In this fifth of a series investigating Australian barter company BBX, I describe the process of a barter exchange demise and apply those stages to BBX, a business that while there are pockets of ethical trading is clearly corrupt from the top down and in its death throes. It contains a sad and brutal reality, such is the way of the truth sometimes, is it not? I also give advice on what to do now for those associated with the BBX currency.
[ORIGINALLY POSTED in February 2017 at http://www.dennis.co.nz/2017/02/5-the-demise-of-bbx/index.html]
The commercial barter industry internationally has seen huge and increasing stresses in the last decade. From external forces such as the challenge of multiple currencies; Internet technologies that have enabled trading, knowledge and information to exchange at never afore-to experienced rates . . . to internal issues such as corruption by way of management greed and inexperience; the inward-looking, self-congratulating and corrupt international organisation (IRTA), and the profiferation of quick-buck Internet-based scam-artists . . . the commercial barter industry has seen more than its fair share of failures; some of them quite spectacular.
BBX is in that sense simply another one in a list of the casualties. As I specialise in analysing and investigating this industry, one incidentally that I love and care about, I’ve been at the fore of exposing more than one dodgy operation. In all cases the events surrounding the demise of a barter business follow the same broad pattern. First, greed and self-interest have their way from the top of an organisation taking from the bottom [the rich get richer at the expense of the little people principle]. Secondly there is some form of exposure of the moral (or legal) crimes – somebody with a conscience becomes a whistleblower. Thirdly there is an inevitable coverup and defensive action by or on behalf of the perpetrators. At this stage what happens is anyone’s guess, but if the intel and exposure from the whistleblower and the authorities is good then things can deteriorate from there into the death spiral resulting from a drop in confidence. The currency loses perceived value. It has no real value. Nobody wants it. No trading. No income. Close door and say, “Good night!”
Depending on circumstances, basically how long it takes for the little people to realise that they have been and are being conned then it could be a rather quick demise, or a gradual decline into a painful and inevitable death. It is possible to resurrect a dead or dying exchange/business but this is rarely successful and there is one thing certain, the goons that got them into the mess can never get them out of the mess! Crisis teams or crisis leaders specialise in turning things around. Usually they evict the top guy and bring in someone who knows what they are doing. If there is a good brand, or assets locked up and there is a clean break then a receiver or statutory manager can sometimes save the day. Generally though we are looking at liquidation and total demise.
The principle behind an exchange’s demise is the same as for any entity from an individual person to a company or an entire country – when their currency is debased to the point that the people have lost faith in it then the show is over. Betray too many kids on the school playgrounds and you won’t have any friends. This is a form of currency debasement, the currency being trust in the context of the school environment. In a business sense when the customers lose faith in you to deliver what you promise then your currency (goodwill of the business) has devalued – they buy elsewhere and you go out of business. Same thing with national currencies. When the backing of the USD for example is found to be absent and the USD is recognised for what it is really worth, then all things being equal, inflation will rise as people recognise that they’ve been had. Given the chance they will opt for other forms of payment. Exit the USD as the world’s reserve currency. WW3!
A barter business is exactly the same – when people lose faith for example in the BBX Barter Dollar (or BBX Pound); when they realise to what extent it is backed by only thin air and run by people being rather economical with the truth, then inflation will hit the currency, and the prognosis is [usually] terminal. Signs in a barter exchange that the currency is debased are many but the key clue is when the traders refuse to take credits in the system (usually because they can’t use them to buy anything of value). “I’ll only do half cash and half trade” or “I’m not taking trade [anymore/at the moment] are obvious indicators of currency devaluation, usually because everyone is in credit – no-one is in debit. I’ve blogged extensively about this in relation to BBX’s bigger brother Bartercard, another Australian barter organisation with a MASSIVE hidden trade deficit, being propped up against all logic by people who are desperate to save the drowning beast. BBX may go under before them, but that both are struggling with liquidity due to massive downturns and stripping of real value by their leaders is without question.
In BBX’s case currency debasement can best be observed by increasing numbers of members refusing to take trade or full trade. This is a sure sign that the pot is being or has been emptied by others above. In Michael Touma’s time be balanced this trade deficit with the new blood. He knew that it was the ones who came into the system that gave him his greatest opportunity to turn some good coin.
Selling agencies came secondary, and when China took off with a hiss and a roar BBX got all excited at the good money in agencies – like Bartercard had done. But just like Bartercard did, BBX found that there is a cost to supporting Franchises and that they needed time and effort to keep. Michael, like Bartercard burned off many a Franchise with under-delivery.
