Mirko Sarovic, a Bosnian Serb who was the chairman of the country's three-member multiethnic presidency, knew about and failed to stop the illegal export of refurbished engines for Iraq's military aircraft, according to a team of international investigators.
The team's report was presented last week to Bosnia's top international official, Paddy Ashdown. Ashdown had ordered the investigation after finding that an attempt by Bosnian Serb authorities to shed light on the deal had failed to address the question of which political leaders approved it or knew about it.
Sarovic's resignation also came a day after NATO said evidence showed that the Bosnian Serb military had spied on NATO troops and other international officials in Bosnia.
The Bosnian aviation company Orao's illegal exports of engine parts for fighter planes to Iraq violated a U.N. ban on exporting weapons to Saddam Hussein's regime imposed following the first U.S.-led war against Iraq in 1991.
NATO peacekeepers found evidence of the illegal trade during a raid in October of Orao, which is based in the Bosnian Serb town of Bijeljina.
60 Mintues Correspondent Ed Bradley reported Sunday that among the documents found by peacekeepers was a contract for $8.5 million to repair and upgrade the engines of Saddam's MIG fighter planes.
They also found a copy of a letter sent last September to the Ministry of Defense in Baghdad outlining precautions to avoid detection by U.N. weapons inspectors. They offered the help of Yugoslav experts to dismantle the equipment, and cautioned the Iraqis to hide the spare parts in a safe place.
The letter went on to say that, when the possibility of being discovered had passed, the Yugoslav side would reassemble and operate the equipment again.
That letter was sent to the Iraqis by Yugoimport, the Yugoslav arms export agency, and signed by the director of Yugoimport in Baghdad.
Bradley reports that shortly after the raid on Orao, Croatian authorities, acting on a tip from U.S. intelligence, intercepted a ship called the Boka Star, steaming on the Adriatic Sea, and brought it to the port of Riyeka.
According to the ship's manifest, the Boka Star was headed for Egypt with a cargo of water filters and charcoal. But that's not what Croatian police found when they searched the hold.
A tape shot by the Croatian authorities reveals that the Boka Star was carrying 208 metric tons of explosives--some for use in artillery shells, and some that could be used to produce solid rocket fuel for missiles.
Zinka Bardic, a spokesperson for the Croatian Ministry of Interior, says that documents found in a secret compartment on the Boka Star included a log that listed the ship's voyages over the last year. They show, she says, "that they transported weapons and go to some Arabian country, like, to be specific, to Syria."
From Syria, U.S. officials say, those explosives would have been trucked overland to Iraq to fuel Saddam's missiles.
Evidence of the Bosnian Serb military's spying surfaced last month during a raid of its headquarters. Evidence found by the peacekeepers indicated the spying was conducted for at least all of last year and also targeted European Union police and Ashdown's office.
The prime minister of the Bosnian Serb half of the country, Dragan Mikerevic, told reporters Wednesday that it was in the public interest for Sarovic to resign "because of the violation of the U.N. Security Council resolution concerning Iraq and because of the spying affair."
"I regard his resignation as a personal and moral act with the aim to establish new standards of behavior of those holding public positions," Mikerevic added.
The three-member presidency's powers are limited, but it has the authority to define Bosnia's foreign policy and propose the prime minister of the country, who holds the executive power. Ultimate power rests with the top international official, a position now held by Ashdown.
The presidency includes one representative from each of Bosnia's three ethnic groups: Serbs, Muslims and Croats. The three presidents are elected directly by the public.
Sarovic served as the president of the Bosnian Serb part of the country at the time when the illegal export to Iraq and the spying occurred.
The 1995 peace agreement that ended Bosnia's 3½-year long war divided the country into the Serb republic and the Muslim-Croat federation, giving each part broad autonomy, including separate presidents, governments, parliaments and armies.
The two halves are linked by a joint multiethnic, three-member presidency, a parliament and a government.