a specific activity, nor does it recognise
PSCs as actors in the general security sector in Serbia. The causes that lie
behind such a confused situation can be found in the origins of private security
firms in Serbia.
In 1993 the Serbian National Assembly, along with a number of other

laws, revoked the Law on Civil Self-defense. This law regulated the duties 53
and responsibilities of private firms in a comprehensive security system. The
companies who had been operating according to this law continued to do
so from pure inertion. The revoke of this law created a problem that left a
gap in the security sector that state actors failed to fill and which was then
filled by private companies. As these companies operated in the absence of
any regulation and were influenced only by market forces the entire private
security sector could not be integrated into a unified Serbian security system.
Personnel reductions in the army or police were followed by increases

in the number of people working for private security firms. Some of the
activities of these firms have become an integral to the day-to-day functioning
of private companies, such as cash and valuables in transit or school safety
and security services. Yet the fact remains that the employees of PSCs do not
have the same status as state officials5 and are not, therefore, subject to the
3
“Living with the Legacy: SALW Survey Republic of Serbia“, UNDP 2002, p. 10
4
See annex for the laws that apply to PSCs.
5
Police officers have the status of state official and they are allowed to use their fire-arms
and to apply physical force under less restrictive conditions than private security company
employees.
same responsibilities. This can only impact on the motivation of employees

and their effectivness in carrying out their duties. Employees of companies
that provide so-called physical and technical security (PTS) often carry
firearms that, according to the strict letter of the law, they are not allowed to
use. This affects how these security company employees are seen by the
general public – mostly as a threat to their security – as well as the way they
are seen by criminals who might want to take advantage of the fact that they
are armed but cannot use their weapons. In contrast to similar companies in
other countries which present themselves as ‘service providers’ and which are
open and integrated into the unified security systems of their state, Serbian
companies receive a very bad press.
During the process of privatisation in Serbia numerous foreign

companies have inherited the servces of Serbian security firms, often with
clauses about the transfer of nightwatchmen to the security firm. Such clauses
are a handy way for companies to make cut-backs in staff numbers without
having to pay out dismissal wages. Until then many Serbian companies
employed a large number of people with secondary functions that had little
or nothing to do with the primary function of the company. However, the
54 transition process made this practice unacceptably inefficient or otherwise
the new legislation did not demand it (as is the case with security). In many
cases the security personnel were ageing employees, disabled employees
or other employees who the company would otherwise make redundant but
could not do so legally. Simply by changing the uniforms of their (former)
employees the new owners, in cooperation with local PTS companies, could
avoid paying redundancy compensation because the employees in question
were transferred to ‘new’ jobs. The PTS companies, in turn, protected their
interests by agreeing to employ their new employees only for a limited period,
after which they would refuse to renew their contracts.
Inter-linked Actors and their Interests
The standard operation of PTS companies leads to a conflict of interest

between those who provide security services - and who are inclined to earn
as much as possible for the least amount of effort - and those who are the
end users of security services – and who want to pay as little as possible for
a high quality service. It is possible to loosely view this process as having two
elements, horizontally and vertically. The horizontal connections are between
the clients, the PTS companies and insurance companies. The effect these
actors have on the quality of security services is clearly observable thanks
to already determined standards. The vertical connections are between

the Ministry of Internal Affairs (MoI), the National Security Council, the PTS
companies – who express their interests in their vertical connection through
their employees and their unions. The vertical connections do not affect the
quality of the service provided through market action but rather through the
regulation, the issuing of licenses and the establishment of inside industry
standards.
55
Figure 1. Inter-linked actors, vertical and horizontal connections
The key actors amongst those on the horizontal line are the insurance
companies. They can influence both the PTS companies and the clients, i.e.
the banks6. By applying stimulative or punitive measures in their internal
statutes they can improve the functioning of the entire sector. The clients
can, through clauses in tenders, demand a certain standard of service. An
increase in quality raises standards but also raises costs – it also affects the
level of qualification demanded of the security personnel themselves. Within
these horizontal connections there is increased room for improvement. At the
moment, insurance companies have not developed a specific set of policies
for the services provided by security firms and it is, therefore, too easy to meet
the conditions they set.
6
The employees of banks, as the most significant clients, were interviewed for this study but
all clients who want to ensure the security of their assets should have an insurance policy.
Banks are, themselves, not sufficiently motivated to increase the

amount they are paying for security services as such an increase would not
be supported by stimulative measures on the part of insurance companies.
Also, banks frequently report smaller sums of money for transfer so as to
reduce their insurance payments. Even so, it is evident that the standards
demanded by banks for the services provided by security companies, has had
a positive effect on the quality of the service. The PTS companies themselves
are determined to provide the quality of service demanded by their clients,
however, the overiding factor, when it comes to bidding for a contract is the,
plummeting, hourly wage of the personnel. On the other hand, the policies
of the clients, in combination with the insurance companies, could lead to a
complete professionalisation of security personnel. As things stand, applicants
to private security firms are not obligated to prove that they have any kind of
qualification. As a result, applications are essentially a formality, requiring only
a medical and proof that the applicant does not have a criminal record.
The focus of the vertical connections are the operations of the PTS
companies themselves. The vertical connections lack a system of feedback
as exists in the horizontal connections. The National Security Council is
56 included mostly out of propriety. As a parliamentary body the Council can
monitor the operations of private security firms7 only through the Ministry of
Internal Affairs and can work to ensure that standards and regulations are
implemented. Officially, it is the police that has direct control over the PTS
companies. The unwieldiness of the bureaucratic system creates deviations in
this sector, especially in terms of the aforementioned ‘black market’ activities.
The Ministry of Internal Affairs does not have a central database on private
security companies, their employees or the weapons licensed to them, this
information is to be found in the local police stations where the companies are
registered. Quite apart from the merely formal existence of oversight for this
sector there is also a conflict of interest between the PTS companies and the
police, which will be dealt with later in the text under the section that deals with
competition in the market place.
The last actor in the system is also the weakest; the employees of
security firms. Security company employees have the right to organise and
form unions. It is in their interest, as with all other workers, to win higher
salaries and better working conditions for themselves. Their requirements do
have an effect on their employers and can affect the bids their company is
7
For further information on the National Security Council see the Control section.
able to make. Also worth mentioning is the fact that low wages can affect the
quality of the product.
As has already been mentioned, the qualification requirements for

security personnel are insufficient and on the job training is modest at best.
Furthermore, salaries are not high and minimum wage agreements8 are often
not met. Organised unions are almost non-existent. Employee turnover is high;
one of the ways this functions is that some workers are employed in seasonal
jobs in construction during the summer months but work for security firms
during the winter. One of the explainable characteristics of this trend is that a
daily wage in construction is higher9. The high turnover of employees has a
negative impact on the operation of security firms’ as it slows the process of
security checks on employees while the market demands greater efficiency.
What are a security firm’s obligations to its workers? According to one

interviewee the Finance Ministry ought to be regulating this area:
“One huge problem is black market work. According to some…

official statistics around 6,500 people are officially employed in this
sector… According to unofficial information and hearsay the number 57
is more like 65,000… For each one of our employees we have to pay
49% tax, which the employer pays, which means it doesn’t go to the
employee… we have to provide travel costs, overtime, that’s 26%, there
are state holidays for which we have to pay overtime – 11 days of state
holidays for 250 working days a year, also compulsory 25 days holiday.
There are also medical checks, there is weapons training which the law
says we have to conduct every 3 years, we do it every year, sometimes
more frequently, we did training with the Terrorism and Security Centre,
special money transfer protection training…
This means we can’t compete with companies that pay 10,000 (dinars)
per day. We have loads of lads working for banks applying to work for
us… Do yo know your wages are going to be 12,000 per month? – Yes
but I’ll have sick leave, annual holidays, a travel allowance, and here
I have none of those things… There is one thing, I think, if a law on
security firms was passed it would change three things: One, the sector
8
The wages in PTS companies are around 10,000 dinars (120 euros) per month or higher, de-
pending on the company, night shifts, overtime etc. Agreements on the minimum wage relate
to an hourly wage which is between 120 and 180 dinars (1,5-2.0 euros) but even this hourly
wage is subject to reductions during contract negotiations
9
The average daily wage in construction is around 20 Euros.
would be regulated and would have some function; two, there would
be 35,000 new jobs, because that’s how many work now; three, the tax
collectors would go up by about 5-7 billion dinars – because for every
employee there is 150 euros of tax missing and 30,000 employees times
150 euros, that’s 450,000 euros a month, and training, and checks,
the taxes the state collects – checks in the police, in the prosecutor’s
office…”10
The Clients
Many different institutions and public- or private-owned companies

are clients of private security companies but, in Serbia, the most significant
clients of PTS companies are the foreign banks. Most PTS companies
flourished when foreign banks entered the Serbian market at the end of 2000.
It is worthwhile examining why banks are the most significant clients. As well
as the fact that they deal with money that needs protection on a day-to-day
basis they are also significant because they are spread across the whole
of the country. Some of the banks have entered the market independently
and are fighting for their ‘piece of the pie’, whilst others have bought up
58 domestic banks, including their assets and infrastructures. The decision on
which company will provide a bank’s security is made at their headquarters in
Belgrade. The banks announce a tender for a specific kind of service and for a
certain sum, and this tender leads to a contract that applies to all of the bank’s
branches around Serbia.
The service security companies provide for banks is usually physical and
technical security on the premises of the branches themselves and of the cash
and valuables in transit. So how can banks influence the way there services
are provided? In the first case, banks are secured by a security guard who
is physically present at the branch in question but also by technical security
solutions – alarms, anti-robbery systems and security cameras. One of the
bank security managers we interviewed claimed that staff who work in banks
would prefer not to be armed. There are three reasons for this:
1. by law the security guard is not allowed to use his weapon11, and
would, therefore, hesitate to use it
2. in the event of a robbery, the very fact that the guard is armed may
10
From an interview conducted with a employee of a state security company.
11
See text on legislative solutions.
induce the robbers to arm themselves as well, therefore, increasing

the threat to security and not lowering it
3. even if the robbers are not armed the threat is increased as there is a
chance that they could over-power the guard and use his weapon.
An unarmed guard would be there to calm the situation down and to

call the police in the event that the bank’s employees are unable to do so.
Also, it is the guards duty to protect the crime scene. One of our interviewees
even claims that three shifts are superfluous and that only one, during the
bank’s opening hours would be sufficient, with technical solutions providing
the security while the bank is closed. This could reduce the manipulation
of employee wages, raise professional standards, and reduce the threat to
the security of ordinary citizens. Reducing the physical presence of security
guards can be supported with good legal and financial arguments. On the
legal side, there is the aforementioned inability of security staff who do not
have the status of state officials to act. And on the financial side there is the
incentive to the clients to reduce the costs of the security service by providing
only technical security outside of working hours.
Cash and valuables in transit is the second most significant service 59

PTS companies provide. This service necessitates the physical presence of
security personnel and, as a result, there is even more room for improvement.
During the 2006/2007 period the number of robberies of cash and valuables
in transit increased while the number of bank robberies decreased12. There
is some logic to this trend – the money of many of the bank’s clients is
transported, the technical security measures are reduced, the quality of the
security personnel varies and the police are not aware of the transport routes
– in short, the gain is higher and for smaller risks.
In what way can the private security firms, and the other actors they
interact with, be influenced? At the moment the private security sector is poorly
regulated and that seems to suit all concerned. The standards imposed by the
insurance companies require cash and valuables in transit to be accompanied
by two armed men and a vehicle13. They do not forsee any kind of stimulative
or punitive measures for the effort (or lack thereof) of securing the money in
transit. As a result, there have been cases of extraordinary negligence, for
12
According to a security guard working in a bank: on the robberies of money in transit see
“Veliki hajduci haraju Srbijom”, Nedeljni Telegraf, 17.10.2007
13
From more than one interviewee
example, in one case a security guard came out from a restaurant, whose
daily takings he was securing, carrying a hamburger and a bottle of cola and
with the restaurant’s takings in a bag hanging round his elbow. As one source
states, anybody could have run up and taken that money. Another case we
heard about also is illustrative of the poor quality of security services – in this
case two security guards collected the money to be transferred in a private
Yugo. These cases, even though they are exceptions rather than the rule,
clearly exemplify the weaknesses of the present system.
The banks themselves are less inclined to invest greater sums of

money in improving the quality of security service they receive, mostly due to
the fact that the insurance companies are not giving them an incentive to do
this. In fact, the banks frequently report smaller sums of money for money
transfer simply to reduce the insurance costs. These are the same whether
the banks use armoured vehicles, well-trained personnel, not to mention a
second vehicle, GPS tracking and coordination with the police. The banks, of
course, cannot be blamed for this, they are, after all, simply protecting their
own interests. The insurance companies could have greater influence in this
situation as their clients could, by applying the standards set by the insurance
60 companies, influence the professionalism of the PTS companies.
The Insurance Companies
The insurance companies are one of the actors which can wield the
greatest influence over the private security companies. At the time the research
for this paper began, in the Autumn of 2007, the interviewees identified two
insurance companies as being the most important on the market – Dunav
Osiguranje, which has a 60% market share, and DDOR Novi Sad14, which has
30% of the market15. The most important of these two insurance companies
that they are both state (formerly public) – owned. By examining the internal
standards of these two companies, and through various interviews, it has
been possible to conclude that these companies do not differentiate between
different levels of quality in terms of security services provided. A few of the
interviewees have highlighted the closed nature of these companies and the
lack of personnel sufficiently trained to assess the quality of a security service.
The insurance companies cover losses without first examining the quality of
14
While this paper was being compiled this insurance company was in the process of being
privatised.
15
According to the assessment of two interviewees who work as security guards in banks.
the security measures employed by the banks. As for the security present
in the banks’ branches, the insurance companies require only very general
standards for the securing of the banks’ assets:
“…anyone with a metal till draw, that can be locked, pays the exact
same premiums as I do, and I buy safes with level three or four protection
rating. Those safes cost between three and five thousand euros, but
you can buy one of these (as prescribed by the insurance companies)
for 500 euros.” 16
Furthermore, the specifications for the securing of money that the

insurance companies issue to banks contains only loose descriptions of the
measures required. The quality of the measures employed has no effect on
the premiums or conditions of the insurance contract. As things stand, whether
the banks adhere to the meagre standards set by the insurance companies
has no effect on the premium or on any benefits on the insurance contract.
The second interviewee also cited the difficult situation in the security market,
which is reducing the costs of security services, as a factor that affects the
operations of private security firms. He illustrated this claim by describing a
conversation between a representative of a bank and a representative of an 61
insurance company in which the insurance company representative counselled
his counterpart, for the sake of lower cost, to reduce the security measures
in place.
Another problem in terms of the insurance companies’ policies is the

fact that these companies often do not employ personnel with the qualifications
necessary to assess the quality of the security service. There have been
instances of insurance companies offering an insurance contract to a bank
without first sending out agents to assess the security measures in place.
The protection of money transfers is another security service employed

by the banks. As has already been mentioned, there are no standards in
existence that regulate the transport, packaging or guarding of money in
transfer. The only thing that is regulated is the amount of money that can be
insured, but even these standards are rather symbolic:
1) for sums between 5,000 and 12,000 euros the policy holder is obligated
to employ a security guard and/or an alarmed bag
16
From an interview with an employee of a bank
2) for sums between 12,000 and 24,000 euros the policy holder is
obligated to employ one armed guard
3) for sums between 24,000 and 50,000 euros the policy holder is
obligated to employ two armed guards
4) sums over 50,000 cannot be insured.
The insurance companies do not differentiate between the effort or