Unfortunately, as I see it, this legacy then, of an inflated currency, dissatisfied Agencies and people and an organisation simply not cut-out for the big-time was what the Touma family inherited. It took over a year before the Thailand guy to threw it all in and squeeled. The rest will be history.
In BBX’s case, knowledge of the trouble has been concealed from key people. John Attridge in the UK and Dr Lee in Asia have been hoodwinked. Imagine their consternation when they find out that the brand is tarnished. They know that there is trouble in the ranks, but when something like this comes out, unless they can deflect the heat somehow (the usual way is ad hominem attacks on me but in this case as I have shown quite seriously on the whistleblower) the confidence game will start to slide and it won’t take long for it to all be over.
Throw in a couple of legal challenges and adverse events from the authorities and BBX will probably cease to operate very quickly. The biggest and greatest threat I feel will be their capacity to receive income by way of the banking system – imagine if the Credit Card companies do act to protect themselves. Why wouldn’t they. Crumbs credit card fraud is a huge concern to these guys right now and especially online international transactions. Do you think they know, understand or care about barter or the industries reputation? I doubt it!
That means no cash fees for BBX within 7 days, possibly even that many hours. Then they might try to swing across to Paypal and keep the fires burning via their currency payment systems but that is fraught with technical and management troubles. The when Paypal too finds out that there’s a huge spike in their traffic they could be suspended again while investigated by Paypal. The the world will get out to HSBC and others who could and probably would investigate the past 14 months worth of transactions, read this report, check a few signatures, liaise with the Australian authorities, bring in Interpol swoop on the offices, servers in AU, Hong Kong and even knock on the doors of the Touma Residential Palace. Debts will be called in because everyone will want to get in early before the barrel really empties out and, and, and . . .
It is even possible that Ron Whitney from IRTA (who I am dead sure will already know all of this BTW because he is the go-to guy in the industry and makes his living by gossiping and is probably keeping ‘mum’ about the fact one of his new members is going down) may do the honourable thing and be proactive, calling them to account and suspending them from IRTA or booting them out. I doubt it because IRTA isn’t like that but say they did . . . how or why would anyone ever trade with the BBX dollar again.
Something has happened and it’s not good thing. That’s for sure. Someone has a conscience, acted and took on the Whistleblower role. Somebody has investigated, collated & written it up and published it. This is the status for BBX at present.
The next stage in BBX’s demise will likely be defence. We’ve already seen this from Carolin in a reactive email she sent to me and other BBX associates:
There are basically only two ways she can go . . . fess up or provide the evidence to prove the companies case. She has done neither. She won’t do the first one – that’s pride. She can’t do the other one because the evidence is out there. As long as people want to know the truth, BBX is doomed. Those who hold in there and want to live in a dreamworld will lose. Those that stand there and say, no, no, no the Emperor indeed has beautiful clothes will simply draw attention to themselves and their own nakedness and foolishness.
Defence in the face of reason backed by evidence is futile. So is resistance in the face of inevitability. Attempts at protection of minor assets with coverup of larger crimes and debts, will fail. The sooner the affected parties move through the natural stages of grief; denial, pain, anger and into acceptance and constructive moves the better for all
What to do?
My advice, having been on the tail end of a dead and dying exchange (NZ Barter) myself and having both analysed the process and indeed facilitated it in some cases is as follows.
Like with pass-the-parcel, the last one holding the baby pays the highest price. There are two things to protect – your investments and your reputation. Those who stood behind Daniel Evans when The Ormita Report ended up bitter and angry with him. Those who backed the Qoin conmen Rob van Hilten and Edgar Kampers from The Netherlands publicly probably deeply regret it now. I cannot believe that Ron Whitney would EVER write another email again stating that I am not a credible commentator on the industry as long as he lives. It was probably the most stupid thing he ever wrote and he will know it for sure. I also know that those that stood up in public against my analysis that the Qoin boys were conmen must be shaking their heads in unbelief that they were so foolish and had got conned so badly now that they’ve gone bust to the tune of half a million Euros and are under investigation as we speak.
The same thing will happen with BBX I am sure. Some will believe the BS and attack me personally if they are stupid or remain. I am unlikely to get an apology from those that argue with me about my findings, but they will all, eventually, I promise say, “OK You were right. We were wrong. We got conned.” when the dust finally settles on BBX.
