/javascript" src="../static/js/analytics.js"> CalTrade Report - CTR COMMENTARY: Sacramento is Shocked! Shocked! - CTR COMMENTARY: Sacramento is Shocked! Shocked! - Newspaper investigation of California'../">CalTrade Report Asia Quake Victims Politicos, trade agency director attempt to avoid responsibility for mismanagement of California's overseas trade offices; legislators propose closing the offices to save face. - Politicos, trade agency director attempt to avoid responsibility for mismanagement of California's overseas trade offices; legislators propose closing the offices to save face. - CTR COMMENTARY: Sacramento is Shocked! Shocked!  - CTR COMMENTARY: Sacramento is Shocked! Shocked!


Tuesday, June 13, 2006


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CTR COMMENTARY: Sacramento is Shocked! Shocked!

Newspaper investigation of California's overseas trade offices sets legislators scurrying for the moral high ground.

LOS ANGELES - Remember "Casablanca?" One of the greatest films ever produced, it contains one of the most hilarious scenes ever filmed.

It's December, 1941. The city of Casablanca, under the control of the pro-Nazi Vichy French, is crammed with refugees willing to work any deal to gain an exit visa that would clear the path to an escape to America and freedom.

Capitaine Louis Renault, the worldly, cynical Vichy French police official, is ordered by the evil Nazi, Major Strasse, to close down "Rick's Caf頁mericaine" - WWII Casablanca's Studio 54, as it were - after a soul-stirring?"Free French vs. Nazi" musical showdown orchestrated by escaping resistance leader, Victor Laszlo.

Renault is confronted by an angry Rick Blaine and asked for a reason why the club should be shuttered. Fishing around for the first thing that comes to mind, Renault responds, in a voice loud enough for all to hear, "I'm shocked! Shocked that gambling is going on in this establishment."

No sooner do the words leave his mouth than the club manager approaches Renault with a handful of cash saying, "Your winnings, m'sieur."

Fast forward to California, circa?June, 2003.

Out of left field, a trio of stories appear in the Orange County Register lifting the rock, so to speak, on the?alleged mismanagement of California's overseas trade offices.?

Well written and researched by Sacramento-based OCR?reporter Kimberly Kindy, the?exhaustive pieces level a broadside at'the state's 12 overseas trade offices and how their managers have claimed credit for "millions of dollars in false and overblown claims about the business deals they said they were instrumental in brokering."

More than $40 million in fact.

But the fun's just starting. Grab your popcorn, put your feet up and get ready for Renault redux

Sacramento's reaction The same as the red-faced Capitaine's.?

Shocked is Lon Hatamiya, the political appointee who acts as secretary of the Technology, Trade & Commerce Agency, told the Register, "Make no mistake, we will not tolerate any misrepresentation of the trade office's work."

Shocked is State Senator Dean Florez (D-Shafter), chairman of the Banking, Commerce and International Trade Committee, intoned, "It looks like they are fabricating information to justify their existence. We need to get beneath the top layers and talk directly to these office managers," he pontificated, alluding to a scheduled July 2 committee meeting in Sacramento that will bring all of the 12 trade offices managers together under one roof "to answer detailed questions." This," he said, "is going to be one of their few opportunities to make a case for whether they should continue to operate."

Shocked is Senator Joseph Dunn (D-Santa Ana) sent a letter to the chairman of the Senate Budget Conference Committee on May 29, two days after the last piece appeared in the Register. "From my perspective, this weekend's revelations have undermined any goodwill intended by the subcommittee's action and my courtesy vote [to approve some offices to allow the Agency an opportunity to make a case for allowing the offices to continue operating]. I urge you and the other conferees to eliminate all funding for all foreign trade offices."??

Also, shocked, and not to be outdone is State Assemblyman Lou Correa (D-Anaheim) who?joined the Greek chorus with a request for "a legislative audit to determine who lied about the numbers and the extent of the false and overblown claims." Those responsible should be fired," he steamed.

Really? Where should we start, Mr. Correa

How about with the top-level management of an agency that has no accountability in virtually anything it does, either overseas or within the borders of the state itself.

For years, the California Technology, Trade & Commerce Agency (CTTCA) has been a dumping ground for political appointees virtually all of whom have little or no experience, education, or interest?in international trade.

In fact, of the state's 12 overseas trade offices, six are managed by people appointed by Governor Gray Davis as political payback for support during his run for the governorship.

In the four years since Lon Hatamiya was named by Davis to head the Agency, the CTTCA, under his "leadership," has developed a bunker mentality by closing all of its offices around the state, including those in Southern California and the San Francisco Bay Area; virtually ended its participation in trade shows, expositions, or events, either in the state or overseas; squandered resources on expensive political junkets disguised as trade promotion missions that yielded little, if any, business; and frustrated qualified staffers in forcing them to work in a highly charged political environment that stifles initiative and breeds a Machiavellian mindset.