financial resources invested in securing the money transfer and the basic
fulfilment of requirements at the lowest possible cost. A lack of interest, but also
a lack of personnel with the right qualifications to assess security services, cost
the insurance companies every time a robbery occurs. The implementation of
quality control systems would represent a serious stimulative measure which
would, in turn, improve the quality of service provided by private security
companies. Such a system could be complimented by financial benefits to
banks which invest more in the quality of the security they employ and punitive
measures against banks which are trying to fulfil the most basic security
requirements at the lowest possible cost.
The Competition
62
Bearing in mind that private security companies are subject to market
forces, we asked our interviewees to tell us a little about the security services
market in Serbia. The opinions given varied, especially on the subject of the
competitivness of the Serbian security market. Some of the interviewees
pointed to the fact that political connections often influenced the outcome of
tenders, but this always applied to “some other companies”, and not their own.
In the absence of concrete evidence, it is only possible to talk of a perception
of political influence. Even those interviewees who were reserved when
talking about political influence mentioned that they thought that the control on
the financing of political parties should be more rigorous17. If the financing of
political parties was more transparent there would be more discussion of how,
“some company could win a tender and, in return, back the political party of
the man who helped them win the tender”. It is possible, therefore, to conclude
that confirming whether party politics influences the market is very difficult but
17
Failing of the Law on Party Financing exists as the reports on the financing of political
parties are issued by the Financial Council of the National Assembly, which is made up of the
members of the Assembly, i.e. members of political parties. In practice, this means that the
members of political parties are responsible for their own oversight, instead of this function
being carried out by an independent body. This law is available at http://www.transparentnost.
org.yu/aktivnosti/finansiranje/zakon.htm Sl. Glasnik RS 72/03 and 75/03
that measures should be taken to prevent this kind of influence. It is also worth
mentioning that this kind of influence is not a problem only for the security
market but for all kinds of market based activty.
In an effort to avoid the influence of party politics, some security firms

are careful to choose who they cooperate with. One interviewee claims that
the company he works for avoided contracts with state-owned companies and
chose to work only with private companies.
“With private companies there are no problems: if some one wants

to pay more for a service, they know what they are paying for. They
know what to demand and what to expect. Just analyse the tenders
in the public sector. You’ll see that there are certain clauses in each
tender and that once the tender is announced there are new clauses.
There is a lack of continuity in the criteria called for. Why would the
criteria in a public tender change? Also, what do these clasues call for:
the number of side-arms owned by the security company, the number
of radios, why would the quality of a service be affected by the total
number of employees? If the tender is for 50 security guards, why would
the winner need to have 1,000 employees, that’s 20 times the number 63
of employees required to do the job.”
In addition to the problems caused by political influence over contract

tenders, which leads to discrimination against smaller security firms who may
be just as capable of providing the service in question, there are other problems
with the tender process. Namely the fact that, in most cases, the competition
for tenders is reduced to the a battle for the lowest bid. The security companies
lower their bids by lowering the hourly wage of their employees. This lowering
of wages leads to a lowering in employee morale and, therefore, a lower
quality of service. In this case, instead of stimulating the development of the
sector, the competitivness of the market reduces development and lowers the
quality of the services on offer. Many companies have been on the receiving
end of these problems.
Most of the companies who are members of the Council of PTS

Companies in the Serbian Chamber of Commerce have agreed to a minimum
wage for their employees. Yet, in spite of the existence of such agreements,
the problems have not been solved. On the one hand, these agreements are
frequently disregarded when tender negotiations start18, and on the other, a

process of ‘Belgradisation’19 is underway. This means that the minimum wage
is not economically viable in the provinces where factories, land and the
assets of some companies have to be secured. This is because the distances
involved are much greater so more petrol is needed and the wear-and-tear on
the vehicles is greater.
Apart from the already mentioned problems the market is also at the
mercy of non-market competition. There are two main forms of non-market
competition; one is of a systematic nature, the other of an economic nature.
The systematic non-market competition for PTS firms comes in the shape
of the Ministry of Internal Affairs. The police are allowed to commercialise
some of their activities, for example, the protection of cash and valuables
in transit, this draws the PTS companies into direct and uneven competition
with the police20. The police are legally allowed to compete for resources
on the market by offering certain services, namely the protection of money
transfers. PTS companies complain that the MoI are shutting them out of the
market, sometimes even by using their powers to stop the vehicles of private
companies, which often leads to the client changing their security service
64 provider21.

The second form of non-market competition is of an economic nature.
According to one interviewee, and as confirmed by another source, even
though they reduced their personnel costs several leading security companies
lost out in a tender against one actor who offered a price that simply was
not viable. This actor was an association of former-police officers who could
supplement their pensions by working as security guards. This second case
is, however, a rare occurrence. The clients themselves are able to decide
18
An interviewee whose company is not in the Council made the following comment: „How
can they make any agreement stick when one day they’re agreeing on the minimum wage and
the next the same companies face-off against each other in competition for tenders were they
lower the minimum wage?“
19
’Belgradisation’ can be understood as a process where the decisions on the the Serbian se-
curity sector are made in Belgrade, so decisions on the minimum wage are made in Belgrade
and applied to the rest of Serbia, and contracts with the big clients are signed in Belgrade.
20
The guidelines on all the services the MUP is allowed to offer in order to gain extra
resources, Sl. Glasnik RS, no. 64/2006, 71/2007 and 14/2008. Interestingly, the police are
paid from the national budget but their activities on the open market suggests a surplus of
employees.
21
From interviews with the employees of two seperate companies.
whether they will be satisfied by a passive physical presence of security guards

or whether they require the services of a company that can offer human and
technical resources of higher calibre.
The Employees
The employees are the main actors in the private security system. So
what are the employees like? Applicants for work in the security sector are not
faced with rigorous requirements and even those that do exist are largely a
formality. An applicant must be able to confirm that he has no prior convictions,
that he has completed a medical, a fire-arms course and, in some cases, the
applicant is required to have a driver’s license and martial arts experience.
The most significant problem faced by security workers is an absence of
profession22. The requirements applicants face can be fulfilled by a large
number of people. This leads to an increase in supply, of human resources,
and, therefore, a fall in wages. Low wages affect the quality of the service and
the high personnel turnover. As is often the case, security personnel spend the
summer working as a construction labourer, where wages are higher, and the
winter – when there is less construction work - working for security companies.
This turnover affects the way the whole sector functions. The very nature of 65
the work security firms carry out demands punctuality and availability and so,
when the amount of work a firm has increases, new employees have to be
taken on quickly. These new employees often don’t have time to go through
the Ministry of Internal Affairs23 security checks and are forced to temporarily
conduct secondary duties.
A law regulating this sector would also have to regulate against “black
market work”. In addition, to the traditional tax evasion, the security sector also
offers another incentive for “black market activity”. In order for an applicant to
gain employment in a secuirty company, or more precisely, in order for him to
be able to carry a fire-arm, he must pass a Ministry of Internal Affairs security
check. This check is the same for any private citizen wishing to obtain a fire-
arms license and can last “from three to six months” 24. This is an unacceptably
long period for a security company to wait for. In such cases, because contracts
22
A profession is taken to mean work that is recognised as being professional by the market,
and which is underpinned by some form of training – often accompanied by some form of
certificate of license. Of course, it is also useful if the personnel working in this field see their
careers as developing in this sector.
23
These are necessary so that the employees can be issued a fire-arms license.
24
From an interviewee on the slowness of the Ministry of Internal Affairs.
are short, companies often employ people unofficially, without waiting for
security checks. Such personnel are employed as unarmed guards or drivers,
but there is always an element of risk. The Ministry of Internal Affairs is also
supposed to check reports of all cash and valuables transits and the routes
thereof. However, perhaps because of a shortage of personnel or because of
a demanding workload the Ministry of Internal Affairs does not conduct these
checks in a timely manner, which means that money transfers are often carried
out without the knowledge of the police. This directly impacts on their security.
On the other hand, the employment of “black market workers” has economic
incentives too but the trend leans towards the employment of workers in
the”grey zone”, meaning that they are employed through youth organisations,
or similar, thereby reducing the taxes that need to be paid for them.
The absence of profession can also be viewed as a lack of licensing.

From the point of view of the employee, a license could be some form of
certificate confirming the completion of a training programme and which could
be renewed over time. The employee would have to invest in his or her own
training which would, on reciept of a certificate or license, be admissable on
the market. The very fact that security sector workers would gain a profession
66 would also lead to the professionalisation of the companies themselves and
would also lead to an increase in the minimum wage. Many foreign countries
operate a licensing system in their security sectors but foreign security
companies operating in Serbia (of which there are a few) do not demand
licenses of their emploees because it would make them less competitive.
Under the revoked Law on Civil Self-defense security sector workers were
required to complete a number of courses, including a fire-arms course,
courses on first-aid and self-defense and a fire-fighting course. These days
companies send their employees on training courses only once they have
already been accepted for employment. Except for the legally obligatory fire-
arms course25, the training courses security companies send their employees
on are not standardised. A relevant course is available at the Internal Affairs
College, yet it is not obligatory. On the other hand, some companies tout
their educative courses in their marketing material, however, the criteria and
standards of these courses are neither available to the public nor are they
universally recognised. It is, therefore, not possible to obtain a certificate for
work in the security sector, which will be recognised on the market26.
25
“Which nobody has ever failed”, from interview with an employee of a PTS company.
26
On the possible methods for the issuing of a license see texts on legal models by Predrag
Petrovic and Jelene Unijat.
Another apsect that could lead to greater professionalisation in this

sector would be the organising of unions. Unions would be in a position to
campaign for better working conditions and the establishment of employment
standards27. In Serbia there are currently no functioning unions for the private
security sector. On the global level, however, there is an association of unions
for private security sector workers28. In Serbia these unions share the same
fate as other post-socialist unions in countries in transition. Their influence
is esentially compromised as they were supported by the state before the
onset of transition when their activities did not go beyond the selling of pork
bellies at knock down prices. The interviews conducted show that there is an
inclination amongst employees to work for public or state owned companies,
in which there is a greater level of adherence to the Law on Work and which
offer better working conditions, though salaries are lower. The situation in the
Serbian union are aptly illustrated in this extract from an interview with a man
formerly responsible for security in one of the unions:
“I was a responsible for security in a security sector union.

I don’t remember us ever winning a campaign for something, but we
tried… I wrote articles on the problems faced by security sector workers 67
in the union magazines, about the fact that an average member of the
public thinks of security workers as porters, as under-educated, semi-
literate and how they do not think much of the work they do or the places
they work in. The union did not offer much of a fight, it was mostly made
up of petite union oligarchs fighting for their own small privileges, from
shorter working hours to selling pork and leather jackets. I complained
against this but I was removed from my position at the first meeting I
didn’t attend… In another company29 there are two unions but there
is a conflict of interest as one of the managers of the company is also
the president of the union – sure they pay out in the event of a birth or
death in the family or health problems and they organise parties for
their members but I’ve never seen any pamflet of theirs or heard that
they are campaining for something…”
27
Unions can have a significant role in countries in which security sector workers are not
state officials as they can campaign for greater safety at work and compensation in the event
of injury.
28
See http://www.asisonline.org/
29
The interviewee was employed in a publc-owned company as a security guard and was a
member of the union. When the company went through a re-organisation the security depart-
ment was officially disbandened but it is still a public-owned company which is allowed to
provide a security service to the mother company.
Can Serbia have a union in this sector that could compare to those
in Europe? One manager of a PTS company was of the opinion that, in this
sector in Serbia, there is a lack of a social dialogue between the state, the
employer and the employees. According to him, the formation of unions should
be a move that the companies themselves should support, however, in Serbia
this would be more likely to lead to the companies trying to control the unions
they back.
Personnel Transfer from the State Security Sector to the Private Sector
The trend for retired police and army personnel to transfer to private
security companies is widespread in Serbia, as it is globally. It is difficult finding
exact figures for this trend; all interviewees spoke of the existence of such
a trend but none could say how far-reaching it is. Some interviewees were
themselves former soldiers or police officers. This trend affects the sector in a
number of ways. Even though soldiers and policemen share some skills with
their ‘brothers in arms’ in the private security sector, they do not automatically
possess all of the skills necessary for work in PTS companies, or rather, some
of their skills are not necessarily compatible with PTS work.
68
Namely, the mindset that is formed in heirerchical structures like those
found in the police and the army is considered a disadvantage in PTS work
where more individual initiative is desirable. Another problem is the fact that
upon transfering to the private sector the soldiers and policemen do not retain
their acquired rank and the benefits that go with it. Progress towards the top
of a PTS company has to begin at the bottom and the speed with which an
employee is promoted is an indicator of their ablity to adjust to new challenges
in the workplace. In an interview with a representative of a project that looks
after army officers forced into early retirement, it emerged that the Serbian
Army does not keep a record of how many of its former members are now
working in the private security sector. In recognition of this trend the army has,
however, established a programme for re-training army officers for work in the
private sector.
This course is intended for NCOs and civilians who were once
employed by the army but it is open to commissioned officers who might
be interested. The NCOs are usually trained for operations in the field while
officers are better suited to managerial positions. Estimates suggest, however,
that a large number of officers still accept work on an operational level, which
could be explained by the low number of managerial positions available or the
system of promotion and progression within private security companies. This

trend could lead to unfair competition as the former army and police workers
can retain some of their connections in the state sector. These connections
could then be used to acquire intelligence or to gain an unfair advantage over
the competition30.
Foreign Companies and Foreign Capital
I’m all for competition, but…
This is how one interviewee began his answer to a question on the

appearance of foreign private security firms on the Serbian market. There are
several companies on the Serbian market that are owned by foreign capital, or
which are partly foreign owned. There are no significant differences between
the appearance of these foreign companies on the market and the appearance
of other actors. Foreign companies have purchased local firms and in this
way have taken over part of the market and the available resources. The
reaction of the other PTS companies already on the market comes in the form
of a certain amount of dissatisfied tones. On the one hand, our answers that
support the openness of the market and support the client’s ability to chose 69
whether they will invest their money in a “Mercedes or a Yugo”. On the other
hand, there is a degree of apprehension that the Serbian companies will be
pushed out of the market. An appraisal of these arguments shows that they
are both based on economic factors and that those interviewed were most
concerned with survival on the market. However, taking into account the fact
that the provision of security based services is in question, things become a
little more complicated.
The section on licensing has already touched upon the influence

foreign firms can have on the market, and as one interviewee claimed,
“foreign companies have nothing to gain from entering this market because
they have already paid for licenses which have no value here so they cannot
be reimbursed”. In practice, things are a little different, the logic being, “think
global, act local”. The Serbian market is attractive primarily because of the
low wages and low investment costs, which in turn produce the possibility of
big returns. In other words, foreign firms can employ local personnel, who are
paid and trained according to local standards – in this way they can maintain
their presence on the market.
30
See text by Jelena Unijat on legislative solutions for regulating this phenomenon.
It is worthwhile conducting a short analysis of the existence of foreign

firms on the Serbian security market so that recommendations for legislation
can be drawn from this. Advocates of an open market express the opinion
that it is necessary to protect the interests of the clients and to enable them to
choose what services to invest in. This can lead to the general development
of the quality and quantity of security services on offer. The entrance of banks
onto the market introduced new conditions that security companies had to fulfil;
the entrance of foreign security companies would introduce new standards
that local companies would have to follow at the same speed. Opponents of
the entrance of foreign companies claim that, thus far, their presence has not
had this transforming effect on the market.
Furthermore, foreign companies have not forced a change in working

practice or an improvement in the technology used, nor have they contributed
to an increase in profits. The danger for Serbian companies is in contract
negotiations. Some claim that no Serbian company can compete with a
foreign one when it comes to contract negotiations. Foreign companies have,
to their advantage, huge budgets, thousands of employees31 and modern
70 equipment which means that Serbian companies, with their more modest
resources, are at a disadvantage from the very beginning. The apprehension
Serbian companies feel comes from the sense that they have not yet been
able to adjust to the global playing field. The greatest concern is felt by small
and medium sized firms which fear that they will not be able to withstand
the pressure of competing against foreign companies. As has already been
mentioned, the appearance of foreign banks spurred on the private security
sector but brought to an end a large number of domestic banks.
What are the interests of foreign security companies on the Serbian

market? Above all, their interest is of an economic nature. Serbia has a
relatively small security market but its economic significance is in the possibilty
of linkage with neighbouring markets. This is what attracts the larger foreign
firms.
“Foreign capital will establish a presence here… in South-Eastern

