More than 40 workers from Serbia lost their jobs in Denmark in July 2017, when the company they had been working for was thrown out of the project of development of an optic cable network. The cables were laid by Danish company TDC Group, which got into the public focus when media published that one of its subcontractors violated regulations and did not pay its employees.
The trade union tried to negotiate the matter with representatives of the profession, but the negotiations failed, and the Copenhagen-based company Roaming Networks was thrown out of business. The company was actually owned by the Belgrade-based company bearing the same name. It was a part of the network of companies which perform various activities and which are, directly or indirectly, owned by businessman Nenad Kovač, known in the public as Neša Roaming.
The second attempt to resolve the issue through negotiations between the trade union and the organization representing the employers also ended in a failure, and the whole case is soon to be heard before the Labour court in Denmark.
“This case is currently being prepared with the National Trade Union Confederation. We are preparing it together with our lawyers from the Trade union of electricians and lawyers from the Confederation, says Peter Koch Palshøj, head of the communications department of the Trade union of electricians of Denmark for CINS.
The issue was also investigated by Danish law enforcement, but the investigation was concluded as, in the opinion of the police, it would not result in penal sanctions.
A number of the workers returned to Serbia, while some of them found new jobs, as they were trade union members.
Business operations of Nenad Kovač and his companies are to a considerable extent connected to the state which in the course of the last ten years he had been signing contracts worth about 145 million EUR. On the other hand, in the previous 18 years Kovač’s companies had been caught in several customs infringements, while they were also subject to several court proceedings.
Kovač also became known to public after the introduction of the Bus Plus system in Belgrade public transport. Before he purchased it, Roaming Electronics had already established the company Lanus. At the moment when Kovač was already the owner of Roaming Electronics, Lanus established the company Apex Solution Technology. In 2010, Apex was a part of the consortium which was awarded the lucrative business of collection of tickets in public transport in Belgrade. At that time, the mayor of Belgrade was Dragan Đilas. In July 2012, CINS published the investigation in which journalists, assisted by experts, pointed to issues such as limiting of competition.
Company with no one in it
“In the beginning of 2017, Roaming Networks extended its operations, in line with the company vision, to the Danish market. In cooperation with our partner Huawei, we initiated the project of modernization of the cable operator TDC Group network. We proudly emphasize that this is the first project of the kind in Europe”, reads the web-site of the Belgrade Roaming Networks.
Reply of Nenad Kovač
CINS got in touch with Nenad Kovač who replied that he was away, and requested to be sent questions on his e-mail. Here is what he replied:
“No court proceedings are being conducted in Denmark against Roaming Networks. We solve issues which inevitably occur on entering such a market, such as negotiations with trade unions on employees’ rights, in constructive spirit. Our company in Denmark operates in accordance with all valid laws and regulations, as well as our companies in USA, Germany, Austria, Slovenia, Bulgaria, Bosnia and Herzegovina, Montenegro, and Serbia, in which we have employed more than 1,600 people. We are proud at the fact that nowadays we offer products, services, and ‘know-how’ from Serbia at the markets of some of most developed countries. We have had profitable operations in every year since our founding in 2004. We pay all taxes in Serbia, including taxes on dividends. Today, our companies operate in the sectors of consumer electronic appliances distribution, development of energy infrastructure, power generation, ICT development, development of software solutions, system integration, as well as development of computer games.
In terms of the tax proceedings in Serbia which you mention, our operations were entirely in accordance with law, in relation to which matter the Administrative court in Belgrade decided in our favour upon our claim in May 2017. The same goes for the customs proceedings from 2013 which you mention, and which was also ended in a court verdict in our favour. The customs proceeding from 2016 which you mention resulted from an involuntary human error, which we admitted: we had obtained wrong tariff numbers for new products from the shipper, and they were entered in the customs declaration. We rectified the error as soon as we observed it. We concluded an appropriate agreement to that effect with the Customs, we paid all legally prescribed dues, and this is how this proceeding was concluded.”
The terms of reference for this operation further state that it includes “more than 60 engineers and technicians from Serbia who are employed with our company in Denmark”.
In the beginning of October 2018, the same was still present at the web-site of Roaming Networks, in the column “To be emphasized”, even though it was this Danish company which had been thrown out of the project more than a year before, while its employees lost their jobs.
As it was stated in the report of Metal Tele Ost, trade union from Denmark, Danish Roaming Networks violated provisions of labour laws of the country. According to statements of P1, Danish public service radio programme, the employees had been working 15 to 17 hours every day in the week, while they were not paid for overtime work. As one of them said for this radio, they were under constant pressure exerted by their managers who kept telling them that “work has to be finished or we would not pay for this month”.
Danish Roaming Networks joined the Confederation of Danish Industry – the organization which represents employers’ interests in this country – thus becoming obliged to observe the collective agreement which was concluded between the organization and Danish trade unions.
