Posted on 05/27/2003 12:19:08 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
SANTA ANA -- The state offices charged with boosting California exports overseas and luring foreign investment lied about at least $44 million in deals they claimed to have brokered, the Orange County Register reported Monday.
Among other things, the trade office in South Africa falsely said it had brokered a $12,000 export deal for a Diamond Bar company; officials in the Mexico office lied about helping a Lodi sewage equipment firm to sell $150,000 worth of products and the Japanese office misstated its work on a $33,334 deal that supposedly helped a Huntington Beach company that sells purses and briefcases.
In the case of the sewage company, the trade office helped translate bid documents for a potential sale, but the deal fell through.
"We should have followed up and made sure that what we said happened, happened," said Douglas Smurr, director of the Mexico trade office.
In three cases, trade offices took credit for placing foreign companies in California when they actually ended up in Illinois, Arizona and Texas.
The 12 trade offices had a $6 million budget last year. Officials for the agency that oversees them claimed in a budget hearing this year that they bring in $2 in tax revenue for every $1 spent.
But while the offices in Taiwan, Japan and Singapore had success, the other nine trade offices fell short of that return, the Register said, citing an analysis it made based on a state formula.
In the last published report, for the 2000-2001 fiscal year, trade offices claimed $200 million in export deals for California businesses and $231 million in foreign business investment in the state.
The figures supposedly are based on information supplied by businesses the trade offices have helped. But they were not audited, and at least $44.2 million worth of "success stories" cited in the report never happened or the role of the trade office in the deals was overblown, the newspaper said.
Lon Hatamiya, secretary of the Technology, Trade and Commerce Agency, defended the trade office figures.
"How do we get those numbers?" he said. "We get those from the people that we serve ... our clients. These are very conservative numbers."
In the agency's unpublished 2001-2002 report, the Register said, Smurr claimed his office had a key role in a $5 million deal to bring Mexico's Gigante store chain to Anaheim and Santa Fe Springs.
"How could he be claiming credit for doing anything to help us open our stores? I'd like to see him prove that," said Justo Frias, president of Gigante USA.
The Register said it tried to contact representatives of all 191 businesses highlighted by trade offices or listed as "success stories" in the California Technology, Trade and Commerce Agency's 2000-2001 report.
Of the 58 who agreed to be interviewed, 31 said the state trade offices did nothing crucial, and six denied the reported deals ever occurred.
"They are not providing anything that is unique or beneficial," said David Murray, owner of American Safety and Rescue, which makes equipment for firefighters and rescue workers. "They got my name because I went to a trade show they helped organize. And, to be honest, I was really disappointed with the turnout and I didn't do the business I would have expected to do."
A dozen companies did say the trade offices had a direct and pivotal role in helping them.
"They helped us find a distributor, which helped us break into the market in Tokyo," said Mark Korte, general manager of Tri-C Manufacturing, a recycling firm in Sacramento that was listed as a $500,000 success story for the Japan trade office.
"They would be my first stop if I were trying to break into a foreign market," he said.
The chairman of the Senate's banking and commerce committee said the offices should be eliminated.
"They are a drag on the entire agency," said Sen. Dean Florez, D-Shafter.
The trade offices are currently facing a 60 percent budget cut as California tries to cope with a nearly $40 billion deficit.
However, the trade offices have enjoyed political protection since the first one opened in 1987.
"As long as I've been in the Legislature, governors have opposed any attempt to eliminate the trade offices," said state Senate Leader John Burton, D-San Francisco. "I assume they consider them mini-embassies and want them as political plums for their friends."
Were they actually supposed to accomplish something?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.