Sunday, May 14, 2006

Find the Money! Part 2.

Mary, Mary, Beneficiary, how does your money flow?

I warn the reader that this one is going to be harder to follow than most of my posts. It started with The Far East Broadcasting Company asking me to buy a radio for someone in China so that lucky person could receive FEBC’s Christian godfomercial. This got me to wondering if the principals of FEBC were connected to the for-profit business of making and selling radios. I don’t think I got any takers for my game of “Find the Money”, and I can’t say I blame anyone for not getting involved in this one. My adventure quickly hit some dead ends, and began to resemble a cross between a game of Six Degrees of Separation and Alice Through The Looking Glass.

The first dead-end I struck requires some explanation. Say you own ABC Corporation and you want to outsource your manufacturing to China. You don’t get to construct an ABC Corporation factory in China, instead, you must partner with a Chinese company that will make your stuff and brand it for you. Hopefully, your plans and patents don’t wind up across the street in another factory making knock-offs. In any case, one of your business partners is the People’s Republic of China, and they get a piece. There is nothing particularly wrong with this; in the US, it’s called taxes. It does however make it nearly impossible to know where the financing is coming from. Add to that the notion that private investors like their privacy, and it’s hard to find out anything one way or another.

I kept digging, and I discovered a veritable morass of charitable institutions, not-for-profit organizations, consulting firms, and corporations with all manner of incestuous ties and affiliations. Don’t get me wrong, there is nothing particularly wrong with networking, and any system you name will create opportunities for corruption and greed, or at least general inefficiencies. My problem arises from the fact that there is an awful lot of money moving about that is earmarked for developing underdeveloped nations. Some of those entrusted with these development operations have been developing some of these countries for a very long time without a lot of results to show for their efforts. There are many players, and some of them are pouring a token amount of money down a rathole, ensuring a continued supply, while collecting a fine salary for themselves. This removes available funds from those organizations that are supplying real humanitarian aid.

What follows is just one of the threads of my wanderings through the morass. I am not making any judgments about the intentions of these organizations. I am merely illustrating the kind of path this investigation takes amid so many dots that one cannot be sure whether they are connected or merely tangential.

The starting point on the journey was Tecsun, the maker of the hand-cranked radio. I quickly discovered that the same model radios were being rebranded and marketed by Eton Corporation. Excerpt from one of their press releases:

“PALO ALTO, Calif., May 9 /PRNewswire/ -- As a new hurricane season looms, the Eton Corporation today announced it will distribute 2,000 new, self- powered radios to American Red Cross chapters throughout the country.”

Quoting Eton Corporation's Financial Statement and their CEO Esmail Hozour:

In 2005, the Eton Corporation distributed 10,000 self-powered radios in the aftermath of Hurricane Katrina, providing a free, first-class communications link to thousands without electrical power.

Eton will be distributing 2,000 more American Red Cross branded radios to chapter representatives at their national convention in Washington, DC. These radios will help each local chapter better prepare for emergencies.

"We're delighted to help celebrate this milestone in such a meaningful way," said Hozour. "Every American should take the steps recommended by the Red Cross to get ready now, should disaster strike."

And what are those steps?

The American Red Cross recommendations include:

* Learning about emergency plans in your community, workplace and schools;
* Familiarizing yourself with nearby shelters and evacuation routes;
* Establishing a family meeting place and communication plan; and,
* Assembling an accessible supplies kit containing non-perishable food and water, a flashlight and a hand-crank radio.

Aha! And what brand of hand-crank radio is the Red Cross likely to recommend if not the one that they are using themselves? Now that’s marketing! The next tidbit took me to Helen Keller International.

etón Corporation Donates Radios for use in Rural Mali

Bamako-April 12, 2004: In rural Africa, the sense of hearing can sometimes save the senspe of sight. As international development organizations have learned in recent year, rural radio stations are a highly effective method of raising public health awareness among disadvantaged and often illiterate populations. This March, the etón Corporation reached out to rural citizens of Mali by donating forty radios to be used by women's and students' listening groups. The United Nations consistently ranks Mali as one of the least developed countries in the world, with a literacy rate of only 26%. The government has opened airwaves to community radio stations in recent years, and there are now over a hundred stations working towards increasing Malians' access to quality information.

I then searched HKI’s list of affiliates without finding Eton Corporation. One of the companies that HKI partners with was Chemonics. I selected this company for a look-see for having an obviously ambiguous name. Excerpts from press releases:

In his first official address on March 31 as president and CEO of Chemonics, Richard Dreiman praised the work the company was doing and presented his vision for the future.

... previous CEOs, Ashraf Rizk and Tony Teele,” he said. Teele, who founded Chemonics in 1975, was succeeded by Rizk in 2002.

You'll see why you need this roster in a minute. I then checked out a daughter company to Chemonics, Massar

Established in 1994, Massar is a private consulting firm working to promote sustainable economic development in Palestine.

And, their subsidiary:

AL-AYYAM PRESS AND PUBLISHING COMPANY Incubated by Massar in 1994, Al-Ayyam is now one of two leading Palestinian daily newspapers, providing comprehensive commentary of Palestinian

Between radio stations and newspapers, it surprised me how many organizations were getting into the information business.

The center for Public Integrity had this to say about Chemonics:

“Since it was founded, Chemonics has completed at least 600 projects in 130 countries for USAID.
Ashraf Rizk, who had previously served as executive vice president and chief financial officer of Chemonics, replaced Teele as the company's president. Rizk joined Chemonics in 1982 after working as a senior auditor at an Egyptian accounting firm and overseeing CARE programs in Egypt. CARE is one of the world's largest private international humanitarian organizations.

