ASTRAZUB, Kosovo, Dec 31: When Briton Christopher Gilbert and London-educated Etrur Albani teamed up to dig marble in Albani's native Kosovo, they knew they were taking a gamble.

For two years, Albani and Gilbert, who was better known in Britain as an entertainment industry entrepreneur, knocked on literally hundreds of doors in search of intrepid investors.

They eventually turned up 12, convincing them that the risk associated with investing in this young Balkan nation was overblown and that the image of crime and corruption did not match the reality.

One of the poorest corners of Europe, Kosovo is in dire need of outside investment as it tries to make a go of the independence it won from Serbia in 2008.

By September, Gilbert and Albani's Fox Marble Holdings was listed on the junior tier of the London Stock Exchange and had spent 1 million euros ($1.32 million) in readying five mines for business.Mining is seen as a potential driver of growth in Kosovo, a small country blessed with mineral deposits and Europe's youngest population, but shackled with a damaging reputation for gangsters and graft.

Now, Fox Marble's dream is in tatters, its licences to cut and sell Kosovo's marble revoked and millions of euros of investment hanging in the balance.

Whether the victim of over-zealous officials or something more sinister, Fox Marble has gone from investment trailblazer to cautionary tale in the risks of doing business in this country of 1.7 million people roughly half the size of Wales.

“We spent two years convincing people that the country risk was not something that people needed to be concerned about and now everybody is turning to me and saying, 'We told you so',” Gilbert told Reuters.

In December, Kosovo's Mining and Minerals Commission (ICMM) revoked four of Fox Marble's five licences, saying the firm had failed to start work within an agreed time frame.

“It could take years for the work to start. How do we know?” the chairman of the ICMM board, Ahmet Tmava, told Reuters. “Our resources must not be held hostage.” Gilbert said the firm had needed more time to raise funds but had already spent heavily on machinery, taxes and preparing the mines.

He cited a Kosovo law saying that the ICMM is obliged to inform the company in writing and give it 2-4 months to address the complaint. Fox Marble got neither, Gilbert said. Tmava said the company was informed “verbally”.

“VERY STRANGE” Asked what was behind the decision, Gilbert, who was in Pristina trying to save the licences, chose his words carefully.

He said the mining authorities had acted outside the law, and suggested there was perhaps more to the matter than met the eye. The mines contain deposits valued by Gilbert and Albani at billions of euros.

“It's certainly a very strange situation for a company that is spending money in Kosovo. We don't know what the realpolitik is behind this, but clearly there is something going on.” Asked about the allegations of political interference in the marble case, Kosovo's minister of economy and development, Besim Beqaj, said only: “I'm not aware of anything like that.” Britain's ambassador to Kosovo, Ian Cliff, said the British government was “very concerned” and, in a written response to questions from Reuters, said he had heard of allegations of political interference.

“I hope this is not the case,” Cliff said, adding that British Foreign Secretary William Hague had raised the issue with Kosovo “at the highest level”.

The United States and the European Union have spent an estimated 4 billion euros in stabilising Kosovo and encouraging good governance and growth since NATO went to war in 1999 to halt the killing and expulsion of civilians by Serbian forces fighting rebels from Kosovo's ethnic Albanian majority.

With ethnic tensions subsiding, Western powers formally gave up “supervisory” powers over Kosovo this year. But an EU police and justice mission retains some executive authority to investigate cases of organised crime, corruption and war crimes.

NATO retains some 6,000 troops on the ground, mainly in the north where a small Serb minority still rejects Kosovo as a sovereign state.

The government insists it is changing perceptions. There are positives: Kosovo's legislative framework has been crafted to meet most EU standards; construction is thriving, driving average annual economic growth of 5 per cent over the past five years; foreign direct investment was up 14 per cent to 379 million euros in 2011; in October the World Bank lifted Kosovo from 126 to 98th place in a poll on ease of doing business.

“Kosovo has been challenged by a bad image unfairly attached to it due to the past,” said Valdrin Lluka, head of the Kosovo Investment Promotion Agency, part of the Ministry of Trade.

“When investors come with expectations of high crime and corruption, they see a beautiful country, friendly people and a friendly business environment,” he told Reuters. “Good news is not news, so foreigners get to know only the dark side of Kosovo, and that's what's damaging us.” —Reuters