In the first five published parts of the “The Balkan type of fraud on the IT scene in BiH” series, we wrote in detail about the fraud Partner B made over Partner A by submitting unsigned promisory notes to serve as a guarantee to pay the second installment of the purchase price. He then took advantage of the Notary’s omission and refused to pay part of the agreed price on the basis of a contract for the purchase of a share in the IT company which he had purchased from Partner A.
We also wrote about the reports submitted by Partner A to the BIT Alliance, informing them of the fraudulent actions of Partner B, who is also a member of the Board of Directors, requesting that the BIT Alliance comply with the provisions of its own Code of Ethics and remove Partner B from the position of a member of the Board of Directors. Doing this it would distance itself from the fraudulent practicve and preserve its reputation. We have reported in detail the unethical conduct of the BIT Alliance Board of Directors, who, instead of complying with the Code of Ethics, made the decision to support fraudulent practices and to try to find any reason to avoid doing what the Code of Ethics explicitly requires.
In the fifth part of the series, we touched on the sluggish judiciary in BiH and explained that the absence of an effective rule of law actually encourages unethical persons to engage in fraudulent activities.
In the series, we addressed business partners by the aliases Partner A (victim) and Partner B (committed fraud), in order to avoid unnecessary diversion of the topic from the study of business phenomena from the BiH market to individual actors.
The lack of ethical and generally acceptable social conduct of the BIT Alliance, in which Board of Directors Partner B still sits, has received the reports of violation of the Code of Ethics in the hostile way and continues to campaign negatively against applicants, as well as the abusive behavior of Partner B following a thwarted attempt of fraud. Partner A decided to publish previously anonymized names in the epilogue of the case.
The case involved relates to the purchase and sale of a stake in the IT company Atlantbh d.o.o. Sarajevo. Deceived Partner A is Mr. Damir Ibrišimović, founder and former majority owner of the company. Partner B who committed the fraud is Mr. Milad Čerkić, the current majority owner and current director of Atlantbh.
At the end of April 2019, awaiting the payment provided in the Share Purchase Agreement, Mr. Ibrišimović received from the Sarajevo Municipal Court a Request for Determination of the Provisional Measure and Judicial Measure submitted to the said Court by Mr. Čerkić, requesting the Court to grant him permission to not pay the debt provided for by the Agreement. Adding to that he asked the court to prohibit issuing of the (later will be found out) unsigned promissory notes by the Notary . The Municipal Court by short procedure dismisses Čerkić’s request for a provisional measure, after which he himself, apparently aware of the absurdity of the request, withdraws the request for a court measure.
After 1.5.2019. the deadline for payment of the second (last) part stipulated by the Atlantbh share purchase contract expired, and Mr. Čerkić failed to fulfill his contractual obligation, Mr. Ibrišimović’s lawyer went to Notary to pick up the bills deposited as a means of guarantee of payment and upon opening the sealed envelope he realized that the bills which been deposited have not been filled out or signed and are therefore unusable.
Considering that Čerkić submitted a bill of exchange statement in addition to the bill of exchange, with which he obliged to provide new ones in the case of insufficiency with the existing ones, Notary requires of him to submit new signed and filled promissory notes.
Mr Čerkić, advised by his own lawyer, refuses to make up for the missing promissory notes, contrary to the statement with which he was obliged to. Due to the suspicion that he had committed the criminal offense of fraud under Article 294, paragraph 2 and the criminal offense of verifying false content under Article 375, paragraph 1 of the Criminal Code of the Federation of BiH, the Notary filed a criminal complaint with the Cantonal Prosecutor’s Office of KS.
It is important to note that contrary to the Federation of BiH Code of Law and the Law on the FBiH Attorney’s Law, Milad Čerkić’s lawyer suggested that Mr. Čerkić not submit signed bills, which at the very least violated the FBiH Code of Law and very possibly brought himself very close to committing criminal acts of complicity and incitement to commit a crime. To make the whole thing even more absurd, this act brought the lawyer into a direct conflict of interest with the party he is defending because it is logical that he would try to put blame for not signing the promissory notes on each other.
After Čerkić and his lawyer practically abducted a compulsory levy that was provided for by a notarized share purchase agreement, Mr. Čerkić’s lawyer sought contact with Mr. Ibrišimović, and in a four-minute telephone conversation suggested that he resolves the entire case by “both swallowing alike dumplings “. He substantiated this view by the fact that otherwise the case would be brought to court for years.