Teele replaced Scott Spangler as chairman of the Board of Directors. Before becoming Chemonics' principal owner in March 1999, Spangler held various leadership positions at USAID. In 1990, the first President Bush appointed Spangler to deputy administrator for USAID operations. In December 1992, he became administrator of USAID, replacing former University of Nebraska President Ronald Roskens. Spangler also used to be an economic advisor to the governments of Ghana and Uganda.

In February 2003, Chemonics awarded Washington D.C.-based lobbying firm U.S. Global Leadership Campaign a $100,000 matching grant. In a press release, Teele, who is on the campaign's Board of Directors, said the grant is to help the Campaign promote public support for U.S. foreign aid. The Campaign has hundreds of members, including Lockheed Martin, Creative Associates International and Halliburton Company.

As of March 31, 2004: After publication, the Center for Public Integrity received and has posted a copy of a task order awarded by USAID to Chemonics International for economic, as well as food security, assessment. The total value of this order is $1,197,524; it is part of a larger indefinite quantity contract Chemonics has with USAID for work in Afghanistan.”

Chemonics International is also a member of The Development Executive Group, that shares business intelligence on development opportunities. If you’re looking to make money on a contract developing somebody else’s Third World country, check it out here.

It seems pretty clear to me that, for a fee, they’re out to help those that are in it for the money.

Small Business Member Benefits Include:

Weekly email listing new projects and procurements (WB, EuropeAid, USAID, DFID, AfDB, ADB, IDB, EBRD, other untied bilaterals)
Reports on each project and procurement including shortlist and contract award information with contacts
Contact information for agency and government officials tied to specific projects
Post online job advertisements for $275 per ad (a savings of $100 per ad)

All this talk about USAID brought me to their web site, and specifically back to Mali. There, on page 5 of the April edition of BAM!, their Mission newsletter, we get back to the subject of hand-cranked radios! This time, the model is from a competitor. It’s the Freeplay Ranger, from Freeplay Energy, Plc. This would explain the healthy self-interest behind Eton’s donation to HKI. They are distributing complimentary product in a competitive market for the purpose of market penetration.

According to Freeplay Energy’s 2004 Financial Statement:

“The restructuring exercise, which began in 2001was completed in 2003 and has delivered satisfying results in this reporting period. The exercise included the closure of our manufacturing operations and the outsourcing of product manufacture to China.”

And that brings us back to The People’s Republic of China as the vendor of wholesale hand-cranked radios. This seems like a lucrative business to be in right now.

I have only these final observations to make about radio as a tool for socio-economic development. Radio is easily controlled and censored by the political powers in a given geographical area. Radio is linear in time, meaning that one can only listen to one broadcast at a time, and only if one is listening at the proper time. A radio of this kind is a one-way communication device. A better use for some of the money might be the distribution of hand-cranked laptops. These could be used in conjunction with the Internet and USB memory sticks to distribute more permanent and of course less controlled information. Too bad that wouldn't sit well with some of the pisspot dictatorships that these humanitarian organizations have to pander to and indirectly bribe to get into these countries in the first place.


At 7:08 AM, Blogger Darius said...

Yeah, the laptops would be better.

I don't know how the world gets rid of that dictatorship tendency. It seems as though the very people who are more likely to be seriously interested in power and wealth are often into these things for their own sake, not because they are means to the end of any larger good. A perennial problem...

At 8:49 AM, Blogger Romeo Morningwood said...

Woodward and Bernstein LOOKOUT!
Sensational expose, so much to digest as your blood boils.
Gives new meaning to those ubiquitous made in china labels and imprints that are on the back of everything that I own.
They really do have it MADE in China.
Maybe les Chinois will eventually stumble upon little items like Mao murdering 3o million of their grandparents once the technology escapes government control.
I personally hope that they do find out the truth before they become the next global superpower...Ya Right.. like that could happen..
Keep CRANKIN' out the good stuff

At 8:34 PM, Anonymous Anonymous said...

Somehow the image of a bulldog springs to mind - a very strong, very intelligent bulldog with flashing eyes and a set of the jaw that would make Kirk Douglas proud. This post waltzed with danger as it became incredibly long, but you didn't lose me. Not bad.
Oh, and the subject matter chilled me to the bone. Greed and avarice really do make the world go round, don't they? Now all we have to decide is whether or not to be seduced by the dark side ourselves...


At 4:49 PM, Blogger breakerslion said...

Thanks all. This post was almost embarrasingly long, but I didn't know any way to make it shorter. I left out a bunch more "Kevin Bacon" stuff. There were four more journeys like the thread I illustrated. All of them left me wondering who was being altruistic and who was looting.

At 9:59 PM, Anonymous Anonymous said...

You would probably laugh knowing that our ministe for the "environment" in Colombia, Sandra Suarez, recognizes Chemonics as a non-profit NGO organization. Suarez was previously a seller of cosmetics, jumped as a minister (she is a closer friend of the President) and now is going Harvard! Our contry is now known as a paracocracia or the goverment of the paramilitars.

At 8:54 PM, Anonymous Anonymous said...

Eh. I was hoping to see some insight, something insider, something smart. I used to work for Chemonics, and I see nothing here. Ah well.

At 5:10 PM, Blogger breakerslion said...

@ Anonymous:

"Eh. I was hoping to see some insight, something insider, something smart. I used to work for Chemonics, and I see nothing here. Ah well."

I am not an insider. I can, however, smell a scam.


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