In an attempt to resolve the dispute without court proceedings, representatives of employers and Roaming held a meeting on 23 August 2017. Two representatives of the Belgrade Roaming Networks arrived from Serbia, the then manager Tomislav Nešovanović and the lawyer.
It was agreed that Roaming was to prepare documents to prove it had not been violating law. According to the information obtained by CINS, Roaming Networks did provide some data on employees’ salaries, but further agreement was not achieved. This year, another meeting was held between representatives of the trade union which represents the employees and the trade union representing the company, but as it was not successful, the case is being prepared for court.
Sources from Danish company TDC Group stated for CINS that in the course of summer 2017 they heard allegations against Roaming Networks in media: “As the company could not deny such allegations, we stopped working with them at once.”
In the course of 2017, Danish company for international employment and integration issued as many as 58 residence permits to Danish company Roaming Networks.
In Serbia, companies which wanted to take employees abroad had to report to the Ministry of labour. At its web-site, it was stated that in July 2017 Belgrade Roaming Networks took five employees to Austria. There was no data on whether the company bearing the same title ever took any employees to Denmark.
In the beginning of July this year, the legal obligation to report sending employees abroad to the Ministry ceased, as well as the obligation of the Ministry to include in its website a company database containing such data.
The Ministry of labour, i.e. labour inspectors were also authorized to control companies. This, on 16 July 2016, a labour inspector was sent for control to Belgrade Roaming Networks, after it had reported that it was sending employees abroad. He tried to perform control at the address of the company, which, at that time, was the official address of the Agency for Business registers (APR).
The control failed – there was no one at the premises of the company.
This was the only time in the last three and a half years that Labour inspection visited Roaming Networks, while the second large company belonging to Kovač, Roaming Electronics, received none of such visits.
A lot of companies and numerous operations with the state
In the beginning of May 2000, Nenad Kovač, aged 29, founded the company Roaming. The company was registered in his father’s house, in the Belgrade settlement of Žarkovo. Nowadays, the company may not be found in APR, as it was not entered in the APR register or even addressed APR following its (i.e. APR’s) establishment.
Meanwhile, in March 2004, Marija Simić from Belgrade founded Roaming Electronics with $5,000 USD of original capital. The company was registered for production of a large number of different products, including household appliances, office and computing devices, music instruments, bicycles, chairs, bulbs, toys, as well as for intermediary services in trade, wholesale and retail, and telecommunications.
In November 2006, Simić sold Roaming Electronics for $5,000 USD and about 28,500 EUR, to company Salveston international LLC from New York. In May 2008, company Koefik from Belgrade became the new owner for somewhat more than four million EUR.
Koefik is owned by Nenad Kovač. His operations, besides the work in relation to telecommunication networks, include trade in mobile devices and household appliances, but construction of mini hydro power plants as well.
Even though it is not widely known by its name, company Koefik has been recorded in APR registers since 2013 as one of the largest companies regarded by the number of related legal entities. Other firms within the same group are the ones such as Delta holding (owned by Miroslav Mišković) and MK Commerce (owned by Miodrag Kostić).
Besides Koefik, Kovač is the sole or partial owner of four more companies: Industrijska logistika, 105paopet, Eco Glotec, and Bonea. Together with Roaming Electronics, Koefik is the full or partial owner of eight more companies. Roaming Electronics owns 14 companies, including Tehnomanija, Elektromontraža from Kraljevo, as well as companies constructing mini hydro power plants.
Investigations conducted by CINS indicated that in Serbia the business with hydro power plants mostly benefits state companies and companies connected to Nikola Petrović, best man of Serbia’s President Aleksandar Vučić, and his business partners, including Kovač, which get state money for the purpose.
In September 2008, Roaming Electronics established the company Roaming Networks, whose daughter company would first win, and then lose the business in Denmark.
Roaming Networks has been cooperating with the Public Company Elektromreža Srbije (EMS). In the previous ten years, Roaming had been purchasing telecommunication equipment and spare parts for EMS, but had also performed mounting and construction works. From 2011 to the end of 2017, contracts between Roaming Networks and EMS were worth almost three million EUR, excluding VAT. There were 19 of such contracts, 11 of which were signed while the manager of EMS was Nikola Petrović.
Reply of Nikola Petrović
While I was occupying the position of the manager of Elektromreža, more than (in rough figures) 1,200 public procurements were conducted. I claim responsibly that they were all conducted in accordance with law and internal EMS regulations, and that they were fully transparent. For all details in relation to the public procurement which you mention, you will have to address EMS, as I left the managerial position in this company two years ago.
I want to believe that you are not asking this question maliciously, i.e. that you know that managers of public companies do not have influence to public procurement procedures and do not have impact on who will respond to which public procurement. If you have any personal doubts that something was not done in line with law, I urge you to address bodies competent for such matters.
Besides Roaming Networks, other bidders appeared in relation to but one out of these 11 contracts. The explanation of the issue by the Public Procurement Commission states that this happened because there are few companies which may provide the requested services, or that the companies were exclusive representatives for certain spare parts.