Europe. But big companies, global companies, they think – this year I’ll
have 20 million invested in emerging markets – and in one moment they
realise that returns are greater in Latin America than in the Balkans and
they don’t appear, even if they announced that they would. Those that
31
It is claimed that the largest Serbian private security firm has around 3,000 employees.
are here have done nothing for a whole year, they are simply taking their
local profits but thinking globally, the Serbian market means nothing to
them. But if they’re already in Greece, Bulgaria and Romania, there is
no reason not to be in Serbia and Bosnia too. Foreign companies will
come along and literally buy the market. How many workers are there
in this sector, how many companies, maybe 12, they will say – here I
am, I’m interested in these top 8 companies, that’s going to cost me so
much and I can have 40% of the market.”
From this we can see how the global market functions and how it can
influence Serbian security companies. The real problem is finding the line that
divides the open market and security. In envisioning a scenario where foreign
companies can buy up the Serbian private security market we come up
against the possible outcome
of foreign capital one day Working Abroad – The Iraq Experience
withdrawing from the market
and leaving behind a security An interviewee, originally from Bosnia,
vaccuum. In the event of such who works in Iraq, offered to share his
an outcome who would protect experiences from the field. When asked
the state? Such an actor does whether there are Serbian security 71
not exist. The owner of a private personnel working in Iraq he said that there
security firm, worth some tens are, around ten according to his information,
but added that there are around fifty from
of thousands of euros, will sell
Bosnia. There are no Serbian security
to a larger company if he can
companies present in Iraq, those who work
get the right price, the interest there are there on an individual basis and
of the state simply is not his found work through advertisements or the
problem. The state’s security internet. One problem for Serbian citizens
institutions have already is that their country is not a member of
reduced their capacities and NATO. Citizens of countries that are in the
part of the slack that remains Coalition of the Willing have an easier time
has been taken up by the as they can apply for work permits. Serbian
private sector, which would, in citizens cannot get an IRAQ WIDE work
this scenario, be eliminated. permit which would give them freedom of
This dilema was forseen by movement over the entire country, including
military bases, and freedom from being
one interviewee who claims
searched. There are of course, exceptions
that it is indeed possible as
to this rule and some Serbian citizens do
the Serbian market is a small have this permit but there is no system for
one. The security sector is too Serbian citizens to officially obtain such a
important and complex to be permit for the largest foreign market in the
left at the whim of market self- world – Iraq.
regulation.
What mechanisms could the state employ to prevent the outcome

described in the scenario above? There are a number of different opinions
on the relationship between the state and the private sector but most agree
on the fact that it is essential that the private security sector is integrated
into a unified national security system. The PTS companies are not currently
recognised as an actor with potential and one of the consequences of this
is the lack of regulation in this sector. The passing of new legislation would
significantly improve the situation in the sector.
Conclusion
It is said that there are 20,000 to 60,000 people working in the private
security sector in Serbia. Because the figures are not official, some of those
interviewed used differing stastics on different occasions depending on the
desired effect. Our own estimates put the figure at 30,000. Some interviewees
agree and one elaborated on this point, saying there are “three companies
of around 3,000 people, six of 1,500 and the rest are small firms or private
detectives whose numbers vary.” Assuming that these workers are all legally
employed, that their taxes are paid for, one interviewee calculated that, if the
72 state recieves around 150 euros of taxes per employee, this would mean a
tax income of 450,000 euros per month. These companies are eager to be
properly integrated into the economic system, a situation in which the insurance
companies can wield the greatest influence. On the other hand, effective control
and more timely completion of MoI security checks would reduce the level of
corruption in the sector. The establishment of a social dialogue between the
state, the private security companies and their employees is clearly a vision of
the distant future, a fate the employees of private security firms, unfortunately,
share with their employers.
Recommendations
1. Private Security Companies

o Adherence to agreements on the minimum wage,
which should take into account the costs of security
services outside of urban centres (a reduction of
“Belgradisation”).
o Increase of wages (accompanied by an increase in
specialisation); a measure that could reduce employee
turnover.
o Establishment of a social dialogue with employees and
the state.
2. The Insurance Companies

o During the process of compiling an insurance policy,
the resources invested in security should be taken into
account and stimulative and punitive measures should
then be built in so that the clients will be motivated to
invest in their own security.
o An effort should be made to train personnel in the
field of security management so that they will be able
to effectively assess the quality of security measures
employed.
o The quality of the services provided by private security
firms should be closely monitored.
3. The Clients
o When employing the services of a private security
company the standards and conditions of the contract
should be clearly defined and the quality of the service
should be closely monitored.
o An effort should be made to train personnel in the
field of security management so that they will be able 73
to effectively assess the quality of security measures
employed.
4. The Employees
o Professional Training
o Organised Unions
5. The Ministry of Internal Affairs

o A more timely response to requests made by private
security companies and the formation of a separate
department which will be exclusively responsible for this
sector.
o Avoidance of overlap with the private security companies
when involved in private sector operations, in order to
avoid conflict of interests.
6. Recommendation to the Legislative Branch of Government

o Consider the fact that the private security sector is
unique and that it should not be left to the mechanisms of
self-regulation on the open market, that the Law Against
Corruption should be adapted to take this into account.
Predrag Petrović1
Control and Oversight of the Private Security Sector
It is often stated in the public that private security sector in Serbia

employs between 30,000 and 50,000 people, that there are about 3,000
private companies providing security services, that there are around 47,000
registered pieces of arms owned by legal entities, i.e. companies. The very
fact that there are no exact data on private security sector indicates that the
extent of institutional control over this sector is not at the sufficient level. This
is a consequence of several factors: lack of legislation regulating general
and specific conditions for registering of private security companies (PSCs),
74 lack of bodies dealing exclusively with oversight of the PSCs activities, weak
market mechanisms of control and existence of systematic opportunities for
corruption and disloyal competition. However, this does not imply that there is
no legislative basis for PSS oversight or that it is not in any way controlled by
state institutions, but rather that existing mechanisms are not sufficient, that
they are obsolete and only partially obeyed in practice. In the next segment
we will try to present PSCs oversight mechanisms and procedures existing in
Serbia today. Further on in the paper, we will also present possible models for
licensing and setting standards, as well as give recommendations aimed at
helping us to improve the current situation by introducing new legal solutions,
without jeopardising the free market principle. Moreover, we will try to provide
explanation of why such problems have not been resolved yet and how to put
it on the agenda of decision-makers in the politics.
Existing Control Mechanisms
In a situation where there is no single law to regulate the entire private

security sector in a comprehensive, substantial and precise manner, the work
1
The author is a researcher fellow in the Belgrade School of Security Studies.
of companies in this sector has been regulated by a number of different laws.2

The procedure and conditions for PSC registration are the same as those
required for registration of any other legal entity, although PSCs provide very
specific services which also include the use of weapons. These companies
are registered at the municipal level, while licenses for obtaining and holding
arms are issued by the municipal branches of the Serbian MoI. There are no
central records on PSCs kept in any state institution, not even in the MoI. Exact
data on private companies providing security services in Serbia represent a
precondition for establishment of overall and efficient control over this sector.
One of the most important laws currently regulating the PSCs control
is the Law on Weapons and Ammunition3. It prescribes conditions under which
companies can obtain a license for possession of firearms, as well as whether
PSCs employees can carry the same weapons while carrying out certain
duties. According to this Law, a license for possession of firearms is issued
to the company which has an obligation to safe keep it in accordance with
conditions prescribed by this Law. For jobs which require that employees carry
weapons, companies seek license from the municipal branch of the Serbian
MoI (in the municipality where they are registered). In order for the MoI to
issue approval for a security guard to carry a piece of arms, that employee 75
needs to meet certain requirements. Namely, the employee must not have a
criminal record, there are to be no criminal charges raised against him and he
should be physically fit to perform such duty. Moreover, such person should
complete the shooting range training, consisting of three major segments:
legal – introducing a person to legally prescribed conditions for using firearms;
practical – consisting of training for practical use and carrying of arms; and
testing the candidates’ knowledge.
The basic problem lies in the fact that some PSCs fail to implement
these regulations in a consistent way, i.e. they violate them. Namely, it is
often the case that a PSC disregards the fact that the MoI has not given a
PSC employee a license to carry arms or that an employee does not carry an
arm piece during his work, whilst being engaged on a very sensitive job. This
occurs because there are no bodies whose primary tasks would be to perform
control and inspection oversight of PSCs activities. The MoI is in charge of
inspection oversight of the Law on Weapons and Ammunition implementation,
but there is no department within the Ministry itself whose single task would be
2
A complete list of laws regulating the PSS is outlined in the Chapter 6 of this publication.
3
Law on Law and Ammunition, Official Gazette of the Republic of Serbia, No. 24/05
to perform inspection of the PSCs work. Moreover, according to an interviewed

security manager, “the MoI has not performed inspection in our firm for several
years”. One should not overlook the fact that procedures for obtaining such
licenses often take a lot of time, which is unacceptable in case where actors
depend on the market and not the state budget. In order not to “waste time”
waiting for the bureaucracy to do its job, PSCs engage people despite the fact
they have not obtained a license. All of this potentially jeopardises the security
of companies in which such persons are engaged as security officers, as well
as the security of citizens themselves.
Furthermore, regulations pertaining to medical check-ups and training

in handling weapons are not adequately implemented. This is confirmed by a
PSC security manager who said: “… I don’t know of a single case of someone
not passing the shooting range training” and what is also incredible is that
“each and every one passes the medical check-up”. The interviewees told us
that one of the reasons for such high “pass rate” at medical check-ups lies in
the fact that these examinations are uniform for all persons working in PSCs,
i.e. they are not adjusted to different services provided within the wide range
of private security activities. Therefore, it is obvious that abovementioned
76 requirements are not being highly regarded, that is to say they are not regarded
as essential requirements which need to be met by someone who wants to
work as a security officer in a PSC.
Possible Solutions: Main Models for Division of Jurisdiction
While one can easily conclude from the above said that it is very
important to establish an efficient control and oversight over this sector, one
encounters problems with putting this idea into practice. According to an
interviewed manager of a PSC, “this is a business like any other business”. On
one hand, PSCs represent (armed) entities that have a significant influence
on the public, state and personal (in)security, hence it is understandable that
there are demands for them to be placed under strict state control. On the
other hand, they are also economic entities which aim to increase their profit by
offering their services on the security services market, therefore any interfering
of the state in their affairs can be observed as restraining of market freedom.
Therefore, the question is how to enable efficient and effective control over
this sector without jeopardising their freedom to contract and provide services.
It should be mentioned at the very beginning that there is no universal solution
and that every country establishes balance between the state and the private
security sector in a different manner.
In most countries which have legally regulated the area of private

security, the licensing system has the central spot in the control of this
sector. The licensing system regulates who issues and who revokes PSCs
work licenses, the period they are issued for and the line of business of such
companies. Furthermore, it also determines the conditions to be met by a
certain private company (e.g. professional qualifications of employees) in
order to obtain a licence for provision of security services. In this segment of
the paper we will not elaborate on comparative insight into current legislation
in European states or comparison of different law models existing in Serbia4.
We will put forward certain dilemmas which accompany adoption of certain
solutions as well as possible models to overcome them.
It can be said that there are two main models of licensing – the first
model, according to which the MoI issues and revokes work licences, and
the second model, according to which the PSCs association holds this right.
Both models have their strengths and weaknesses. The first model is more
characteristic to continental systems of state administration and legislation.
This system entails that state institutions have a larger degree of control over
PSCs work, as well as larger degree of responsibility considering that the MoI is
accountable to both the Government and the National Assembly. However, the 77
downside of this model is that it can lead to occurrence of disloyal competition.
Namely, Serbian police force is entitled to provide services just like any other
PSC (e.g. securing transport of money)5 and to make profit in such a way.
In a situation where the MoI is issuing work licences for PSCs, there is a
great possibility for the police force to use this right in order to eliminate the
competition and possibly put itself in a monopolistic position on the market.
The problem which occurs here is that Serbian citizens do not pay revenues
in order for the MoI to gain profit on the security services market, but rather to
take care of public security. Putting itself on the market like any other PSC, the
4
See more on the comparative insight into different models of laws on private security sector
in the Chapter 3 of this publication
5
“The Ministry acquires additional funds in relation to its primary activity (…) and which
have the function of own revenues by providing the following services: (…) official secu-
rity and transport of dangerous substances, weapons, money, valuables, precious metals,
art pieces and other objects and goods of significance for the Republic, for purposes of the
National Bank of Serbia, business banks, institutions, organisations and other legal entities;
securing sports events and other public events, in accordance with the Law;… other serv-
ices, in accordance with the Law and regulations of the Minister of Interior.” Article 2 of the
Regulations on Types of Services Provided the Ministry of Interior for Purposes of Obtaining
Additional Funds (“Official Gazette of the Republic of Serbia”, No. 64/2006, 71/2007 and
14/2008)
MoI is reallocating human, material and financial resources which in that case
cannot be used for purposes for which the citizens allocated their money.
The general public is not informed of the scope of business in question or
about the amount of income obtained in this manner and furthermore – for
what purposes this income is being spent. The only way out of this situation
is to ban the police force to provide services performed by PSCs or to reduce
services to a limited range of situations (for instance, the police force can only
secure the transport of money for the National Bank of Serbia6).
Another problem lies in the fact that this model would function
really slowly in the practice. This conclusion can be drawn from statements
given by most of interviewed PSC managers who were of opinion that the
MoI was extremely slow in reaching decisions following requests made by
PSCs.7 Private security companies represent a market subject and for them
“the time is money”, thus it is completely understandable that managers of
these companies rate such a practice as a negative one. This problem might
be overcome if compulsory
deadlines for resolving Competing for the right to issue work
demands submitted by PSCs licences is also profit motivated
78 to the MoI would be short,
as well as if the penalties for In order for a person to obtain a work licence,
amongst other things, he must undergo a
failing to meet these deadlines
training which is being charged. Therefore,
would be put in place.
if we start from the presumption that this
sector employes 30,000 people and that the
According to the cost of a training course amounts to €200‫٭‬,
second model, the PSS has we come to a profit of €6,000,000. Reasons
a large degree of autonomy for competition for the right to issue work
in regulating its own work. licences and provide training for people
This model envisages that who want to engage in this line of business
PSCs must be members of a should therefore be sought in these facts.
professional association, wh ‫٭‬According to an interviewed PSC security
ich would have the prerogative manager, this is the training cost mentioned in the
private security sector.
6
It is not uncommon that PSCs secure transports of money for central banks all over the
world.
7
Bureaucratic slowness is one of the causes of anomy and so called administrative corruption.
See more in: Dobrivoje Radovanović and Aleksandra Bulatović (ed.), Corruption, Centre for
Management and Institute of Criminological and Social Studies, Belgrade, 2005. Further-
more, as we have shown in the Chapter Two of this publication, in a group of countries the
phenomenon of privatisation of security sector occurs as a consequence of inefficient work of
state institutions.
to issue and revoke work licences and provide professional trainings for work
in PSCs. This model’s advantage lies in the fact that PSCs managers have
the best insight in this sector’s needs.8 It is assumed that activities related to
licensing would be carried out much faster than in the first model. However,
majority of professionals not engaged in this sector as well as managers of
some PSCs9 are against this solution. They are of opinion that this model would
give room to a complete domination of a small number of large companies,
which in this case would not act according to the market rules. Moreover, it is
often mentioned, as an argument against this solution, that PSCs in Serbia
have very negative legacy10, hence it would be very dangerous to grant them
such autonomy in regulating this sector. To be honest, there are almost no
state institutions in Serbia who do not have a negative legacy. This particularly
applies to the so called instruments of force: the army, police force and
security intelligence agencies. As a reminder, the lustration, which would clear
the state administration from all those people involved in severe violation of
human rights, has not yet been carried out in Serbia.
“Common Story”
There are also solutions which are somewhere in between these 79