My advice . . . get out; make it as public and as clear as you can what you are doing and why and protect what you have left. The whistleblower didn’t tell you to trust him; he invited you to your own research. I’m not like that – this is my job. I’ve done the research. Trust me.
To members in BBX trade debt I say to you find someone that needs something that you have and sell it to them as quickly as you can to clear your debts because if you are in debt on your trade account, I can tell you VERY assuredly that no receiver or liquidator will accept anything other than cold hard cash for your debt. I haven’t yet confirmed this but all debts to BBX (cash and trade) will almost certainly be likely to be a legally enforcable debt payable in Legal Tender cash upon demand. Read the fineprint of your BBX agreement if you’re not sure of this or speak to your lawyer or even BBX themselves!
If you are in credit in your BBX account (most are) find someone as soon as you can who is in debt and/or will accept your BBX ‘funny money’ and trade it down as soon as you can, or you will lose it. Don’t sell if you doubt that you will get a return on your investment into the currency. Pre-purchase from the system before you sell into the system or simply don’t spend. Expect ultra-high inflation so that people will for example offer $T100.00 (or in time perhaps even more) in return for a $10.00 item or service as confidence dries up and trading ceases. Eventually if or when the BBX currency devalues entirely the credits will be lost.
Seek assistance from BBX trade coordinators if you have to, for that is their job and leverage whatever you can to protect your interests. Act fast and be first and there may be something left. Spread the word and assist those who are trying to put matters right – not everyone is a crook – but trust only when it is wise to do so. To find out where the value has gone from the system, simply look around at those who have real goods and services when it goes down. If the small guys have oodles of worthless credits and the big guys have flash houses, cars and a lifestyle to boot, you can guess what’s happened!
If you are a BBX Franchisee and your exchange has gone down and isn’t really trading, terminate your relationship with the Franchisor on the strong legal grounds that you have for non-performance and perhaps even criminal breach of contract. Speak to me if you need the cold hard evidence for legal purposes. I have enough for every BBX Agency on the planet to justify an immediate extraction of their exchanges from the BBX trading platform and currency and I am [conditionally] happy to share it. Seek legal advice and activate your Plan B at your earliest. If you don’t have or didn’t have one, more fool you. Create one now and make sure that in the future you always do.
From the evidence that I have seen Cameron McKean did it right (getting out of a poorly run barter system). You can too but I recommend that you be clear, clean and ethical in what you do and how you do it. If your exchange is breathing and you think it has potential and you want to go it alone IRTA has their pet software providers and there are plenty of credible and often quite cheap software options out there. If this is you, back yourself and build relationships with others in the industry whom you actually can trust. Speak to me if you need help locating a support network or person with integrity. I can and am happy to help at a big picture strategic level but I don’t usually get involved in day-today running of business. Others though can.
I’d pretty much ignore IRTA unless you want to get in with the in-crowd from decades ago. They’re not entirely without value as an organisation and not all of them act the fool, but there is a cost to associating with a damaged brand that may not suit the newbie going it alone who wants to build credibility. Remember also that if you participate in Universal Currency that you are supporting a massive debt longterm by Bartercard – basically through UC and IRTA you are subsidising your opposition so the cards are stacked against you from the outset. It doesn’t matter how much UC claims to turn over, if there is huge debt to one of their pet members, guess who is underwriting the risk of that debt? IRTA has nothing – so they can’t underwrite it – it’s the UC members who are carrying that risk! Nah!
It’s not impossible going it alone by any means and it may be a breath of fresh air for some but it can be a challenge. From what I have seen thus far, I’d read but probably totally ignore any legal threats from BBX management along these lines. I’ve seen what they’ve thrown at the Thailand guy and it’s a sad and sorry joke from what I’ve seen. I can’t see how they’ve had any legal advice since Michael died and if they have they certainly haven’t followed it.
Some of the Ormita exchanges made it out of that fraud and survived. It is possible but it is a hard one to do well and legally right and ethically. Speak to your lawyer – fast or just walk. Protect yourself and expect trouble particularly from deceivers who will do everything in their power to protect what they have taken from you and your members by deceit.