Thus, Čerkić and his lawyer demanded that Ibrišimović waive half of his claim in exchange for prompt payment of half of his debt. This proposal could almost be considered a business offer if Mr. Čerkić and his lawyer didn’t previously illegally withhold forced collection of debt from Mr. Ibrišimović. The “business offer” presented by a lawyer is therefore very similar to the well-known scenario when criminals steal your car and then invite you and offer to pay it back to you for ransom. Both acts, if proven, fall into the “extortion” category prescribed by Article 295 of the FBiH Criminal Code.
Repeatedly deceived and brought to the door of the litigation, Mr. Ibrišimović sought the legal assistance of a lawyer who encouraged him by the fact that the evidence was on his side and that victory in court was guaranteed. However, as we have already noted in the previous articles, the pessimistic part of the court process is that the process lasts for a minimum of 5 to 6 years until the final judgment is rendered, after which complications with the enforcement procedure only arise.
Considering that Milad Čerkić was ready for fraud with bills of exchange and openly refused to fulfill his contractual obligation and dragged Mr Ibrišimović to court proceedings, it was realistic to expect additional complications in the enforcement proceedings in the form of clearing accounts, transferring ownership of property and similar. If we add to this the right of the Supreme Court of the Federation of Bosnia and Herzegovina to order a retrial, we will easily come to a process that can take 10 to 15 years with a very uncertain outcome.
Regardless to this pessimistic assessment of the resolution of the litigation, Mr. Ibrišimović decided to file a lawsuit against Mr. Čerkić for collection of claims, but also to look for other ways to act.
His intuition led him to believe that the unfair and unethical acting of his ex-partner, Milad Čerkić, and his lawyer can not win, and that he had to confront besides the courtroom by presenting facts in public.
We wrote about the well-known strategy of fraudsters and their lawyers in the fifth installment of this series. Making false submissions, proving unprovable with deceptive constructions, making false statements and other techniques have proven to be quite effective as long as they occur within the courtroom without the eyes of the public. Protected by the court walls, far from the public eye, fraudsters remain reputationally intact, which creates the preconditions for them to continue living (seemingly) respectable citizens outside the courtroom. Reputationally seemingly ‘pure’ fraudsters are given the opportunity to find the next victim for fraud.
In this field, Ibrišimović identified a strategic partnership with the ‘Ethics Company’ that specializes in analyzing the case from the point of view of ethical offenses and reputation in the target public. This process is complementary to the court process. In the west, business partners’ reputation is assessed on the basis of violations of ethical business standards, and no court rulings are awaited, because if court rulings are pending, then the fraudster could commit many frauds before reaching the first fraud judgment. Business people know how to choose their partners very carefully, and sometimes the wrong word is enough to give up working with someone.
The ‘Ethics Company’ and Damir Ibrišimović have made a strategy to analyze the case from the perspective of international ethical business standards and to campaign in targeted audiences that could be compromised by Mr. Čerkic, where by presenting exclusively accurate and verified facts his unethical and unprofessional behavior would be presented. This strategy is based on breaking the false PR image and reducing it to the facts and the truth, which would result in the destruction of reputation and the reduction of maneuverability.
This approach is justified from an ethical perspective, because if one wants to deceive his long-time business partner in an immoral way and blackmail him for years in slow litigation, it seems very fair to have the fretfulness returned to his yard by telling the truth about his intentions and actions.
EPILOGUE – MILAD CERKIC AND ATTORNEY
After months of detailed analysis of the documents and procedures by the ‘Ethics Company’ and Mr. Ibrisimovic, and the disclosure of the facts to the target public, Mr. Čerkić and his lawyer realized that they had made many omissions along the path of fraud. False statements, blackmail, conflicts of interest, authentication of false content, attempted extortion …
When they realized that the fraudulent act they envisioned was at too high a risk of being disclosed to the target public, they decided to raise a white flag. At the beginning of September 2019, Milad Čerkić made the decision not to await a court verdict but to rule on his own. His lawyer comes up with a motion for a court “settlement” that is actually adequate to the court order that he and his client lose judgment. In fact, Čerkić acknowledges the existence of a complete debt and agrees to pay it in full and to bear the costs of attorneys, court and associated interest.
