I blogged last month that Bartercard has secured a fifteen year deal with IRTA to supply the software platform for Universal Currency and IRTA’s active endorsement of that system globally. This deal was apparently the basis for Bartercard’s decision to float on the ASX. [IRTA has confirmed this now with a limited release News Alert to Members of IRTA and UC]. In this post I examine the deal and commence my analysis/commentary.
The deal is spectacular. There can be no other word for it – spectacular. Regardless of the outcome of my complaint to the ASX and their success or otherwise in going public, securing a deal like they have from IRTA (with their exclusive endorsement for a fifteen year period) would be totally a dream come true for any aggressive industry player out to dominate their market, in any industry.
Ethics aside, no wonder the Directors are excited about the future, for a commercial entity to leap-frog their entire industry, and secure an exclusive enduring support of an industry association (supposedly an association independent and without bias) in direct competition to all other players in that industry has to be unprecedented!
If IRTA was the government this sort of deal would be called none other than Fascism, a very efficient and effective business model if ever there was one!
There are currently only two sources of information about the deal available to IRTA Members [who are in the same position as] and the public:
- Bartercard (the BPS Technology Prospectus and associated Media stories), and
- IRTA’s News Flash (currently only available to selected members of the industry)
The guts of it as far as I can determine is that as I’ve blogged about before, Bartercard has an exclusive agreement to provide the software to IRTA (Universal Currency) for a fifteen year period (5+5+5). In that time IRTA and no doubt their deal-brokers will receive kickbacks (income) and will promote Bartercard’s solution as the “best in the industry”. That last concept alone staggers me how the heck they could say that but nonetheless it seems to be part of the deal.
As I am only working off heresay information – the deal itself is hidden from the the world (despite the ASX requirements for a public company to reveal relevant documentation) – I cannot reveal any more details than what the two parties have shared independently.
How They Got There
IRTA has had a pretty rocky road with their software provider for their Universal Currency. Not only have they had multiple providers, they have been at sixes and sevens over what they want to do, technically AND strategically for the last four years at least.
According to their website, IRTA’s UC Software Sub-Committee was established in early 2010 to examine potential alterative software program for the UC platform to migrate to in the near future. Four years later they have apparently succeeded in their stated task [cough, cough!].
They say on it that the Sub-Committe is comprised of the Members:
- Annette Riggs, Chairperson,
- Scott Whitmer, Florida Barter
- Jeff Burkhardt,
- Scot Mathewson, iTradeearth
- Terry Brandfass
They will no doubt report to the IRTA Board. The information supplied to the public here is out of date and I believe is deceptive. Apart from the fact that Bartercard has launched an IPO on the basis of an agreement with IRTA (and the true makeup of the decisionmakers is actually incorrect) the current makeup of the UC Sub-Committee should be analysed especially looking for conflicts of interest and how those conflicts of interest were handled. For example if any of the sub-committee or their companies benefit from the Sub-Committee’s recommendations, then this would be a clear conflict of interest and should be dealt with appropriately.
Furthermore the distribution, timing and content of their RFP’s should be considered carefully and the results of their testing and software comparisons should certainly be made available to the IRTA Board prior to their signoff on the change and preferably also to the Members. Even better in the interests of transparency would be to release it to the public to support their new
owner’s partner’s IPO, for at present there is NO validation of the claims in the dodgy Prospectus that IRTA has actually chosen the best solution, nor the process they got to to announce it.
Next, once the deals were done is the approval process past the IRTA Board. Ron Whitney says in his News Alert that the Global Board of Directors agreed to this one:
In the judgment of the IRTA Global Board of Directors, the existing Bartercard software, combined with the financial resources resulting from a successful IPO through BPS Technology, would provide UC the best opportunity to utilize and recommend a highly advanced technology solution to the industry.
When was the IRTA Board given the information to peruse? What information were they given? How long did they have to consider the matters? Could or did they take the matters back to their constituents for their input into such a monumental decision? How did the IRTA Board handle commercially sensitive information? What transparency was there in the entire appointment process? These are just the beginning of a list of questions that must be asked. There is much more on this issue in due course, rest assured!
Bartercard has scored a coup. I believe that they got there with backdoor, underhand, secretive processes in full collusion with the Executive and that the Board of IRTA were either deliberately misinformed, fooled, manipulated or kept in the dark and have all made a substantial blunder endorsing such a shonky deal. Bartercard got there with this deal, but there is nothing surer than eggs that it will be a ‘hospital pass’ for them, and probably a badly poisoned chalise too, given time.
I predict that there will be widespread dissent within the industry and that all parties will live to regret the decision.