two models. Hence activities related to the process of licensing would not be
entirely within the authority of only one of the abovementioned subjects. For
instance, PSCs work licenses would still be issued by the MoI, while the PSS
would have the prerogative to independently provide training for employees,
either at the central level through its professional association or in such a
manner that each company would have the right to organise such training on
its own. It would be possible to have an opposite solution, according to which
the association would issue PSCs work license and the MoI would organise
training for work in the PSS. One of the ideas is to provide training at the
central level, while the ability test for candidates who will work in PSCs is
carried out by a mixed committee composed of representatives of both the
MoI and the PSCs (or the professional association). Decentralised provision
8
Some PSCs security managers are of opinion that it is not good that the MoI issues licenses
and provide training, since the MoI employees do not have a sufficient insight into the market
nature of this sector, hence it would have negative consequences on the PSCs work.
9
Security managers of companies who are not members of the Association of Security Com-
panies with the Serbian Chamber of Commerce are particularly opposing the introduction of
this solution.
10
See more on the negative legacy of the PSS in Serbia in the Chapter Two of this paper titled
Privatisation of Security in Serbia.
of training would create a sort of a market that would give people who want
to work in the PSS an opportunity to chose where they want to be trained
and their decision would be based on information on the quality of training a
certain company can offer.
Proposed Solutions
Therefore, as we have already mentioned, none of the offered solutions

is a perfect one and they all have their strengths and flaws. It is our opinion that
the answer to a dilemma on which model should be accepted directly depends
on whether the MoI is allowed to put itself on the market as any regular PSC
or not. If this is allowed, then the prerogative to issue licenses to work in
the PSS should be given to the association of PSCs and implementation of
professional training should be decentralised. The MoI would in this case
carry out only security assessment of candidates who are going to work in
PSCs and perform inspection oversight over the Law implementation. The
inspection would include oversight of implementation of regulations pertaining
to the security sector. Particular attention would be paid to supervision of
status and professional activities as well as to checking whether the license
80 holder has kept records and the contents thereof. Moreover, misdemeanours
in performing security activities would also be determined. For instance,
inspectors would check whether there are licenses and IDs for performing
security activities, evidence on meeting conditions for obtaining a licence
for providing security services, carrying and holding fire arms, evidence on
informing the authorities of a criminal act, evidence of informing the police
force on use of coercion means, etc. Inspectors in charge of the security
sector would have the right to, after establishing flaws or misconducts in the
PSC work, set deadlines for elimination of such flaws, submit to the relevant
body a proposal seeking temporary or permanent revocation of license and
also submit criminal charges for acts of misconduct on an official duty.11

11
See more on what is included in inspection oversight in the Model Law on Private Security
Services and Activities drafted by the Center for Civil-Military Relations, at the CCMR
webpage
http://www.ccmr-bg.org/upload/document/zakon_o_bezbednosnim_delatnost.pdf. All four
model laws regulate inspection oversight of PSC work in the same manner. The only differ-
ence being that according to the model law drafted by the Committee of the PSC Professional
Association, licenses for work is issued by the professional association, hence it has the
prerogative to revoke them as well. See comparative review of model laws on private security
sector drafted to date in the third segment of this paper, as well as in the paper “Comparative
Analysis of Four Model Laws on Private Security Sector”.
Therefore, whichever model is accepted, it would be necessary to

form a department within MoI which would keep records on the number of
companies and weapons they are in possession of. This department would
also be in charge of the above mentioned inspection. Certainly, this would
inevitably lead to increase of the state administration and expenditures thereof.
This is however the price of security which has to be paid.
Market Mechanisms of “Control”
The fact that the state, PSCs and users of their services are not the
only actors significantly influencing the nature of the PSS is often overseen by
the general public. Insurance companies also have a very important role in this
sector. They establish which security conditions12 the companies must meet in
order for an asset to be insured. In addition, insurance companies also set the
height of insurance premium rates depending on the level of risk with regard
to the security provided for the asset to be insured. With improved quality
and degree of security the insurance premium rates paid by the company are
decreasing. Therefore, by applying the system of insurance rates and quality
control for security services, the insurance companies have a significant
influence on professionalism and responsibility of PSCs. 81
Nevertheless, all of the above said pertains to developed Western

countries. The situation in our country is quite different. Namely, almost all
of the interviewed security managers of PSCs and banks said there is no
connection between the insurance premium rate and the quality of security
services provided. Hence, for example, the insurance companies prescribe
obligatory security conditions for transport of money for the banks: one
vehicle and two security officers. However, none of the insurance companies
sets more detailed criteria which have to be met in this case, such as, for
instance, the age of security workers who are doing the transport of money,
their professional capacities, the type of vehicle used for money transport,
etc.13 Therefore, insurance companies do not perform the quality control of
services provided by PSCs to their clients, but rather only make sure that
formal security conditions have been met. One of the reasons for such a
practice lies in the fact that insurance companies do not have staff qualified
to solve such problems in an adequate way. We are of opinion that in the
12
See more on this topic in the Chapter Two of this publication, in the paper “The Market
Influence and Development Perspectives”;
13
See more on all the ways the money is being transported in the Chapter Two of this publi-
cation, in the paper “The Market Influence and Development Perspectives”.
future the insurance companies could and should play a more significant role
in the quality control of services provided by the PSCs. The presumption that
market actors can to a large extent control the quality of services provided by
PSCs can be confirmed by the fact that it was the private economic entities,
foreign banks in particular, who had significantly raised the quality of services
provided by PSCs by setting higher standards.
The State does not Want Legally Regulated Control of the Private
Security Sector
During the last decade, the experts but also the general public have
become quite interested in problems, or rather security risks and threats,
generated by the PSS during this period. It has been demanded that the initial
step in sorting out the situation in this sector should be adopting of the law
which would regulate this area in a systematic, comprehensible and precise
manner. For the last four years, the citizens of Serbia had the opportunity to
review several models of laws which regulated the area of private security
from different perspectives. A law model drafted in 2003 by the team of experts
from the Serbian MoI became a Draft Law on Private Security Sector and
82 entered the parliamentary procedure. However, this draft law has never been
put to vote in the National Assembly, for the reasons unknown to the authors
of this paper.
An interview with members of the Defence and Security Committee

also did not provide us with specific answers to why the law on private security
sector had not been adopted yet. All interviewed Committee members
principally agree that this sector represents a very important segment of the
Serbian security system and that it needs to be regulated by the law. They
even opted for concrete solutions, advocating for stronger state control of
the PSCs work. Be that as it may, the Committee members are not greatly
interested in this issue, i.e. they are not ready to initiate the endorsement of
this law. They are also not interested in initiating a discussion on this topic
within the Committee itself, since they are of opinion that there are far more
important issues that both the Committee and the National Assembly should
put on their agenda.
Such an attitude towards this topic is rather discouraging, because a

law regulating this area cannot be endorsed without a political will of decision-
makers in politics. However, we can say that there is room for changing the
parliamentarians’ attitude towards the private security sector. Namely, the
Committee members informed us that although they had general, principled

opinions on this topic, they were still insufficiently informed of the basic
characteristics of this sector – the number of companies in this sector and
the number of their employees; the range and number of weapons these
companies possess; who are their clients; what is the significance of PSCs
in the EU and also how this sector is regulated in the world. We are at liberty
to say this, since they were rather surprised when we presented the data on
private security sector. This leaves room for the PSCs and the citizens to
additionally inform the Defence and Security Committee members about this
topic and, by doing so, stimulate them to reflect on it more seriously and take
concrete steps aimed at regulating this area.
Direct and Indirect Influence of Politics on Security Services Market
Some PSCs have in a very short time enhanced their business

capacities and positioned themselves well on the market. This encouraged
the public to look for cause of this in liaisons between politicians and PSCs.
There are some claims that certain PSCs owe their dominant position on the
market exclusively to connections they have with politicians. However, there
are other claims that this is only a fiction and that those who put forward such 83
accusations must also name the companies and politicians in question. During
the interview with PSCs representatives, we have established that majority of
them think the political influence exists and that politicians can significantly
influence that certain companies get more jobs. Nevertheless, we also found
out that political influence could also be indirect and based on the fact that
certain companies (e.g. banks) make agreements with those PSCs which are
in their assessment close to certain governmental centres of power. By doing
so, they hope to gain governmental support and get better deals in an easier
way.
This fact indicates that we also must examine PSS problems outside
the legislative framework, i.e. that adoption of laws is only the first step and
that further professionalisation of this sector can be expected only after
the political influence on the economy and the society in general had been
reduced. While we are waiting for the market economy to come into effect
to the full extent, we might propose certain measures aimed at reducing the
influence of politics on PSCs business. Namely, one of the ideas put forward
by the interviewees was that relations between the politics and PSCs should
be made public, i.e. relations between those two entities should be legalised
and regarded as consultancy services. In this manner, we would know who
are actors mediating in obtaining contracts, what is their rate, as well as who
the other actors in this relation are. By doing so, we might avoid different
speculations in public.
In addition, it is necessary to eliminate deficiencies in Serbian Law on

Financing of Political Parties14. According to this Law, the Finance Committee
and the Republic Electoral Committee represent bodies which monitor
implementation of this Law. Members of these bodies are people coming from
political parties whose work they should control. The conclusion that can be
drawn is that political parties control themselves. Therefore it is necessary to
establish an independent body15 to oversee the implementation of this Law,
which would be completely independent. This would enable establishment of
an independent anticorruption agency which would have extensive authorities
when it comes to combating corruption, based on comparative experiences
from other states, particularly Australia and Hong Kong.
Conclusions
Private security companies are very specific entities. On one hand,

84 by providing security services to their clients, they have a significant influence
on public, state and personal (in)security, hence they need to be placed under
control of the state institutions. On the other hand, they are also economic
entities which aim to gain and increase their profit on the security services
market, therefore any interfering of the state in their affairs can also be regarded
as restraining of entrepreneurial freedom. Therefore, the question is how to
enable efficient and effective control over this sector without jeopardising
their freedom to contract and provide services. It should be mentioned at
the very beginning that there is no universal solution and that every country
establishes balance between the state and the private security sector in a
different manner.
“Contradictive” nature of this phenomenon indicates that it is not easy

to determine to what extent the state should interfere in the PSCs work and
which mechanisms are required to put this into practice. Before the legislators
accept one of the presented models of control, they must also consider how
the accepted solution will practically influence PSCs business. If the state
14
Law on Financing of Political Parties, Official Gazette of the Republic of Serbia 72/03 and
75/03.
15
See more on significance of independent anticorruption agencies in Serbia in: Predrag
Petrović, Anticorruption Agency, The Security Review, Centre for Security Studies, 03/07.
interferes too much in PSCs work, it could reduce business capability and
incomes of these companies, which will ultimately have a detrimental effect
on the state itself since its revenues will be reduced and a larger number of
people will stay unemployed.
Nevertheless, despite all these dilemmas, it seems possible to present

several conclusions pertaining to PSC control and oversight. First and foremost,
it is necessary to adopt a law which would comprehensively, substantially and
precisely regulate the entire private security sector. This would give PSCs a
predictable and stable business framework. Secondly, the decision on who
should be entitled to issue PSC work licenses and who can provide training to
people who want to work in this sector must directly depend on whether the
MoI is entitled to provide security services on profit basis just like any other
PSC. If the MoI can put itself on the market as a PSC, then the prerogative to
issue PSC work licenses should lie with the professional association, because
the MoI could otherwise use the right to issue licenses for the purpose of
eliminating the competition. According to this model, the MoI would perform
inspection control over PSCs, as well as security assessment of people who
want to work in PSCs. Thirdly, it is necessary to establish an organisational
unit within the MoI who would be in charge of keeping the central registry on 85
PSCs and performing inspection control of these companies. Certainly, the
main precondition for legal regulation of this area is existence of a political
will, hence the PSCs, professional and general public must inform decision
makers in politics of the importance of this sector for the security, but also for
the state economy.
In addition to the abovementioned control mechanisms, one should

not disregard the role that insurance companies might have in the quality
control of PSC work. However, in order for them to be able to play their role to
the full, it is necessary for insurance companies to firstly provide more detailed
elaboration of existing rules for setting conditions for securing the transport of
money, and subsequently control that these rules are being obeyed. Moreover,
insurance companies might significantly influence the quality of services the
PSCs provide to their clients by making the height of the insurance premium
rate depending on the level of security risk of the asset to be insured. In order
to meet both of the abovementioned demands, insurance companies must
have qualified staff who knows this area well.
Nevertheless, even if all of the above said were to be implemented,

professionalisation of this sector can occur only after solving problems caused
by illegitimate influence of politics on social and economic developments.