To the BBX management and the Touma family I advise that you prepare for a rough ride. Fess up and get it out in the open to the appropriate people. Don’t come to me to ask for help because I gave you plenty of chances to do the right things and you turned those opportunities down. Take the opportunity to plea-bargain if it comes to that and try to work together and do it as a family. Going out with integrity, admitting errors, even if it costs you the family mansion would gain you the thing that you have lost – your credibility which would set you up for future family opportunities. If you can’t do that and you remain divided, then I will help the ones who ask me for help and if they ask for it I will help the authorities to put the others in jail – simple. Oh, and don’t blame the messenger. I’ve never done anything to hurt you, your father/husband or your family.
To IRTA, specifically take notice that your new members her (BBX) are not the sort of business that IRTA should be associated with. Take notice that I have advised you via your Executive man Ron Whitney of these findings prior to their publication here and that I consider this was an official warning . . . the eyes of the entire industry will be on you now, some of us that you have p*ssed off over the years including your well known detractors will be watching you and what you do with BBX – like a hawk! BBX is now a real and very hot potato for you. Remember that you are the self-proclaimed watch-dog of the industry and in the past I’ve made you look like ducks over Bartercard, Universal Currency, Trade Qoin and the conmen at Qoin . . . total plonkers. Yes, I’m opinionated, a prickly character and never give up but I am also fair. This BBX thing may be one chance to redeem yourselves on this blog.
To potential BBX Franchise purchasers, it is my belief that based on my investigation that you will be almost certain to lose all value that you put into the hands of BBX under its current management and ownership. Be warned.
To observers in the trade, play it straight and if you don’t do the honourable thing day by day, hope like h*ll that none of the people you rip off come to me with evidence like this whistleblower did.
To observers outside this industry, yes there are serious credibilty and ethical issues within the barter movement, but no that doesn’t mean that ALL are crooks in the order of Bartercard, BBX and the others I’ve investigated, BUT you should be very careful especially when looking at making easy money or fast money. There’s no such thing as a shortcut here, as the demise of BBX has shown us all.
In my next post I summarise the whole investigation and then I conclude with personal observations and thoughts. It’s a sobering, sobering and sad story I’ve brought in this post, unfortunately. I get specific in the next.
The BBX Investigation Series
- PUBLIC WARNING: BBX Barter (2381 words)
- 2. War Erupts Within BBX Barter (4090 words)
- 3. BBX is Busted – Working it Out (2388 words)
- 4. BBX has big, Big, BIG Problems (1778 words)
- 5. The Demise of BBX (3489 words)
- 6. BBX – A Summary (1308 words)
- 7. Reflections on Investigating BBX (6394 words)
- 8. BBX – The First Criminal Charges (3625 words)
- 9. BBX Crimes – The Significance (2,710 words)
- 10. BBX Causes Problems for IRTA (2,251 words)
- 11. BBX: Rats Off a Sinking Ship (1,715 words)
- 12. BBX Data Security Breach (1,852 words)
- 13. BBX Threatens – Sue Me PLEASE! (1,511 words)
- 14 The BBX Knives Are Coming Out (1,791 words)
- 15. BBX Memberships – Names in a Database (2,774 words)
- 16. BBX UK & The Franchise Show (2,840 words)
- 17. OPEN LETTER 1 – BBX Members (162 words)
- 18. BBX Currency Analysis – 10c/$1.00 (1,527 words)
- 19. The BBX People Speak (11,726 words)
- 20. More Words from BBX People (15,206 words)
- 21. How BBX Did It – Lies & Theft (3,663 words)
- 22. BBX – Winding Down/Winding Up (3,217 words)
- 23. BBX New Zealand Analysis (828 words)
- 24. BBX UK Membership Analysis (1,143 words)
- 25. BBX NZ – Serious Fraud Office (1,261 words)
- 26. BBX – Thailand Member Analysis (1,165 words)
- 27. BBX Minor Countries Analysis (574 words)
- 28. The BBX People (2,290 words)
- 29. BBX International in a Nutshell (295 words)
- 30. The Raw BBX Data (4,463 words)
- 31. BBX Members React – It’s War (5,617 words)
- 32. BBX and Issues of Morality (1,363 words)
- 33. Warning to BBX Staff & Associates (1,944 words)
- 34. BBX Devaluation Helps With Tax Losses (1,269 words)
- 35. BBX Rips Open the Barter Industry (1,237 words)
- 36. MEDIA RELEASE: Barter Tax Avoidance Warning (516 words)
- 37. BBX Whistleblower: Cameron McKean (4,994 words)
- 38. The BBX Investigation Final Comments (1,504 words)