Ron Whitney (Executive Director) and Annette Riggs (president), along with the IRTA Board Members who voted along party lines for this deal are now ‘toast’. No amount of spin, explaining away, time, money, ignoring, defending or even attacking detractors can ever undo the events surrounding this shonky deal, especially if there is someone out there like me who isn’t frightened to think, ask questions, then share the facts.
They’ve reached the point of no-return with the cat’s head and shoulders well and truly out of the cage by now. They will never be able to get it back in. As the steady stream of dissatisfaction with what is happening in IRTA’s leadership grows they will find the heat increase as their past, present and future conduct is exposed for what it is. The consequences of this deal will have serious, perhaps even terminal consequences for the Executive.
Voters on the Board FOR this deal will find it very hard to survive as the Members ask why they could betray the original purposes and mandate given to the organisation. Those who step aside in disgust over the matter and make it clear that they did NOT agree to the deal, and that they have resigned or stood aside on a matter of principle will have a future in the industry.
Those that voted AGAINST the deal and remained quiet will be seen to be weak and powerless in the face of those who have it, despite the fact that they may have dissented at the vote.
The euphoria that would have followed the deal signing (if indeed there ever was a deal signed, and I’m not convinced that this actually happened, for Bartercard would surely have shown it to the world in their Prospectus if there was one) will have well and truly worn off by now. They will likely be petrified of having to deliver the agreement to the ASX if it doesn’t exist. They will also be very concerned that IRTA could pull the plug on the deal at a moment’s notice (as they have many times before with others) and they will need to cope with negative press day after day as their system inevitably has problems, delays and PR issues for a demanding and experienced clientelle – in many cases their direct competitors!
They will need to address the ethical issues of how they got the deal, and will be suffering alongside of the IRTA team when or if the proverbial hits the fan. Should IRTA drop the ball in any way, Bartercard will get whacked alongside of IRTA. They won’t get their coveted centre of the industry role because they don’t understand the wholesale software industry and the industry doesn’t trust them. They are really in a no-win situation of their own making now and have cast their lot pretty firmly with their IPO released on the basis of this deal!
Members will resign forthwith. Ron and Co will have known that there would be some dissatisfaction with the deal going through but Membership loss will be much greater than they estimated and some of the big boys will be REALLY P*SSED OFF with what they have just done.
It is possible that Bartercard ruling the roost within IRTA could decimate the IRTA Membership and income streams. Why would ANY Trade Exchange support an organisation financially OR morally when that very organisation is contracted for the next 15 years to actively endorse and promote their direct opposition?
While it may take time to sink in and for the matter to really settle down, every IRTA Member will work out the significance of their information sitting on the systems of an aggressive industry predator with a stated intent to buy up those very companies that will be entrusting some of their business information to!
I’ve learned a lot about the history and politics of IRTA in the time I’ve been researching them. I’ve spoken to enough members thus far that I predict this matter to generate the biggest turmoil of its long and proud history. Serious Member revolt is right around the corner – I still have my hat ready to eat if needs be but I doubt I’ll need it!
The first thing I would expect is some response at least from the incumbent. I’ve spoken to Richard Logie at length over this matter since it has blown up. Anyone wanting to know the ‘other’ side of this thing should speak to him and ask a few juicy questions. I have and I consider his responses to some pretty hairy stuff from IRTA over the years incredibly professional and measured.
I’d predict serious problems of many sorts for IRTA (most likely technical, probably political, possibly legal and certainly moral) if they attempt to just ‘dump’ the GETs system and move to another platform. How the relationship with GETs and IRTA developed and came and went and what the inside story on his dumping from the Board with his conflict of interest makes for interesting listening if you can get him to talk about it.
Aside from the GETs to Bartercard thing though there is the integrity and value of the UC currency at stake too. How will the managers handle the potential conflict of interest that will snowball as a result of Bartercard’s new role? Will that not affect the usage of the currency amongst the other players, and then too the perceived value of the UC Dollar?
I can’t predict the future other than to see a big can of worms and problems.
I believe that IRTA now has a destroyed any last remaining remnant of integrity that might have been there last week.
The amateurish way that the deal was announced; the insane structure of the deal; the timing of the deal with different dates given by differnet people; the weird motivation and the highly slippery implementation of the deal; the cloud of ethical issues that surround the whole thing; not only the lack of transparency but the incredible shonky way the whole thing was put together . . . all these things show to the industry (and to the world) that IRTA has lost the plot.
It leaves IRTA’s reputation in tatters.
Bartercard’s buyout of IRTA may be complete, but rest assured the story is only just beginning!
In my next post in this series on Barter I put forward the questions that the IRTA Members should be asking of their Board Members.
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