A step towards achieving this might be making the relations between the
politics and PSS public, by legalising it and regarding it as consultancy
services. In this manner, we would know who is mediating, what their rate
is, as well as who the other actors in this relation are. Furthermore, Serbian
Law on Financing of Political Parties currently enables politicians to control
themselves, which is an absurdity. Hence this Law needs to be amended and
an independent controlling body consisting of people who are not members of
parties whose finances are under review needs to be established.
RECOMMENDATIONS
1. Inform decision makers in politics, particularly the Defence and

Security Committee members and presidents of parliamentary groups
of the Serbian National Assembly, about all the particularities of the
PSS, and by doing so stimulate them to put the issue of adoption of
laws regulating this sector on the National Assembly’s agenda.
2. It is necessary to adopt a law which would comprehensively,

86 substantially and precisely regulate the private security sector.
3. The decision on who should be entitled to issue PSC work licenses

and who can provide training to people who want to work in this
sector must directly depend on whether the MoI is entitled to provide
security services on a profit basis just like any other PSC. If the MoI
can put itself on the market as a PSC, then the prerogative to issue
PSC work licenses should lie with the professional association. In
this case, the MoI would perform inspection control over PSCs, as
well as the security assessment of people who want to work in these
companies.
4. Regardless to which licensing model is to be endorsed, it is

necessary to establish an organisational unit within the MoI who
would be in charge of keeping the central registry on PSCs and
perform inspection control of these companies.
Market Mechanisms of “Control”
5. Insurance companies could have a much greater role in controlling

PSCs activities. For starters, it is necessary for insurance companies
to provide more detailed elaboration of existing rules for setting

conditions for securing the transport of money, and subsequently
control that these rules are being obeyed. Moreover, insurance
companies might significantly influence the quality of services the
PSCs provide to their clients by making the height of the insurance
premium rate depending on the level of security risk of the asset to
be insured. In order to meet both of the abovementioned demands,
insurance companies must have qualified staff who knows this area
well.
Depolitization of PSS
6. Relations between politics and the private security sector need to

become transparent and public, by becoming legalised and regarded
as consultancy services. In this manner, the public would know who
is acting as a mediator, what their rate is, as well as who the other
actors in this relation are.
7. Serbian Law on Financing of Political Parties should be amended

so as to make the monitoring of political parties finances genuinely 87
possible, i.e. establish an independent controlling body consisting
of people who are not members of parties whose finances are
under review. This would enable establishment of an independent
anticorruption agency which would have extensive authorities when
it comes to combating corruption, based on comparative experiences
from other states, particularly Australia and Hong Kong.
III
ANALYSIS OF LEGAL
SOLUTIONS
Jelena Unijat1
Comparative Analysis of the Four Model Laws on Private

Security Sector
Serbia is the only country in the SEE region wherein the private security
sector remains unregulated despite the large number of companies providing
security services already operating in it. The initial attempt to legislate this
matter was made in 2003 when a legal proposal developed by the Ministry
of Interior that is responsible for regulating this area, was submitted to the
Parliament2. Specific reason for this proposal not being adopted is unknown,
90 but it is clear that there was lack of political will. In addition to this, at the
moment there are three model laws regulating private security operation. Two
draft laws were prepared by the civil society organizations: Model Law on
Private Security Services (Centre for Civil Military Relations, 2006) and the
Draft Law on Private Security for the Protection of Persons and Property and
Detective Activity (LEX, 2006), and the third one by the professional association
that assembles private security companies – Draft Law on Private Security
for the Protection of Persons and Property (Committee of the Association
of Companies for Physical-Technical Security in the Serbian Chamber of
Commerce, 2006). In this paper we are going to present and compare main
regulations of all four existing law models in this area.
Company Licensing
Physical-technical protection was until 1993 governed by the Law

on the System of Social Self-Protection of the Republic of Serbia.3 This
1
The author is a reasearcher at the Belgrade School of Security Studies
2
Draft Law on the physical – technical protection (MoI, 2002)
3
Matić D. Goran : Osnovi fizičko-tehničkog obezbeđenja (Basis of Physical-Technical Securi-
ty), Privredna komora Srbije, Udruženje preduzeća za fizičko-tehničko obezbeđenje, Beograd,
2006, p. 3
Comparative Analysis of the Four Model Laws on Private Security Sector
law prescribed police vetting (checking for criminal records) and testing of
psycho-physical abilities of security guards before issuing the work license.
The establishment of the Private Security Companies (PSC’s) is currently
regulated by the Company Law4 requiring no more than initial capital, an
office, a registered telephone line and at least one employee to establish
an agency.5 Bearing in mind that the law does not specifically refer to the
category of security companies, this means that a person may, e.g. register a
supermarket but nevertheless provide security services.
According to the above-mentioned model laws, private security

activities involve protection of persons and property, transport of money and
other valuables, securing of public assemblies, management of the protective
surveillance centre and the planning, design and installation of technical-
protection systems. In addition to these activities the LEX proposal also
anticipates detective work and self-protection activities.6 All models foresee
obligatory operating licenses. That is extremely important, since the state
thereby transfers to these companies part of its monopoly on the use of physical
force. This section will address the regulation of the licensing procedure, as
well as the relevant competencies.
91
These model laws provide different solutions with respect to the
body competent for issuing the PSCs’ operating licenses. According to the
Association and LEX’s models, the license is issued by the Association, i.e.
Security-Protection Chamber as part of the Chamber of Commerce, while the
CCMR model designates the Ministry of Interior as the licensing body. Both
solutions exist in praxis of other countries. The advantage of the former lies in
the fact that private agencies know their need best, and disadvantage is the
potential conflict of interests. The latter solution seems superior as it ensures
state oversight of licensing, bearing in mind that the Ministry is accountable to
the government and the Parliament. There is also here a potential conflict of
interests and the possibility of anti-competition, because the police is allowed
to charge for its security services.7 More on this problem you can see in the
4
Zakon o preduzećima (Company Law), Offical Gazette of FRY, No. 29/96, 33/96 – corr.,
29/97, 59/98, 74/99, 9/2001 – and 36/2002
5
Apart from this term we will be using the terms like: firm and company
6
Nacrt zakona o privatnoj delatnosti obezbeđenja lica i imovine i detektivskoj delatnosti (Draft
Law on Private Security for the Protection of Persons and Property and Detective Work), LEX,
Belgrade, 2006, Art. 84
7
Pravilnik o vrstama usluga čijim pružanjem Ministarstvo unutrašnih poslova može da ostvaru-
je dopunska sredstva (Statute on the types of services through which the Ministry of Interior can
generate aditional resources), Offical Gazette of RS, No. 64/2006, 71/2007, 14/2008
second chapter in the paper, Control and Oversight of the Private Security
Sector.
All the models, apart form the one of the MoI, anticipate a time-
wise unlimited validity of licenses, revocable under specified conditions,
established through the monitoring of the agencies’ operations. The MoI
draft model, foresees the licence being issued for a limited time period: five
years for corporate body and three years for employees. Experience from
other countries8 tells us that it is better to limit the validly of the license to
a specific period of time, as that enables regular review of the work and
operating conditions of the companies concerned, and thus helps preserve
the standards set forth at the beginning of their operation.
Apart form the proposal by the MoI, it is also foreseen, that all security
activities in Serbia can be conducted by the foreign legal entity (e.g. company,
institution) and physical entity (e.g. an individual). This is a good solution, taking
into account that lately the work of these companies is acquiring transnational
dimension. Also, the foreign firm business on the domestic market would bring
competition, and therefore a better quality of the services at the lower price.
92 The operating standards could be improved by the developed market.
According to the CCMR model licenses may also be issued to

associations of retired police officers and Serbian Army members. However,
it remains unclear why this proposal refers only to the retired staff of the two
services, and does not include their lay-offs, knowing that a large number of
army and the police members will be let off due to the planned downsizing.
This opportunity could help them find new jobs. But, this solution also has a
reverse, negative side, primarily due to strong personal ties between these
people and state employees, which may be conducive to unfair competition on
the labour market. In many European states, e.g. Belgium, a policeman may
not be employed as a security officer five years following the termination of his
service in the police. That is due to the fact that a policeman has operational
links, i.e. knows customs officers, inspectors in different areas, etc. and may
thus gain advantage.9
8
Belgium, Luxembourg, Netherland, Portugal… Dimitrijević Ivan (ed.): Uporedni prikaz za-
konodavstva industrije privatne bezbednosti u Evropskoj uniji (Comparative review of the EU
private security industry legislation), Klub studenata Fakulteta bezbednosti, Beograd, 2006.
9
Široko polje za pravo jačeg (Wide Leeway for the Right of Stronger), http://www.danas.
co.yu/20060825/terazije1.html, accessed: 30. 8. 2006.
Who is Permitted to be a Guard?
All model laws specify the conditions for those willing to work for
private security agencies including appropriate professional qualifications,
completion of a professional advance training program, non-existence of
public order violations (record of convictions for offences involving violence),
citizenship of the Republic of Serbia and generally good health. Another
condition in the CCMR and the Association’s models is an active knowledge
of the Serbian language. This additional requirement ensures operability, but it
also prevents foreign competition and creates the conditions for discrimination.
This particular provision is at variance with the solution proposed in models
allowing foreign legal and physical persons to engage in security operations
in the country. Namely, that would hardly be feasible and this sphere of activity
would be reserved for domestic firms and citizens. In the absence of foreign
competition domestic agencies would find it easier to increase the prices
and reduce the quality of services they offer. Speaking of discrimination, the
question is also whether this clause complies with the constitution, i.e. the
relevant provision regulating the right to work10 prohibiting the discrimination
of national minorities11, and guaranteeing everyone the same rights. There is
also some doubt as to its compliance with the Labour Law’s ban on language- 93
based discrimination in employment.12
What we see in Serbia today is that policemen work for PSC’s when
off duty. They can do that under the Police Law which only prohibits police
officers to engage in independent private and professional activity.13 The
Law mentions nothing regarding whether they can conduct work with other
employer. Therefore, it would be appropriate to include another provision into
the new law prohibiting employers to take on personnel already hired by the
police. Concerning the professional army members, the Law on the Military
foresees that they can work for a fee and outside their units, ie. institutions,
and that they can independently conduct activities with the permission of Chief
of General Staff, and Minister of Defence.14 The action that would not be in line
with this regulation would present a disciplinary offence.15
10
Constitution of the Republic of Serbia, November 2006, Art. 60.
11
Ibid art. 76
12
Labour Law, Official Gazette of the Republic of Serbia, 24/05, Art. 18
13
The Police Law, Offical Gazette of RS, 101/05, Art. 133.
14
The Law on Military, Offical Gazette of FRY, Art 52
15
Ibid. Clause 149, Art 20, 21, 22
Another new requirement should address the background security

check of the candidates, analogue to the Police Law, in view of the nature of
the agencies’ operations and the powers of their employees (e.g. the carrying
and use of arms, detention of persons...).16 From comparative experience
we can see there are different solutions regarding who should perform these
checks. That can be MoI, due to its information capacity for required checks, or
some form of independent organisation, whose advantage would be unbiased
approach. It would also be a good thing to limit the employees’ licenses time-
wise, so as to enable regular checks of their abilities and suitability for this
kind of work, as well as the knowledge of the relevant regulations for the
protection of human rights.
Particularly important for the efficiency of these agencies is the training

of their staff. All models, apart from the one proposed by the MoI, anticipate
that the programs and professional training are prescribed by the minister
of the interior upon the proposal of the Association. The authority of the MoI
in this part could establish the compatibility between the work of the police
and the private security sector. The programs have general and special parts,
addressing the training common to all security activities and specific services
94 respectively. The CCMR’s proposal goes a step further by setting the amount
of funds an agency must appropriate for training purposes. Adequate financing
is a condition for high quality training. The proposal forwarded by the MoI quite
broadly sets the organisation of the training. It foresees that the competent
authority, company or other organisation that fulfils the requirements can carry
out the training. Concerning the training, it is our opinion that they would need
to be set in the Law as mandatory, but the content and the way of carrying it
out, as well as the issue who will organise it can be regulated by the individual
acts of firms.
Intrusion of Human Rights – Use of Coercive and Technical Means
The use of force is part of these agencies’ repressive function. As

things stand, legal grounds for the use of force include self-defence17 and
16
Similar legal practice is found in Germany where the background of people employed by
private security agencies is checked for criminal records. Op. cit.: Dimitrijević Ivan.
17
Criminal Code, Official Gazette of the Republic of Serbia, no. 85/2005, 88/2005 – corr. and
107/2005 – corr., Art. 19.
extreme neccessity18, under the Criminal Code and self-help19, under the Law
on Obligations. This foundation was kept also in the Draft put forward by the
MoI, but it is still not specified. The rest of model laws uphold the principle
of proportionality and legality in the application of all measures implying the
use of force and the restriction of the citizens’ human rights. These measures
must be applied in line with their legally established purpose so that no one
is submitted to torture, inhuman or degrading treatment. A security officer is
obliged to apply the measure which is the least damaging, while all license
holders must notify the police on the use of any of these measures within
24 hours. The purpose of this procedure is to look into the possible criminal
responsibility of security officers, i.e. their overstepping the bounds of self-
defence or extreme necessity. We consider that it is necessary for the principle
of proportionality to be included, as one of the guiding principles.
According to the proposed models, a security officer may carry firearms

in line with the Law on Weapons and Ammunition20. They, however, limit the
number of weapons for individual agencies by allowing no more than a half
of their employees to carry arms. This prevents the creation of small private
armies. Under the Law on Weapons and Ammunition, PSC’s must keep the
records of their physical security weapons and ammunition. The use of arms 95
is permitted only if there is no other way to protect human lives, or when
necessary to fend off an attack endangering the life of a security officer or the
person under his protection. Furthermore, license holders are also obliged
to keep records of their use of firearms. This requirement has gone missing
only in the CCMR model, which is not good, since it makes the control of the
agencies’ operations more difficult.
Paradoxical (Un)availability of Weapons

Another aspect that is not properly regulated is the type of weaponry
that is available to private security companies. According to the Law
on Weapons and Ammunition21 PSC companies are allowed to acquire
rifles, including locally produced semi-automatic and automatic rifles.
18
Ibid. art. 20
19
Zakon o obligacionim odnosima (Law on Obligations), Offical Gazette SFRJ, No. 29/78,
39/85, 45/89 – and 57/89 i Offical Gazette FRY, No. 31/93
20
Zakon o oružju i municiji (The Law on Arms and Ammunition), Offical Gazette RS, No.
9/92, 53/93, 67/93, 48/94, 44/98, 39/2003, 101/2005 – and 85/2005
21
According to the claims of a senior employee of a PTS firm, the procurement of automatic
rifles is legal because the same law that regulates hunting clubs applies also to security com-
panies.
On the other hand, the acquisition of sub-machine guns and TASER

type weapons is a privelege of state security organisations and is
illegal for private companies. The very nature of the private security
companies’ operation, i.e. that they overwhelmingly operate in urban
centres, is the aspect that most impacts on the security of ordinary
citizens. In the event of an attack on the personnel of private security
companies, the outcome of the use of automatic assault rifles could
be catastrophic. Assuming that the attack and its consequences are
located in the immediate area where the secrity personnel are operating
(for example, where they are carrying out cash and valuables in transit),
this may not be the case if the weapons used were sub-machine guns
or electroshock weapons. Automatic rifles and sub-machine guns are
both capable of fully automatic fire but the difference is in the type of
ammunition used. Rifles fire rifle rounds which have an effective range
beyond 500m but sub-machine guns fire less-powerful pistol rounds
with an effective range out to 150m. The use of electroshock weapons
would further increase the relative security of both ordinary citizens and
the PSC company personnel.
Marko Milošević
96
Speaking of the use of technical means, first three models exclude the
possibility of secret video surveillance, which is an important advantage. They
all request that an area under video monitoring must prominently display a
warning to that effect. According to the CCMR model these recordings should
be kept in collections and destroyed after three months. This is a good solution
since it prevents unnecessary stockpiling of data as well as their abuse. Data
related to criminal offences which are prosecuted ex officio would be kept for
a year at the longest, probably so that they could be given in evidence. The
Draft proposed by the MoI foresees only for the security jobs to be carried
out in accordance with the regulations on the personal data protection, which
is also not a bad solution. Only problem is that the Law on the protection of
personal data exists only as a recommendation and is still to be adopted in the
Serbian Parliament.
Affiliations Between the PSC’s and State Bodies
The law must also regulate the relations between the public and private
security sectors. The above-mentioned models anticipate that license holders
may not conclude work contracts of carry out jobs which the police, military
police, security services or the judiciary are legally authorized to do. The
CCMR model quotes the prosecution of perpetrators of criminal offences, debt
collection, etc. as examples of such activities. It goes on to prohibit security
officers to work for domestic and foreign security-intelligence agencies. This
however, leaves them room to conclude contracts with other state institutions
and do other work such as escorting money transports for the National Bank
of Serbia.
According to the proposed solutions, the PSC’s should cooperate

with the police by conveying to its officers information pertaining to criminal
offences, their perpetrators or objects used to commit such offences, as well
as any fact revealing a breach of public order with elements of violence. In
addition, they also anticipate that a person who has been detained, or whose
movement has been otherwise restricted, must be turned over to the police
within two hours at the latest, whereby a possible harassment of citizens is
prevented. Violations of these provisions are sanctioned by fines.
All four models anticipate the Ministry of Interior’s oversight of the