On the day of the signing of the Court Settlement, which becomes final and enforceable on the same day, Čerkić pays the entire debt, thus confirming:
• that the amount of money claimed by Mr Ibrišimović was fully established;
• that he tried to defraud his ex-partner;
• that he was untrue in the trials and that he was aware of it;
• that he had relied on the fact that the trial would last for years, that he personally would not suffer significant harm, and that he would use the funds he had seized in the meantime;
• is aware of the reputational risk he faces as a result of revealing the truth about his actions;
EPILOGUE – BIT ALLIANCE
Despite two extremely well-documented complaints against Milad Čerkić for breach of the Code of Ethics, as well as efforts by Mr. Ibrišimović and the ‘Ethics Company’ to repeatedly draw the attention of the Board of Directors to the Code of Ethics and the reputational consequences of unethical conduct, the BIT Alliance has decided to ignore provisions of its own Code of Ethics and to stand besides an unethical member of the Board of Directors.
After a lengthy obstruction and avoidance of a specific answer, which we described in detail in text 3, the BIT Alliance responded by written letters, which essentially expresses a non-credible position that the Alliance does not want to prejudice the court’s decisions and that it will only decide on requests for sanctioning Mr. Čerkić after passing final judgments. This is completely upside-down logic, because the purpose of having a Code of Ethics is to handle reports regardless of lawsuits. It is certainly important to note here that the BIT Alliance did not follow the prescribed procedure for reporting violations of the Code of Ethics at all, thus further damaging its reputation, especially in the international market where these issues are of great importance.
Considering that the IT companies mainly have a market in the west, BIT Alliance, which brings these companies together, instead of leading the ethical standards of business and raising standards with its members, did the opposite and sent the worst possible message about how it looks at modern business standards .
In the absence of an adequate response, BIT Alliance has proved that the issue of business ethics and reputation by Western standards is not considered important. Once again, it has proved that the Code of Ethics it has created and accepted with its seal, serves solely for marketing purposes. We hope that organizations that unreservedly support the BIT Alliance will recognize in time the unprofessionalism of the BIT Alliance and will take timely steps to protect their own reputation.
Unfortunately, this is not the end of blaming the BIT alliance. Instead of being dismissed as a member of the Board of Directors, the BIT Alliance shows an unusual lack of awareness of ethics and reputation, and awards Čerkić a thank you note at the last party held on December 9, 2019, presumably for his sacrificial work on building the (bad) reputation of the BIT Alliance.
In the introductory part of this series we talked about how a “rotten apple” can endanger a large number of healthy ones. We mentioned the example of apple exporters who suffered financial losses several times because of the sanctions imposed by Russia on BiH, all because of several producers who tried to cheat Russia by importing apples from Poland, repackaging and presenting them as home-made BiH apples. We pointed out that other honest manufacturers made the mistake of not identifying fraudsters on time and publicly fencing them off. We have also drawn the attention of the IT industry to this risk.
Although timely warned, the BIT Alliance not only did not fence off Mr Čerkić’s unethical conduct, but openly stood in his defense, thereby supporting and even promoting unethical behavior in the IT industry. This attitude of the BIT Alliance could be considered as quite legitimate if it wants to publicly present itself as an unethical organization. However, aware of the fact that ethics is very important to the partners with which the Alliance and its members work, the BIT Alliance conceals its real side of unethicality by publicly proclaimed Code of Ethics that provides very good guidelines for ethical conduct, but which the BIT Alliance does not put into practice and uses only for attracting new partners to whom business ethics are important.
The risk that the problem of “rotten apples” brings with it is fully realized in the case of the BIT Alliance. Mr. Čerkić, who was the only “rotten apple” at the beginning of the series, managed to engage the BIT Alliance and the entire IT industry indirectly. In the end, forced to pay off his debt, Čerkić failed to heal his own reputation, as it requires him to admit to making a mistake, apologize publicly and resign from the Board of Directors, while the BIT Alliance, which persisted in unethical conduct, retained the epithet of an unethical organization that with its bad reputation it damages the reputation of all its members.
One rotten apple was not removed and again managed to infect a whole crate of healthy apples. We want to believe that this series will help all other individuals and organizations to learn, recognize and remove their “rotten apples” in a timely manner.
* Net Consulting d.o.o. monitors and analyzes business processes and practices, disputed business relationships, administrative and judicial procedures, and identifies irregularities to the detriment of clients’ legitimate business interests. This text was published with the consent of Partner A as the injured party in this situation. Net Consulting d.o.o. made sure all the allegations in the text were true through an insight into the documentation and other material evidence.