Expert examination of contracts between private and public companies, including BS Telecom contracts, being prepared?

SARAJEVO, (Patria) - The Sarajevo Prosecutor's Office is expected to launch a detailed review of contracts in several public companies and institutions, based on which software was procured for them in the last few years.

The review specifically pertains to two telecom operators in the Federation, BH Telecom and HT Eronet, as well as Elektroprivreda BiH and Elektroprivreda HZ HB, Autoceste FBiH, and the Federal Health Insurance Fund, it was unofficially confirmed to Patria from several sources close to the Prosecutor's Office.

Millions of marks of public money are spent annually on the procurement and maintenance of IT software in companies and institutions of public importance, and an expert examination could determine whether these software packages were paid for at a real or inflated price, as well as whether the companies and institutions conducted transparent public tenders when selecting suppliers.

There are suspicions of multiple price inflations during the procurement of software for the mentioned companies, after which money from private firms' accounts was returned to those who enabled the allegedly suspicious tenders.

According to unofficial information, the subject of the review will be contracts with several domestic and foreign private companies that procured and maintained software for public companies and institutions, or still do. Companies from Zagreb and Belgrade are mentioned, as well as the Sarajevo-registered company BS Telecom, along with some other private IT companies from Sarajevo that appear or have appeared on the market independently or in a consortium with BS Telecom.

The CIN database states that from 2011 to 2015, BS Telecom signed 24 contracts with state-owned companies totaling slightly over 32 million KM, which positioned the private company as one of the leading IT companies in the country. BS Telecom signed its most valuable contracts with BH Telecom, Elektroprivreda BiH, and Hrvatski telekomunikacije Mostar, as well as the Federal Health Insurance Fund.

In 2012, the media reported that BS Telecom was a private IT company founded as a Sarajevo subsidiary of the Prague-based company Strom. The then-weekly magazine Slobodna Bosna reported that BS Telecom was backed by Miodrag Škrbić, Nihad Hurem, and some other individuals, all close friends of the then-leader of SDP BiH Zlatko Lagumdžija, who would be removed from that position after the electoral defeat in 2014.

Until 2011, BS Telecom operated without spectacular results, but from 2011 onwards, it received multi-million contracts from the most profitable public companies in BiH, making it one of the leading IT companies in the country.

According to business reports shown to Patria, BS Telecom reported a revenue of only 8.9 million KM from 2008 to 2011. From 2012 to 2014, the company's reported revenue experienced a sharp increase, amounting to 62 million KM, all thanks to contracts with public enterprises.

The return on equity for BS Telecom is 514 percent. For comparison, according to data available on Microsoft's website, that global company reported a return on equity not exceeding 32 percent.

It is strongly suspected that the deals in public companies and institutions were awarded to BS Telecom based on recommendations, or at least with the knowledge of Zlatko Lagumdžija. During the period when BH Telecom and Elektroprivreda BiH awarded contracts to BS Telecom, the leading positions in those public companies were held by Professor Lagumdžija's assistants; Kemal Kačapor and Elvedin Grabovica.

Kemal Kačapor was on the Supervisory Board of BH Telecom, and Elvedin Grabovica was the director of Elektroprivreda, both Lagumdžija's assistants at the Faculty of Economics in Sarajevo.

Ensad Karić, also close to Lagumdžija, headed Autoceste FBiH. Dženana Muračević, then a member of the Management Board of BH Telecom, is also linked to Lagumdžija by the media.

During the period when this private company received multi-million contracts from public enterprises and institutions, Emir Hurem was at the head of BS Telecom, who could also be included in the investigation.

Centres for Civic Initiatives have been warning for several years that the highest levels of corruption in Bosnia and Herzegovina are found in public procurement.

"When asked where it is most present, research, both domestic and foreign, as well as the daily perception of citizens, actually indicate that corruption is most prevalent where there is the most power, i.e., where there is the most money."

Other organizations warn that the most suspicious contracts are signed precisely in the fields of IT, construction, marketing, and consulting services.