PCS’ work. The Association is obliged to submit to the Ministry annual financial
reports. Their review shall be carried out by security inspectors of the Ministry. 97
For that purpose the inspectors would be given insight into the records.22 An
inspector would be entitled and obliged to propose to the Ministry to revoke
a specific operating license on a temporary or permanent basis (CCMR and
LEX models). According to the Association’s model a proposal to that effect
should be submitted to the Association.
Choosing the Best Solutions
In the end we can conclude that all the models are more or less
similar. Also, certain differences do exist, that directly or indirectly sustain
the understandings that creators of these models have on the privatisation
of security. The models created by the two non-governmental organisations
were done to smallest details. We can even say that certain regulations
included are superfluous, ie. certain regulations already exist in some other
legislations or need to be included into sub-legal acts, as they burden the
text of the legislation. However, this way of organising avoids the possibility
for the later regulation of the MoI to be in conflict with the law or for the
22
Records kept by license holders include: contracts on security services, information on crimi-
nal offences, detained persons, use of force and restraints, and the use of firearms.
regulations to be interpreted in a wrong way. Out of the mentioned models, the

Associations model differs most concerning the authorisation of the licences
issuing, which tell us a lot about their interests and distrust in the state bodies.
Also, in other three models, which is different from the draft given by the MoI,
significant number of regulations are dedicated to both internal organisation
and regulating the jurisdiction of the Chamber, ie. the Association. Passing of
the Code of Conduct could represent a solution for this part, as in this way the
text of the legislation would be disburdened.
The Draft proposed by the MoI has only 44 articles, and it contains
scarce formulations with number of aspects considered as implicit. This
method, although concise, creates the opportunity of different interpretations
and it opens the question in what way will that be specified in bylaws and
statute. Most of the articles are dedicated to exercising of control, licence
issuing and generally the relationship between the MoI and private security
sector. On the other hand, the Chamber, ie. the Association, is not mentioned
at all, nor the rights or the responsibilities are specified that the employed
have during the carrying out of the activity.
98 RECOMMENDATIONS:
1. If the MoI keeps the right to commercially (for profit) provide the
security services, then we suggest to adopt the solutions proposed
in the model laws of the Association and LEX which envisage that
issuing and revoking of the licence is to be under the jurisdiction
of the Association of Physical and Technical Security Companies
within the Serbian Chamber of Commerce. Other choice would be
for the MoI to have jurisdiction over issuing or revoking the licence
under the condition to end commercialisation activities of the police.
The latter is proposed in the models proposed by the MoI and the
CCMR.
2. The licences for PSC should have limited time validity as it is

proposed in the MoI model law.
3. The foreign legal entities (e.g. companies) and physical entities (e.g.
individuals) can provide security services under the condition that
there is reciprocity. Such solution is envisaged in the model laws put
forward by the CCMR, LEX and Association.
4. The PSCs should be obliged to have their staff pass standardised

training. This is proposed in all models in different forms.
5. The PSCs should be obliged to reserve financial resources for
training of their staff. This is proposed in the model law developed
by the CCMR.
6. We recommend incorporating in the future Law the principle of

proportionality in use of force so to deter from excessive use of
force by the PSC staff.
7. PSC should acquire at least the amount of weapons for one half of
the employees as suggested in the models proposed by the CCMR,
LEX and Association.
8. PSC should be obliged to keep the record on the use of fire arms
as it is recommended in the models proposed by the LEX and
Association.
9. A secret filming should be prohibited as it is envisaged in the models

proposed by the CCMR, LEX and Association. 99
10. The Ministry of Interior should be authorised to perform regular

oversight of work of PSCs as it is recommended in all four model
laws.
11. Alongside the passing of the new laws, it is important to change

the existing laws on the (fire) arms and Ammunition which would
prohibit PSCs to use automatic and semiautomatic weapons.
12. Having in mind the fact that the private security sector is unique
business type if activity and that it should not be left to the
mechanisms of self-regulation on the open market, we sugest that
the Anti - Corruption Laws should be incorporate provisions about
prevention of corruption in private security sector.
To secure efficient enforcement of the law as well as regular and

sound oversight over this sector, it is necessary in our opinion to set up
specific department within the MoI that would have sufficient number
of executors and financial resources. For the agencies services to be
efficient, it is important that the quality and the length of the training
of the employed as well as the work of security-technical centre is

thoroughly organised. Alongside the passing of the new laws, it is
important to change the existing Law on the (fire) arms and ammunition
which would prevent the use of automatic and semiautomatic weapons
in the private security activities. Without enactment of these additional
steps, the situation in the private sector can not be solved. The law is
necessary, but not sufficient.
After the law is enacted, it is necessary for a number of by-laws to

be passed, which would make this law specified. We would recommend
the following by-laws:
• Code of rules for uniforms and badges of the security
operatives
• Rules of business ethics
• Programmes of organising and carrying out the training
• Standards for setting the quality level of the services
• The decision on the price of services
• Procedure for money transport and other valuables
100
Detectives
The LEX model law regulates the activities of detectives. Engagement
in these activities requires a license from a Detectives’ Chamber yet to
be established within the Chamber of Commerce. In order to obtain an
operating license, a person must meet specific requirements similar to
those applicable to PSC employees, including in particular that over the
past two years the detective did not perform “the tasks of authorized
officials” in the Ministry of the Interior, the Security Intelligence Agency
or another security service. This limitation is appropriate since it
prevents the use of knowledge acquired during previous employment
for commercial purposes. However its drawback is that it limits itself
only to the security jobs in the MoI. In practice that would mean that if
someone worked as an inspector has the right to engage in detective
activity even before the expiry of two year period. The advantage of
this model is also in the fact that it explicitly prohibits detective work
for political parties. According to this model, the most controversial
category of data private investigators are authorized to collect has
to do with the performance and business efficiency of legal persons.
These cases border on economic espionage and allow for abuses.
Furthermore, this gives the detectives large authorities with respect
to access to official data, since the managers of collected recordings

are obliged to provide them with the requested information23, without
having to previously notify the persons to whom these data are related,
which goes against the protection of personal data. It would be better to
envisage a possibility, rather than the obligation of authorized persons
to provide the detectives with insight into such data and to prohibit the
disclosing any information constituting an official secret. This solution
has been incorporated into the relevant law of Republic of Srpska.24
Another deficiency of the model’s authors is their failure to prohibit
video recording or wiretapping, or else to at least prescribe the relevant
conditions. The model anticipates the obligation of detectives to keep
the collected data and use them in line with the law guaranteeing the
privacy of personal data. That is a good solution but would be practically
uneasible until the protection of personal data is regulated by law.
Model Laws:
1. Model zakona o privatnoj delatnosti obezbeđenja, Centre for Civil-Military

Relations (Model Law on Private Security Activity), Belgrade, 2006.
101
2. Nacrt zakona o privatnoj delatnosti obezbeđenja lica i imovine i detektivskoj
delatnosti (Draft Law on Private Security for the Protection of Persons and
Property and Detective Work), Legue of experts, Belgrade, 2006.
3. Nacrt zakona o privatnom obezbeđenju lica i imovine (Draft Law on

Private Security for the Protection of Persons and Property), Committee
of association of Companies for Physical-Tehnical Security in the serbian
chamber of Commerce, Belgrade, 2006.
4. Nacrt zakona o fizičko-tehničkom obezbeđivanju (Draft Law on physical-

technical security), MoI, Beograd, 2002.
The first version of this paper was published in the Western Balkan Security
Observer, no. 4 , Centre for Civil Military Relations
23
Draft Law on Private Security of Persons and Property and Detective Work, LEX, Belgrade,
2006, art. 62
24
Law on Private Security Companies and Detective Work, Offical Gazette of Republic of
Serrska, no.50, 16. 8. 2002., art. 44
102
103
104
Ivan Dimitrijević 1
Overview of the Private Security Legislation in the

Countries of European Union
In the last thirty years the European Union has experienced substantial
expansion of the private security sector, in terms of increasing number of
companies for private security (PSC) and enhancement of the service quality
106 they are offering, as well as in terms of the growing number of employees. In
many member countries the number of employed is equal to the number of the
police, while in some countries that number has been exceeded. According to
some reports, there is one member of the private security company for every
500 citizens.2 When talking about the entire security system this represents the
capacity that cannot be neglected and during the 90’s the need to regulate this
sector has become visible. Most of the member countries at that time adopted
relevant laws that regulate this domain and this path was followed by the new
member states during the last two rounds of enlargements. The exceptions
are Austria, Germany and Cyprus that regulate private security sector through
other laws regulations, mainly in the domain of economy and industry. This
is also the case with Czech Republic which still hasn’t regulated this domain.
Apart from these countries other exceptions are Italy and Sweden, which have
in 1931 and 1973 introduced special laws for this domain, respectively.3
1
The author is fellow of the Belgrade School of Security Studies
2
Panoramic Overview of Security Industry in the 25 Member States of the European Union,
CoESS/UNI-Europa, 2004
3
Data use from: Panoramic Overview of Security Industry in the 25 Member States of the
European Union, CoESS/UNI-Europa, 2004
Overview of the Private Security Legislations in the Countries of EU
Legal Framework
The legal definition of private security is not adopted on an EU level.4

However the national legal definitions contain certain elements that are
concurrent among all countries. According to most laws, the private security
services are considered as: securing the individuals and property; organizing
the escort of cash and valuables; the existence of surveillance centre;
laying out, installing and maintaining the system of technical protection; and
conducting of private investigation. As a kind of exception we could single out
Belgium, Germany, Great Britain and Slovakia whose laws contain detailed
definitions.5 Only in Sweden is there a deviation from the conventional tasks
of protection found to present in most countries. In this country protecting
activities are more than diverse.
In this country the security activities are more than just diverse and
involve the provision of medical services, transport of patients, traffic control,
providing assistance during fires and road traffic incidents, monitoring for
the Ministry of Defence, transport of money and valuables, alarm response,
neighbourhood monitoring, as well as providing services at the airports.6
According to some authors, Sweden is one of the countries that in qualitative 107
terms provide the best private security services in the world.7
Companies Working Licences
Issuing the working licences for private security is most commonly the
responsibility of the Ministry of Interior, police (on all levels) or the Ministry of
Justice, with few exceptions (in Ireland and Great Britain separate institutions
4
Attention: de jure definition doesn’t exist
5
According to German Law, the private seucurity services involve: securing physical objects
and industrial complexes; securing of individuals, transport, military complexes, order at the
public meetings; securing nulear plants, airports, carrying out patrol activities and escort of
money and valuables.
6
A comparative overview of legislation governing the private security industry in the Euro-
pean Union, CoESS/UNI Europa, 2002. It is important to mention that Sweden is an excep-
tion only due to the wide range of services that were previously used under the jurisdiction of
public services and institutions. The transfer of duties from the public to the private sector is
characteristic of Scandinavian countries but to a lesser extent than it is in Sweden.
7
De Waard, Jaap, The Private Security Industry in an International Perspective, European
Journal on Criminal Policy and Research, vol 7, no 2, pp. 143–174, 1999, citirano u: A
comparative overview of legislation governing the private security industry in the European
Union, CoESS/UNI Europa, 2002
are formed for this purpose). In a small number of countries the licences are
issued by the Ministry of Labour, Ministry of Defence or local administrative
council. In all member states the work licences are compulsory and they are
issued for limited time period (usually from 3 to 5 years) with the possibility
of extension.8 In all the member states, apart from Italy, the companies are
facing certain requirements that first of all relate to responsibility (moral and
financial) and required infrastructure. Taking this into account, during the
issuing of working licenses, financial checks and professional qualifications
checks are performed to ensure appropriate training for job performance.
Owners and Employee Requirements
Owners, employed in the management of the companies and

the security personnel, apart from being in adulthood, which is the basic
precondition, have to pass the security checks, although there are no set
regulations. The basic condition is that the person has not had any previous
criminal convictions. However, it should be mentioned that there are differences
from country to country concerning the time period necessary to pass from the
expiry of a conviction before it is possible to set up a company. Some counties
108 like Belgium have even more restrictive preconditions. Also, it is necessary for
personnel to possess adequate psycho-physical and professional qualities and
qualifications, as well as citizenship (apart from national citizenship in some
countries any EU citizenship is allowed). In some member countries one of the
requirements is that the person cannot work in state services (police, military,
security services), as well as in areas that deal with weapons, ammunition
and explosives or similar activities. Concerning this matter the most restrictive
measures are adopted in Belgium and Portugal. In these states it is necessary
that the person hasn’t been working for at least five years in police, military or
security services. Apart from these requirements, in Greece and Italy there is
also a prerequisite that person has to have served in the military service.9
Concerning the additional requirements, we could say that there are

differences between the conditions that need to be fulfilled by the owners and
managers and conditions that need to be fulfilled by the security personnel.
Additional requirements for owners are mentioned under the part that talks
about company work licences. In Belgium and Denmark the owners and
8
Data used from: Panoramic Overview of Security Industry in the 25 Member States of the
9
Ibid.
managers have to pass mandatory specialised training. The security personnel,

apart from the basic training, have to fulfil additional requirements that relate
to training.10
Training
In most member states the PSC personnel have to pass basic

training, while in some they have to pass specialised or additional training
and checks. The training can be organised within the companies or in the
specialised training centres. In most countries the content of the training,
courses and instructors that carry out the training have to gain permission
from the responsible authorities. On the EU level the length of the training is
not standardized, so the certain variations exist depending on the country.
Apart from compulsory training, in most countries the security personnel have
to sit the exams which will provide them with a valid licence for a limited period
of time (for example in Belgium and Finland the licence is issued for a period
of five years).11
Uniforms/ID cards
109
The PSC personnel in most cases have to wear uniforms and ID cards
(although in some cases this is a matter of choice), that are issued to the
companies, individuals or both. In half of the member states the rules stipulate
that uniforms of the PSC personnel cannot be similar to police uniforms, so
they have to be first approved by responsible institutions. Similar praxis exists
during the issuing of identification cards, and it should be highlighted that in
almost all states ID cards have to be visible.
Use of Coercive Means
When it comes to the use of coercive means, it can be noted that the
most often used means, after those pertaining to the restriction of movement,
are non-lethal weapons and service dogs. In most countries it is necessary to
obtain a specific licence for the use of dogs; it is also required that a dog and
a dog handler are properly dressed. In Greece, the use of dogs is prohibited
in public space or public accessible places. The use of firearms is not allowed
10
Data used from: A comparative overview of legislation governing the private security
industry in the European Union, CoESS/UNI Europa, 2002
11
Ibid.
in Denmark, France (except for cash in transit), Netherlands, Ireland and