Besides EMS, Roaming Networks had also won businesses with PIO Fund, EPS, and Post of Serbia. Roaming Electronics cooperated with Nikola Tesla Airport, Security intelligence Agency, and Telekom Serbia. For instance, the company supplies Telekom with mobile phones and tablets intended for further sale to users.
Telekom refused to supply CINS with contracts with Roaming Electronics, justifying this by keeping a business secret.
Through analysis of other documents, CINS journalists established that in the last ten years Roaming Electronics has contracted business with Telekom and supplied commodities at the value of about 140 million EUR.
Deduction of tax and customs duties
Court and customs proceedings have been conducted against three of Kovač’s companies since 2000.
Roaming Electronics and its manageress, Nela Džodan, were suspected of tax evasion, i.e. that they stated some 15 million dinars less of VAT in their tax reports. The proceeding is underway before the Misdemeanor Court in Belgrade.
According to the misdemeanor charges of Serbian Tax Administration, between 2010 and 2013 Roaming Electronics was concluding sale contracts with several domestic companies, including Metro, Merkator, Maxi, Idea, and others. The companies would become owners of goods on the day of its takeover while if it turned out the goods were deficient they had a 30-day deadline for complaint. They had to inform the seller to that effect in writing, while the seller had to either replace or accept the returned goods.
The motion to launch misdemeanor proceedings filed by the Tax inspection states, among others, that field controls lasted from 24 July to 4 December 2015, with intermissions, and that these were repeated proceedings, i.e. that the inspection had already controlled operations of Roaming Electronics. According to the findings of the inspection, Roaming issued approvals for return of goods to companies, based on which they reduced their debts to Roaming, while Roaming was paying less VAT than it was supposed to.
The inspection established that the companies had been using the goods as owners, after the expiration of the 30-day deadline for complaint, and that they had not returned the goods because of deficiencies, but as unsold. Thus, there was no reason to modify the tax base, as this was a new sale of the goods, subject to new VAT accounting.
The second item on the motion to launch misdemeanor proceedings related to the fact that Roaming Electronics had engaged a company which was to find employees for several managerial positions in other related companies, for which it deducted the tax, which it did not have any right to do.
The Misdemeanors Court in Belgrade launched two proceedings against Roaming Networks, but they were both suspended. The Environmental protection Agency reported them as they had failed to supply data on types and amounts of imported products which upon use become special waste streams. The Court established that the Agency had not had competences to file the report.
The second proceeding fell subject to limitation; it was conducted as the tax inspection established that Roaming Networks had failed to employ three to five persons with disabilities, which had been its obligation. The company also failed to pay about 700,000 dinars to the state budget as compensation for the employees who were not engaged.
When it comes to customs infringements, in 2006 two proceedings were conducted against; the company was reprimanded as a result of one proceeding, while the second was suspended.
Two years later, on the occasion of customs clearance of mobile phones at Belgrade Terminal, customs officers established that the amount of goods reported for customs clearance by Roaming Electronics and the real amount of goods did not match: ten Samsung mobile phones were missing. Roaming Electronics stated in its defense that the phones had disappeared in the warehouse in which they were waiting to be cleared through customs, and that the company who was the owner of the warehouse had filed criminal charges for the theft.
The Commission for customs infringements of Belgrade Customs was of the position that this does not clear Roaming Electronics of responsibility. The company was issued a reprimand because it “had not been punished before”, even though in 2006 it had been punished by the same Commission, also with a reprimand.
In 2013, Kruševac Customs office filed a motion to launch misdemeanor proceedings against this company for suspicion that the then manageress and a driver from another company based in Kosovska Mitrovica excluded 300 phones from customs clearance. These goods were destined for Kosovo and their value amounted to almost 4.5 million dinars. The suspects were acquitted in 2017, while the Misdemeanors court from Kruševac and Appellate court in Kragujevac established that, by an error of a shipment clerk, the van travelling to Kosovo was loaded with fewer phones than it was declared in customs documents.
On the other end of the country, Subotica Customs office fined Roaming Electronics as many as 10 times in the course of 2015 and 2017. The company was fined as it had failed to re-import temporarily exported goods within defined time.
Another proceeding for customs violation is currently underway before the Misdemeanors court in Belgrade. Roaming Electronics and its former manager Dejan Stančević are suspected of entering erroneous data in customs declarations on the occasion of import of washing machines in April, June, and September 2016. They were declaring these appliances as goods subject to 5% customs rate, rather than the prescribed 10%, which is why the company paid about 600,000 dinars less of import duties than it was supposed to.
Roaming Electronics filed a motion to conclude an agreement on admission of minor offence, which was concluded in the end of September. The Misdemeanors court is to decide upon this matter.
The company Roaming, which exists no longer, was fined in 2004 for customs violation as it failed to deliver commodities to the customs body. As a legal entity, Roaming was fined with 100,000 dinars at the time, while the responsible person within the company was fined with 50,000 dinars. CINS did not manage to obtain detailed data on this case, as the case file was placed in archives.