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Mladic, the 66-year old commander of the Bosnian Serb forces in the 1992-95 Bosnia war, was indicted in 1995 on genocide charges for the 43-month siege of Sarajevo and for orchestrating the Srebrenica massacre of about 8,000 Muslims. Â
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Special police units entered the Vujic Valjevo window factory, a business believed to have been part of Mladic's support network.
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"It is a part of an overall action to locate Ratko Mladic and those who had been providing financial support for his hiding," a source in the prosecutor's office told Reuters.
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There were no reports of arrests and a Reuters cameraman said several white police vehicles left the factory after 3:30 p.m. (1430 GMT).
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The arrest of Mladic is key for Serbia to join the European Union, a priority for the country's four-month-old government. Serbia said last week the search had been intensified.
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"I haven't seen Mladic for a long time," factory owner Vidoje Vujic said, adding that he met Mladic's son last year.
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He said police took his mobile phones and seized several pictures, including one of former Bosnian Serb parliament speaker Momcilo Krajisnik who is on trial in The Hague.
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"Under the orders of the war crimes prosecution, the interior ministry is conducting a search of the Vujic Valjevo factory," the ministry has told AFP.
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"We are verifying information according to which Mladic could be there," said a ministry source who requested anonymity.
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Citing unnamed high-ranking officials from the interior ministry, Serbia's B92 television said the security services armed with automatic firearms were also hunting for people thought to have helped Mladic avoid justice.
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Mladic, last seen in 1999, hid in Serbian army facilities until 2002, and later moved around several apartments in Belgrade's New Belgrade district.
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Serbia had hoped that the July arrest of Radovan Karadzic would boost the country's EU aspirations, but the 27-nation bloc said Mladic must be arrested also.
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The Hague Chief War Crimes Prosecutor Serge Brammertz is expected to visit Serbia next week to report on the Balkan country's progress in the hunt for Mladic and a second war crimes fugitive, Goran Hadzic.Â