United Kingdom. In other countries, this can be a requirement or a matter of
voluntary choice. In the countries where firearms are permitted, it is required
for security personnel to hold either an individual or a company licence. In
most cases, these licences are issued by Ministries of Interior or the police.
The use of firearms is limited to the work environment and need to be held in
secure company premises. The lists of firearms can be stored in a company
or with the police.12 In general, besides being authorised to search people and
objects as well as to seize objects from a person’s possession, private security
personnel have no special powers comparing to citizens. The use of special
powers is allowed only by few member-states (Belgium, Poland, Greece) and
only in precisely defined circumstances (when related to private ownership
and airports, or when permitted by appropriate authority). Security personnel
are required in all countries to complete training for the use of firearms.
Associations and Syndicates
In nearly all member-states, with exception of the United Kingdom,

there are collective agreements used by private security companies intended
110 to standardize their interests on a national or a sector level. In all the “old”
member-states, security companies’ employees have their representatives in
the syndicates, while the entire private security sector is organized through
professional associations. In some countries there is a single organization
of that kind, while it is a more common case to have several of them. Similar
situation exists among the twelve “new” member-states. What all the EU
countries have in common is that at least one of these national associations
is a member of the Confederation of European Security Services (CoESS), an
umbrella association under the European Commission. In the same manner,
the syndicates are organized through the UNI-Europa organization. Although
the social dialogue is well-developed in most member-states, in particular
“new” states this issue is yet to be addressed in time to come.13
Control and Oversight of PSC
It is common that the institutions operating within the private security

sector are, at the same time, authorized to carry out control over the PS
12
The data are obtained from Panoramic Overview of Security Industry in the 25 Member
States of the European Union, CoESS/UNI-Europa, 2004
13
Panoramic Overview of Security Industry in the 25 Member States of the European Union,
CoESS/UNI-Europa, 2004
companies and employees. In particular cases, this authority is delegated to

local-level government or the police. The police have the power to carry out
regular and random company checks, during which they can withdraw the
licence or initiate criminal proceedings. In the case of half of all EU member-
states, the companies shall submit to the appropriate authorities regular work
reports, mostly on an annual basis, while sometimes regular daily reports
are also required.14 Companies and employees are subject to administrative
sanctions ranging from warnings and suspension, licence withdrawal to
criminal prosecution, including fines and sentence of imprisonment, and
depending on the type of offence or criminal act.
Resume
All the EU member-states, with the exception of Czech Republic,

already have, or are in a process of preparing, regulations that should help to
managing private security industry. What all member-states have in common
are appropriate institutions created to regulate the sector as well as developed
work conditions for both companies and their employees. It can be noted that
in the most member-states the sector is economically well-grounded and is
constantly increasing. When it comes to the countries which became the EU 111
members in last two accession rounds, it should be taken into consideration
that the future managing and developing of their private security sectors will
follow the “old” member-states’ praxes. We can, therefore, assume that the
existing regulations, established in “old” member-states, will persevere in time
to come. An international regulation of private security will be certainly be
established in the near future for two reasons: firstly, it comes as a logical
progression in the development of this field, and secondly, it responds to the
imperative for regulating the ever-growing market of private security.
European security-guard profile:
Performs a job of static physical safeguarding

Male, 35 years old on average
Has completed training and owns a proper work licence
Wears uniform and carries firearms
Has no special powers
Works for 8-12 hours a day15
14
A comparative overview of legislation governing the private security industry in the Euro-
pean Union, CoESS/UNI Europa, 2002
15
Data used from: Panoramic Overview of Security Industry in the 25 Member States of the
112
113
114
115
116
117
118
119
120
121
Annex 1
Glossary
 Belgradization – concentration of decisionmaking on the Serbian

private security sector in Belgrade, including decisions on the minimum
price of labour and negotiation of deals with major clients for the whole
of Serbia.
 “Bottom up” – term used to denote the system of advancement from
lower to higher positions in a company.
 “Bottom up” privatisation – denotes a privatisation process developing
spontaneously and more or less outside state control. It is characteristic
of the so-called weak states that cannot efficiently and effectively
122 carry out the basic functions, a deficiency which private actors seek to
compensate.
 Consulting – activity including diverse kinds of services ranging from
security evaluations to provision of advisory services.
 Detective activity – denotes the collection and provision of information
of importance for the protection of property and persons in accordance
with legally prescribed rules.
 GPS - Global Positioning System. Currently the only operational global
navigation satellite system. GPS comprises 24 satellites distributed in
the Earth orbit, transmitting radio signals to the surface of the Earth,
allowing GPS receivers to define their precise position – altitude,
latitude and longitude anywhere on the planet, night or day, in all
whether conditions.
 Insurance companies – companies insuring property and persons.
 Physical protection - implies undertaking of security, military, criminal
police and other methods of work, within the set legal authorities and
competences, with a view to ensuring the physical security of persons
(e.g. VIPs), facilities and property. The term is used to distinguish
Glossary
the security service which is generally based more on the physical

presence and use of human resources (e.g. patrolling and guard duty)
than on technical means. In practice, physical and technical protection
are most often combined, which accounts for our references to Physical
and Technical Security.
 Private military companies – a general term denoting all privte
companies providing military services and training. They are most often
engaged in conflict and post-conflict areas, although they also provide
their services in non-conflict environments.
 Private physical and technical security companies (privatne
firme za fizičko-tehničko obezbeđenje (FTO) (eng. private security
companies-PSCs) – provide the services related to physical and
technical security of personnel, facilities and property and are engaged
in non-conflict as well as conflict and post-conflict areas.
 Private security companies (PSCs) may be defined as a clearly
structured and hierarchically organized registered corporative
associations providing services of security nature and competing for
123
such jobs with other similar companies on the market.
 Securing of key infrastructure – special purpose facilities subject
to obligatory security requirements, e.g. electric power generating
capacities.
 Technical protection – use of technical means for protection purposes,
e.g. installation of alarm, video monitoring and anti-burglar systems and
other technical facilities.
 “Top down” privatisation – denotes a process of security privatiztion
deliberately undertaken by a large number of governments. It is
characteristic of Western states which privatize their security sectors
in order to increase efficiency and effectiveness of security services
provided to their citizens.
 Training – general and specialized education of security sector
employees.
Annex 2
Initial questions about private security companies in
Serbia
1. When was your company established?
2. Which year was crucial for the company’s development?
3. What kind of services you mostly provide to your clients?
4. Who and what do you most commonly secure?
5. Does the state/government retain any private security companies’

services?
6. Are you particularly active in any specific region in the country (major
124 town, area)?
Division of work in the company
7. Is the company hierarchically structured (more than two levels)?
8. Is the work in the company technically divided (security, video

surveillance, money escort, administration)?
9. Does that imply specific requirements and training?
10. How much does a middle ranking employee normally make?
11. How many regular employees does the company have?
12. Does it engage part-timers due to increased volume of work?
13. Has the company taken over the personnel of former social firms
based on their privatisation or business deals with such firms?
14. Are there allowances for overtime or night work?
15. Are there any moonlighters?

Initial questions about private security companies in Serbia
16. Are there provisions for “business secret” in the employment contract
(a clause prohibiting new employment in the sector to outgoing staff
for a certain period of time)?
17. What are the conditions for employment in PSCs (military service,
previous service in the army, police or Security Intelligence Agency,
course in fire-fighting, no conviction certificate...)?
18. Are former policemen, soldiers or security officers given any

employment advantage or benefit, and what is their status in the
company?
19. Which criterion is used to distinguish between large, medium and

small companies (personnel, technical facilities)?
20. How is ranking done?
21. Is there an informal division into quality or quantity oriented

companies?
22. Which laws apply to physical and technical security activities?
23. What are the deficiencies of the applicable legislation?

125
24. Which areas does it cover?
Data
25. What kind of data do you collect (personal, video, audio)?
26. Detective activity – what sort of data do you gather and what is the
legal basis for that activity?
27. Is there any notification on the existence of video surveillance?
28. What do you do with video recordings:
- Do they belong to you or the client?
- How long do you keep them?
- Who has access to these recordings?
- How?
- Who issues recording permits?

Arms
29. Are the employees armed?
30. What kinds of arms are accessible to them?
31. What is legally permitted?
32. Under what conditions?
33. What is the company policy for the use of arms and coercion?
34. Are the arms registered and to whom (company and/or private
owners)?
35. Who issues the licences?
36. When not used, are the arms stored in company premises, or do
employees take them along home?
37. Is there any (general or special) training the company carries out or
arranges?
126 38. Are there any standards?
39. Do the employees have shooting range practice and if so how often?
40. How is the use of arms by PSCs regulated – is there a prescribed

reporting procedure or an investigation in the case of use of arms, or
do the provisions of the criminal code apply?
41. Is there an authority controlling the PSCs operations for compliance

with prescribed norms and operating conditions?
42. Have there been cases of violation of human rights by PSCs?
43. Do you know of any “information leaks” from the company or

participation in attacks on clients by company employees?
44. Who does and who should carry out security screening of personnel?
45. Who keeps records (if any) on successful/failed attacks/robberies, and

who has access to these records?
46. Is there a work report, and if so, who has access to it?
Market
47. Are there any foreign-registered companies operating here?
48. Do we have any unregistered companies operating here illegally?
49. Are there connections between the PSCs and the:
- Army
- Police
- Political parties
- Security Intelligence Agency
50. Are there any formal and/or informal links with these sectors
(exchange of information, cooperation with the police in securing
meetings, etc...)?
51. Political influence on the PSCs – how do you see the relation between
political parties and politics, and the PCS:
- Does it limit or help the PCSs operations? 127

- Does it influence the market?
- How should it be regulated?
- Are there PCSs which provide services to a single political party and
are they the single provider of services to the party concerned?
52. Influence of crime on the PSCs: are there (or have there been) any
criminal groups in the private security sector?
53. Which mechanisms are used to prevent that?
54. Do we have foreign firms operating here?
55. Penetration of foreign firms in the domestic market – to what extent?
56. Would that be a good or a bad thing?
57. Would that be considered unfair competition (larger companies, more

assets, larger capacities... )?
Insurance companies and their politics
58. What are insurance requirements from security services (money

escorts, banks...)?
59. What are the conditions for insurance of vehicles and personnel?
60. Are these conditions formal or specific?
Trends
61. Have company operations been expanded (additional registration,

response to new challenges...)?
62. What is the perspective of PSCs operations (market enlargement,

work abroad)?
Questions for banks
128 1. Does your bank have its own or hired security?
2. What is your experience with the PSCs?
3. How do you contract the job – on the basis of a recommendation, a

tender?
4. How does the bank choose its security manager?
5. What kind of education is required – formal or informal, experience?
6. Which problems do you perceive in this sector?
7. What is the role of insurance companies in evaluating the risks and

measures to improve security?.
8. Relations with the police – cooperation, problems?
9. Privatisation of the physical and technical security sector -

influence of political parties and politics on the sector’s operation.
Tentative questions for representatives of the Committee for Security
1. To what extent has this Committee so far addressed the issue of

security privatisation in Serbia?
2. Has the Committee identified the key problems of security sector

privatisation in Serbia?
3. How well re the Committee members informed about this

phenomenon, in your view??
4. What has become of the draft legislation on private security

elaborated by Interior Ministry’s expert team, i.e. why has it not been
adopted?
5. How could this committee have an efficient oversight of this sector?
6. How could Interior Ministry’s control of the private security sector be

improved? Would it be a good idea to set up a special unit/department
in the Ministry for that purpose?
7. Should the Interior Ministry be prohibited, or limited, in the 129

engagement in private security operations, since it is a state body
financed from the state budget?
8. Should part of operations of state institutions be relinquished to

private security companies (guard duty, e.g.)?
9. How could the link, i.e. influence of politics on private security

sector functioning be removed?
10. Which are the main difficulties and deficiencies interfering with the
efficiency of the Committee’s work and what would it take to improve
it?
Annex 3
List of Interviewees
Note: During the research the total of 18 oral and written interviews were carried
out. In order to ensure the maximum validity of our findings, we guaranteed
the company managers and employees interviewed anonymity in the use of
the data so collected, which is why their names will not be revealed here.
1. Managers of public security companies:

• 3 large companies members of the Physical and Technical Security
Association attached to the Serbian Chamber of Commerce,
130 • 1 company, member of the association and specialized in technical
protection services,
• 1 smaller firm, outside the Association’s membership,
• 1 state company engaged in the so-called self-protection activities
2. A PSC employee, union member
3. Employees of a foreign firm operating in Iraq and recruiting personnel

from the territories of the former SFRY
4. Security managers of the following banks:

• ProCredit Bank,
• Raiffeisen Bank,
• Meridian Bank(PR).
5. Members of the Serbian Parliamentary Committee for Security and

Defence:
• Đorđe Mamula, MP, Democratic Party of Serbia,
• Konstantin Smofalov, MP, Democratic Party
• Ivica Dačić, MP, Socialist Party of Serbia, chairman of the Committee
for Security and Defense
List of Interviewees
6. Verica Barać, president of the Anti-Corruption Council
7. Uroš Mirčević, employed with the Business Registry Agency
8. PRIZMA program - Lt. Col. Milković Dragan, head of the Serbian MoD
retraining Department
9. Dunav Insurance Company – Olga Mićić, company employee
The research also drew on the data obtained from:
- A debate with representatives of the Physical and Technical Security

Association on the model law regulating private security of persons and
property held at the CCMR on October 24, 2006,
- A debate on private security companies in the Balkans held at the CCMR on

December 14, 2007 with a delegation of Granada University (Spain), including
the University vice dean Prof. Dr D. Carlos de Cueto Nogueras and Adolfo
Calatrava Garcia of the Centre for Security Analysis.
131
Annex 4
Existing Regulations Relevant for the Operation of PSCs
Laws
• Labour Law, Official Gazette of Serbia, 24/05
• Law on Arms and Munitions, Official Gazette of Serbia , 44/98
• Law amending the Law on Arms and Munitions, Official Gazette of

Serbia , 39/03
• Law on Business Companies, Official Gazette of the FRY, nos.

