NewsCOVID-19

Procurement of PCR Tests: From Egg Laying Hens to a Multimillion Deal with the Authorities

20. Aug 2020.
Health worker in laboratory "Fire Eye" in Nis; foto:BETA/SASA DJORDJEVIC/DS
The National Health Insurance Fund of the Republic of Serbia in July concluded agreements with the Second Cycle company worth roughly 58 million dinars (without VAT) for the procurement of coronavirus tests and reagents. This company, which has in the past engaged in the sale of egg production boosters, got a new owner this past March – former Socialist Party of Serbia alderwoman in Mionica, Dragana Zeman. We were unable to learn more about this deal and the company from either the Health Insurance Fund or the former and current company owners. They were not at the address where the company was registered during the making of the deal, and they changed the address only after CINS journalists went to visit it.

In July this year, the National Health Insurance Fund of the Republic of Serbia received from its Sector for Prevention, Logistics and Conduct in Emergency Circumstances requests for urgent procurement.

First, on July 10, the Sector requested the procurement of PCR tests and required reagents, and then on July 13 it again requested PCR tests and expendable material for the analysis device.

Both procurements were carried out without a prior public call, while the criterion for the awarding of a framework agreement was the most affordable price, reads the documentation published on the Public Procurement Portal.

On the same day when it received the requests from its sector, the Health Insurance Fund concluded the agreements. One company submitted bids for reagents in the first and PCR tests in the second procurement, Belgrade-based Second Cycle d.o.o., and so contracts worth around 58 million dinars in total were signed with them for these goods.

However, the company was not at the address where it was registered at the time of awarding of the agreements, 6 Braće Jugovića Street.

The Center for Investigative Journalism of Serbia (CINS) journalist went to that address on August 6 and found the company’s previous owner, Lazar Đurović, there.

In December 2017, Đurović applied for the position of director of the Anti-Corruption Agency, but was not chosen for that spot. As he claims in his CV, he spent two years working in the Government’s Office for Cooperation with Civil Society, and was also a member of the Government’s Council for the implementation of the Action Plan for the judiciary in the accession negotiations with the European Union. According to the CV, he worked as an anti-corruption consultant in the Council.

As an anti-corruption consultant of the Ministry of Justice, he attended meetings of the Task Force for Chapter 23 (judiciary).

He had been the owner of Second Cycle from its founding in 2018 to the declaration of the state of emergency in Serbia due to the coronavirus epidemic in March 2020. Then Dragana Zeman, former alderwoman of the Socialist Party of Serbia in the Municipality of Mionica, became the new owner and director.

When asked whether Second Cycle was located there, Đurović said that he received the mail for the company and “if it says [in the documents] that it is here, then it is here.“ He could not even give us the telephone number of the current owner and declined to talk about his reasons for terminating ownership of the company.

Apart from receiving its mail, Đurović denied any connection with the company and even though he stepped out of it just five months earlier, he told CINS that he had been the owner a long time ago.

He said that he hadn’t been the owner, that “it’s different, it doesn’t even matter. The fact that I had connections, that was literally my own business. I have no reason whatsoever to explain anything to you,” he said.

Đurović went on to say that he could vouch for both himself and for the company that they were doing business “properly” and told us to address the authorities because they were “obliged to answer us:”

“You can’t expect a private firm to answer you, if the authorities are not answering you. Completely insane.”

Five days after our conversation with Đurović, Second Cycle filed a request and changed its address in the Business Registers Agency. No one from the company was at the new office at the Mona Plaza hotel in Belgrade, but the receptionist confirmed that the company had leased the space.

The National Health Insurance Fund of the Republic of Serbia did not reply to the questions we had sent them regarding these procurements. CINS has already written about the procurement of medical equipment needed during the coronavirus pandemic.

Nemanja Nenadić of the Transparency Serbia organization says that there are two key issues regarding

Second Cycle’s business deals

This is not the first time this company has taken part in state-organized tenders. According to publicly available data, in July 2019 Second Cycle was one of the companies with which the Ministry of Agriculture, Forestry and Water Management concluded a framework agreement on the procurement of laboratory materials. This year, it sold PCR tests and expendable materials to the City Institute of Public Health for the detection of various viral and bacterial infections, which were not used for the novel coronavirus, worth roughly 10 million dinars. The same institution concluded a maintenance contract with the company worth about 500,000 dinars.)

these procurements of the Health Insurance Fund. The first is whether there was more than one company that could have done the job and whether just one was invited.

“If they knew there were several companies that could have delivered these goods and the invitation was sent to just one, that would be unconscientious conduct and contrary to the principles and the Public Procurement Law.”

From Egg Laying Hens to PCR Tests

Second Cycle registered a new Web portal in the Business Registers Agency in June. So, instead of the website hensecondcycle.com which states that Second Cycle is “a team of professionals dedicated in helping your egg farming business become even more profitable,” the new official portal is scc-lab.com.

“We are a distributor of biomedical products and provider of consulting services. SCC-Lab is present in Central and Eastern Europe and now we are opening our first subsidiary in Serbia,” reads their new website.

CINS tried to get in touch with the company also by calling the number listed in the register. The female employee who answered refused to introduce herself and asked us to address the company by e-mail for anything that might interest us. We did that, however, we have not received an answer to date. When we asked her whether the company was doing business in the area of egg farming, we were briefly told that we must have misread something.

However, former company owner Lazar Đurović told CINS that the company had two activities which were running in parallel the whole time.

Đurović told CINS that those were all medical products of some sort, “except this is in agriculture and this is for people.” He added that where egg farms were concerned, there was a patent he was not allowed to talk about.

In the meantime, CINS contacted six companies from various parts of the world which Second Cycle lists on its website as its collaborators, which two Chinese companies – Sansure Biotech and Bioer Technology, as well as Canadian TECTA-PDS confirmed.

We only managed to reach Dragana Zeman at the telephone number listed next to her name on the list of Municipality of Mionica aldermen and alderwomen dated to 2015, but declined to talk with the CINS journalist, and told us to address the Health Insurance Fund with any questions we might have.

“As a private company, we really do not give information of any kind,” she said.

When asked whether she was still a member of the Socialist Party of Serbia and whether she currently occupied any official position, Zeman said the answer was no.

Two addresses are mentioned as headquarters on the company’s old website. The address in Belgrade is 6 Braće Jugovića Street, while the other is the address of an office in Los Angeles. A man who introduced himself as Nemanja Nikolić answered the phone listed on the old website and said that he no longer worked for the company and could not talk about it because that had been a part of his contract.

“In any case the company deals with laboratory equipment and also dealt with those egg farms, i.e. those are medical products, i.e. veterinary medical products that boost molting in egg laying hens,” Nikolić told CINS.

Vladimir Ćuk answered the phone at the number in the United States of America. He said that a guy “who is very good at sales” connected him with the employees of this company last year and that he (Ćuk) gave them the phone number and address so that their mail could be delivered there. Ćuk, who has been living and working in the U.S. for 25 years now, says that the company employees “blew my mind” and he wanted to try and market their product, a chicken feed premix, in the U.S. However, sales failed to take off:

“This was a legitimate attempt here for them to push that product and I told them to put my phone number and all that on the website, so when someone calls for that call to go to me in America, but that never got off the ground.”

In his words, he never actually looked into the ownership structure, as he had planned to do so if he “scored a deal” with them.

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