29/96, 33/96 - corr., 29/97, 59/98, 74/99, 9/2001 – Federal
Constitutional Court’s decision and 36/2002
132 • Criminal Code, Official Gazette of Serbia, 85/05
• Fire Safety Law, Official Gazette of Serbia , 48/94
• Law on Health and Safety at Work, Official Gazette of Serbia, 101/05
• Law amending the Law on the Prevention of Violence and

Unbecoming Conduct at Sporting Events, Official Gazette of Serbia,
90/07
• Law on Road Transport, Official Gazette of Serbia, 32/90
• Law amending the Law on Road Transport, Official Gazette of

Serbia, 44/03
• Planning and Construction Law, Official Gazette of Serbia, 47/03
• Law on Explosive Substances, Inflammable Liquids and Gases,

Official Gazette of Serbia, 44/77, 45/84, 18/89
• Law on Transportation, Distribution and Use of Natural Gas, Official

Gazette of Serbia, 66/91, 53/93, 67/93, 48/94, 12/96
• Law on Transportation of Hazardous Substances, Official Gazette

of the SFRY, 27/90, 45/90, Official Gazette of the FRY, 24/94, 28/96,
21/99, 68/02
Existing Regulations Relevant for the Operation of PSCs
Bylaws
• Decree on Road and Rail Transportation of Hazardous Substances,

Official Gazette of the FRY, 35/95
• Rules for Railway Transportation of Hazardous Substances, Official

Gazette of the SFRY, 25/92
• Rules on the Manner of Road Transportation of Hazardous

Materials, Official Gazette of the SFRY, 82/90
• Rules on Technical Standards for Fire and Explosion Protection of

Depots, Official Gazette of the FRY, 24/87
• Rules on Technical Standards for Fire Protection of High-Rise

Facilities, Official Gazette of the SFRY, 7/84
• Rules on Technical Standards for Fire-Fighting Hydrant Network,

Official Gazette of the SFRY, 30/91
• Rules on Mandatory Fire-Resistance Certification of Typical Building

Structures and Requirements to Be Fulfilled by Authorized Certifier
Organizations of Associated Labour, Official Gazette of the SFRY,
24/90 133
• Rules on Technical Standards for Design and Finishing Construction

Works, Official Gazette of the SFRY, 21/90
• Rules on Technical Standards for Access Roads, Loops and Paved

Areas for Fire Engines Near High Fire Risk Facilities, Official
Gazette of the FRY 8/95
• Rules on Technical Conditions and Standards for the Safe Transport

of Liquid and Gaseous Hydro-Carbons by Main Gas and Oil
Pipelines and International Gas Pipelines, Official Gazette of the
SFRY, 26/85
• Rules on Technical Standards for Indoor Gas Installations, Official

Gazette of the FRY, 20/92, 33/92
• Rules on Technical Standards for Low Voltage Electrical

Installations, Official Gazette of the SFRY, 53/88, 54/88, 28/95
• Rules on Technical Standards for the Protection from Static

Electricity, Official Gazette of the SFRY, 62/73
• Rules for Technical Standards for the Elaboration of Technical

Documentation Required for All Fire Detection and Alarm Systems,
Equipment and Facilities, Official Gazette of the FRY, 30/95
• Rules on Technical Standards for Fixed Fire Notification Installations,

Official Gazette of the FRY, 87/93
• Rules on Technical Standards for Fixed Installations for the

Detection of Explosive Gases and Vapours Official Gazette of the
FRY, 24/93
• Rules on Technical Standards for Fire Protection of Electrical Power

Generation Plants and Facilities, Official Gazette of the SFRY, 74/90
• Rules on More Detailed Conditions Concerning the Way and

Programme of Training for Handling of Firearms, Official Gazette of
Serbia, 1/99, 30/2000
• Rules on More Detailed Conditions and Manner of Storing and

Keeping of Arms and Munitions, Official Gazette of Serbia, 1/99
Association’s Internal Regulations:
• Final Rules of Business Ethics
134 • Programme for Development of Standards
• Programme for Setting the Quality Level of Services
• Decision on Establishing the Minimum Prices of Services
• Decision on the Minimum Prices of Services

Annex 5
Bibliography and List of Useful Sources
About PSC in general:
1. Alan Bryden and Marina Caparini, Private actors and security

governance, DCAF, Geneva, 2006.
2. Alexandre Carette, “New and Emerging Threats: Are Private Military

Firms up to the Challenge? Revolution or Evolution? Emerging Threats
to Security in the 21st Century”, at First Annual Graduate Symposium
Dalhousie University, Halifax, N.S. Canada
3. Daniel Burton-Rose and Wayne Madsen, “Corporate Soldiers - The U.S. 135
Government Privatizes the Use of Force”; http://multinationalmonitor.
org/mm1999/mm9903.07.html
4. David Shearer, “Outsourcing War”, Foreign Policy, Fall 1998;

http://www.fsa.ulaval.ca/personnel/VernaG/EH/F/cons/lectures/
mercenaries.htm
5. Deborah Avant, “From Mercenary to Citizen Armies: Explaining

Change in the Practice of War”, International Organization 54, 1,
Winter 2000, pp. 41–72
6. Deborah Avant, “Mercenaries”, Foreign Policy, Volume 5, Number 17,

July/August 2004
7. Deborah Avant, “Privatizing Military Training”, Interhemispheric

Resource Center And Institute For Policy Studies, Vol. 5, No. 17,
June 2000.
8. Deborah Avant, “The Outsourced War “Is Here to Stay””,

BusinessWeekonline; http://www.businessweek.com/bwdaily/dnflash/
may2004/nf20040521_2913_db052.htm
9. Doug Brooks, “A new twist on a long military tradition”, The Boston

Globe, 10/19/2003, http://www.boston.com/news/globe/editorial_
opinion/oped/articles/2003/10/19/a_new... 16.12.2004
10. Eugene B. Smith, “The New Condottieri and US Policy: The

Privatization of Conflict and Its Implications”, Parameters 32:104-119,
Winter 2002-2003
11. Fred Schreier And Marina Caparini, “Privatising Security: Law, Practice
And Governance Of Private Military And Security Companies”,
Occasional Paper - №6, Geneva Centre For The Democratic Control
Of Armed Forces, Geneva, March 2005
12. James McCullough and Abram J. Pafford, “Contractors On The

Battlefield: Emerging Issues For Contractor Support In Combat &
Contingency Operations”, Briefing Papers, West Group, No. 02-7,
June 2002.
13. Jens Stilhoff Sörensen, War as Social Transformation: Wealth, Class,

Power and an Illiberal Economy in Serbia, Taylor & Francis. 6: 55-82,
2003.
136
14. Leslie Wayne, America’s For-Profit Secret Army, New York Times,
October 13, 2002.
15. Mandel, R, The Privatization of Security, Armed Forces & Society, vol.
28, 2002, pg. 129-151.
16. Michael Page, Simon Rynn, Zack Taylor and David Wood, SALW and
Private Security Companies in South Eastern Europe: a cause or
effect of insecurity?, SEESAC, 2005.
17. P.W. Singer, “Corporate Warriors: The Rise and Ramifications of the
Privatized Military Industry”, International Security, Vol. 26, No. 3,
Winter 2001/2002
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572-584, 2002
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for Public Integrity, Washington, October 30, 2002;
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Post-conflict context
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the Demise of the Modern Nation-State in Africa, Occasional Paper
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implications of the privatized military industry for the humanitarian
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Humanitarian Affairs Review, Summer 2004
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Security Observer 4/2007, Centre for Civil-Military Relations, Belgrade,
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Legal aspects
138
1. Andrew D. Fallon, “Closing the legal loophole? Practical implications
of the Military Extraterritorial Jurisdiction Act of 2000 - civilians
accompanying the ArmedForces”, Air Force Law Review, Spring,
2001
2. Anita Ramasastry and Robert C. Thompson, “Legal Remedies for

Private Sector Liability for Grave Breaches of International Law, A
Survey of Sixteen Countries”, Fafo-report 536, FAFO 2006.
3. Bogoljub Milosavljević, „Model Law on Private Security Related

Services“, Western Balkans Security Observer, no. 1/2006, Centre
for Civil-Military Relations, Belgrade 2006
4. Captain Glenn R. Schmitth, “The Military Extraterritorial Jurisdiction

Act :The Continuing Problem Of Criminal Jurisdiction Over Civilians
Accompanying The Armed Forces Abroad—Problem Solved?”, The
Army Lawyer, December 2000, Da Pam 10 M 27-50-337.
5. Caroline Holmqvist, “Private Security Companies: The Case for
Regulation”, SIPRI Policy Paper No.9, SIPRI, January 2005.
6. Chaloka Beyani and Damian Lilly, “Regulating Private Military

Companies Options For The Uk Government”, International Alert,
2001.
7. “Civil Defence in International Humanitarian Law”, Advisory Service

on International Humanitarian Law, International Committee of the
Red Cross
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Headquarters Department of the Army, Washington, DC, 3 January
2003.
9. Davidović Dušan (ed.), „Poslovni priručnik – Izbor najboljeg ponuđača

u procesu nabavke usluge obezbeđenja (Business manual – Selection
of Best Bidder in Process of Acquiring Security Services “, Centar za
prevenciju kriminaliteta, Beograd 2007
10. Dimitrijević Ivan (ed.), „Uporedni prikaz zakonodavstva industrije

privatne bezbednosti u Evropskoj uniji (Comparative Law Overview
of Private Security Industry in European Union)“, Klub studenata
Fakulteta bezbednosti, Beograd, 2006.
11. Donald R. Rothwell, “Legal Opinion On The Status Of Non-Combatants

And Contractors Under International Humanitarian Law And Australian
139
Law”, University of Sydney, 2004.
12. Francesco Bruscoli, “The Rights of Individuals in Time of Conflicts”,

International Journal of Human Rights 6, pages: 45-60
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02”, Foreign And Commonwealth Office, Isbn 0 10 291415 X, London:
The Stationery Office, February 2002
14. Jon D. Michaels, “Beyond Accountability: The Constitutional,

Democratic and Strategic Problems With Privatizing War”, Washington
University Law Quarterly, Vol. 82:1001
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88/2005, 107/2005
16. Laura Dickinson, “Government for Hire: Privatizing Foreign Affairs and
the Problem of Accountability under International Law”, University of
Connecticut School of Law Working Paper Series, Year 2005, Paper
53, University of Connecticut School of Law, 2005; http://lsr.nellco.
org/uconn/ucwps/papers/53
17. Major Michael E. Guillory, “Civilianizing the force: is the United States
crossing the Rubicon? - role of civilians under the laws of armed
conflict”, U.S. Air Force Academy, Department of Law, Gale Group,
2004.
18. Marten Zwanenburg, “Existentialism in Iraq: Security Council

Resolution 1483 and the law of occupation”, IRRC, December 2004
Vol. 86 No 856.
19. Matić D. Goran, „Basis of Physical-Technical Security“, Association

of Companies for Physical-Technical Security , Serbian Chamber of
Commerce, Belgrade, 2006.
20. „Draft Law on the Provision of Private Security Related Activity“,

Centre for Civil-Military Relations, Belgrade, 2006.
21. „Draft Law on Private Security of Persons and Property and Detective
Work“, LEX, Belgrade, 2006.
22. „Draft Law on Private Security of Persons and Property“, Association

of Companies for Physical-Technical Security , Serbian Chamber of
140
Commerce, Belgrade, 2006
23. „Draft Law on Physical-Technical Security“, MoI, Belgrade, 2002.
24. P.W. SINGER, “War, Profits, and the Vacuum of Law: Privatized Military
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42:521
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Technical Security , Serbian Chamber of Commerce, Belgrade, 2006
26. “Private Military Companies: A Legal Vacuum, summary of discussion”,

at the International Law Programme Discussion Group at Chatham
House, on 16th March 2005
27. “Q&A: Private Military Contractors and the Law”, Human Rights
Watch; http://hrw.org/english/docs/2004/05/05/iraq8547_txt.htm
28. Ryan M. Scoville, “Toward an Accountability-BasedDefinition of

“Mercenary””, Stanford Law School, 2006; http://law.bepress.com/
expresso/eps/943
29. „The Sarajevo Code of Conduct for Private Security Companies“,

SEESAC, 2006.
30. The Arms Export Control Act; http://www.law.cornell.edu/uscode/html/

uscode22/usc_sup_01_22_10_39.html
31. “The Right Of Peoples To Self-Determination And Its Application To

Peoples Under Colonial Or Alien Domination Or Foreign Occupation
Use Of Mercenaries As A Means Of Violating Human Rights And
Impeding The Exercise Of The Right Of Peoples To Self-Determination”,
Report Of The Special Rapporteur, Shaista Shameem, United Nations
Economic And Social Council, Commision of Human Rights, Sixty-
first session, Item 5 of the provisional agenda, 8 December 2004.
32. Unijat Jelena, „Grey Security Zone“, Western Balkans Security

Observer 4/2007, Centre for Civiln-Military Relations, Belgrade, 2007
33. „Constitution of the Republic of Serbia“, November 2006
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Official Gazette of Republic of Srpska, no 50, 16. 8. 2002
141
35. „Law on Obligations“, Official Gazette of SFRJ, no 29/78, 39/85, 45/89
and 57/89 and Official Gazette of SRJ, no 31/93
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53/93, 67/93, 48/94, 44/98, 39/2003, 101/2005, 85/2005
37. “Labour Law”, Official Gazette of RS, 24/05
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UK
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Private Security Companies”, Defence Studies, Vol. 5, No.2 (June
2005), pp. 188–212, Taylor & Francis, 2005
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1. “A comparative overview of legislation governing the private security
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the European Union”, CoESS/UNI-Europa, 2004. www.coess.org
142
CIP – Катаголизација у публикацији
Народна библиотека Србије, Београд
351.749 (497.11)
PRIVATE Security Companies in Serbia : a

Friend or a Foe? / [ Jelena Unijat … et al.
; translators Dijana Gaćeša ... et al.] . –
1st ed. – Belgrade : Centre
for Civil - Military Relations, 2008 (Beograd :
Goragraf ) . – 142 str. : graf . prikazi, tabele;
24 cm
Izv. stv. nasl.: Privatne bezbednosne

kompanije u Srbiji. – Tiraž 350. – Napomene i
bibliografske reference uz tekst. –
Bibliography and List of Useful Sources: str.
135 – 142.
ISBN 978-86-83543-51-9
1. Unijat, Jelena [аутор]
a) Приватна служба безбедности –
Истраживање – Србија
COBISS.SR-ID 150876940

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This research is published with a kind support of the OSCE Mission to Serbia.

Centre for Civil – Military Relations

Cover design and computer typesetting:

Jelena Unijat, Predrag Petrović, Marko Milošević and Sonja Stojanović

Case study: PRIVATIZATION OF SECURITY IN SERBIA

ANALYSIS OF LEGAL SOLUTIONS

Annex 1: Glossary 122

Annex 2: Initial Questions about Private Security Companies in Serbia 124

Annex 3: List of Interviewees 130

Annex 4: Existing Regulations Relevant for the Operation of PSCs 132

Annex 5: Bibliography and List of Useful Sources 135

1. Model 1: PCS environment in Serbia, Methodological framework for

2. Figure 1. Actors in the chain, vertical and horizontal distribution,

3. Box 1: Work abroad – Experience from Iraq, Influence of the market on

5. Box 3: Paradoxical (in) accessibility of arms, Comparative analysis of

6. Box 4: Detectives, Comparative analysis of four model laws with

7. Box 5: Profile of a European security officer, Review of private security

BiH – Bosnia and Herzegovina

On the Need to Study Private Security Sector in Serbia

Methodological Framework for Researching the

This trend of privatizing security sector services has been prominent

Before an analysis of the specific characteristics of the Serbian private

Fig. 1: Interactions of Serbian PTS Companies

How can the term private security company be defined? Private

In academic literature, legitimate security providers can be divided

of “security” in Serbian has a broader meaning and encapsulates both terms:

1. Private military companies

Currently in Serbia there are no private military companies in existence.

In Serbia, the most common form of private security company is the

Private detective agencies are often small businesses with only a

A alternative hypothesis is formed around the lack of control over the

One more additional hypothesis has been established. In the absence of

Planned and Realized Sample

By examining newspaper articles and consulting relevant research

In addition, it was thought prudent to examine the opinions of some

Three of the six largest companies responded to the request for

representative for these companies. To balance their views, an interview was

At least one interview with a representative of a technical security

Financial constraints confined interviews to being conducted in 21

In addition to the research into the views and opinions of companies

Parliamentary oversight of this sector, conducted by the National

A separate part of the study was the comparative analysis of proposals

legislative solutions applied in the European Union as well as in other Western

Scope and Shortcomings of the Study

The phenomenon of security sector privatization in Serbia has

The shortcomings of this research are related to the survey sample

Sonja Stojanović, Jelena Unijat, Predrag Petrović and Marko Milošević 1

Key Research Findings and Policy Recommendations

The genesis of privatisation of security in Serbia

The Genesis of Privatisation of Security in Serbia

In 2005 the Association of Companies for Physical and Technical

primarily at promoting private security companies and advocating for their

The Size and Profile of Private Security Sector In Serbia

There is no exact data on the number of companies and people

In Serbia, the most common form of private security company is the

During the research conducted for this study a trend of ‘Belgradisation’

The Control and Oversight of the Private Security Sector 29

The Public Police and Private Security Sector

The Ministry of Interior (MoI) is formally in charge of the control of the

of their employees or the weapons licensed to them, this information is to be

1. It is necessary to establish an organisational unit within the MOI

The second problem is that the Serbian police force is entitled to

Recommendations for Issuing Licencies for PSCs and Their Employees

2. The decision on who should be entitled to issue PSC with work