If that's not enough, the Agency, which squanders millions of taxpayer dollars every year, has failed to form and cultivate relationships with the scores and scores of international trade organizations, economic development agencies, and chambers of commerce that serve the business community from Otay Mesa to Crescent City; and squashed any effort to create and generate a proactive and visionary approach toward trade promotion by stifling internal criticism and shutting out advise and counsel from the state's international business community.

Simply, the Secretary of the California Technology, Trade & Commerce Agency has failed to do his job, yet he is untouchable, protected by a governor, who is, sources in Sacramento say, unwilling to face the political backlash that would surely flare if he were to can the first Asian-American to be named to a high level post in any California administration.

Let's not stop there. How about you, Mr. Correa? And you Mr. Dunn? And, oh, yes, and let's not forget you Mr. Florez?

The California State Senate and Assembly bear a lion's share of the blame for ignoring conditions within the CTTCA that have been festering for years.

It is, frankly, dishonest, cynical and self-serving for the Legislature to claim that these developments have, only recently, appeared on their radar screen.

We all owe a debt of gratitude to Kimberly Kindy and her editors at the Orange Country Register for their in-depth coverage of this issue. Such coverage has been long overdue in the mainstream press. But none of this is new. To say that her articles revealed facts that weren't common knowledge in the state's international trade community is false.

The sorry - dare we say criminal - state of the California Technology, Trade & Commerce Agency has been the topic of conversation over many a rubber chicken lunch at scores and scores of trade-related seminars, conferences, and other events over the years. A lot of rolled eyes and "what if" sighs.

The concerns have been communicated by numberless business professionals who've given of their time to travel to Sacramento, at their own expense, to speak at a seemingly endless loop of Assembly and Senate budget committees, trade sub-committees, and ad-hoc transportation infrastructure committees only to have their comments recorded, neatly bound, and filed away with a smile and "the sincere thanks of the members."

Simply, no one in Sacramento ever pulled their thumb out and listened.??

Late last year, a state senator proposed opening another trade office in Yerevan, Armenia, in a baldly political ploy to curry favor among the huge Armenian population base that dominates his district. Where was the ire then? Who scrambled to claim the moral high ground and thunder indignation?

Yes, silence. Hear the crickets?

The California State Legislature has been asleep at the switch and most, if not all, members of that august body have been blissfully unaware that the state even has overseas trade offices, let alone an Agency that's supposed to be held accountable for their management. Blissfully unaware, that is, until a not-so complimentary series of stories hit the front page of the Orange County Register, which only happens to be the second most widely circulated newspaper in the state.

To paraphrase the old joke, those who don't believe in the Resurrection of the Dead should be around a politician's office when a negative story appears in the press.

The fault for all this - and there's plenty to spread around - isn't in the trade offices California maintains in Japan, South Africa, Germany, Mexico or elsewhere. The fault lies within the city limits of Sacramento; to be specific, within the marbled halls of the Capitol Building.

The fault is in a political environment in Sacramento that has stifled any attempt to effectively promote California's global economy with a blanket of politics and bald self-interest. Given the Machiavellian environment in the state capital, it could be argued effectively that the managers of the trade offices felt they had no choice but to "cook the books." Sacramento says if you want to survive, you fabricate; you equivocate; you do what you feel you have to do to make sure that it's always somebody else's fault.

International trade is the very lifeblood of the state's economy. It is not a "sector" or an "industry." It is an umbrella that covers virtually every business activity from retail and manufacturing to tourism and entertainment.

California is the leading trading state in the world's leading trading nation not because of what happens in Sacramento, but in spite of it.

There's a lot that needs to be done to clean up the mess.

Here are a few suggestions.

De-politicize the California Technology, Trade & Commerce Agency. Run it like a real business?and staff it with people who have energy and real experience in international trade. Make it accountable and allow it to develop a track record over the long term no matter who sits in the governor's office or no matter what political party is in power at any given moment. Trade is neither Democrat, nor Republican;

Reactivate the highly successful California Export Finance Office (CEFO).? Created to guarantee loans for small and medium-sized businesses, the CEFO was, in years past, the best-run and most-active program of its kind in the country. It gave tangible help to small and medium-sized California exporters and is worthy of being revived as, unfortunately, it hasn't guaranteed a loan in more than three years;

Educate legislators about the role that international trade plays in the state's economy and hold them accountable to remain up-to-speed on developments that impact the economy. The state of South Carolina has a highly successful program to educate state legislators on international trade issues. The program is privately funded and all legislators are required to attend. There's no reason something similar couldn't be duplicated in California;

Reduce the number of overseas trade offices and consolidate their operations. There is no reason for two or three offices in Europe, while one would do. In addition, offer the managers of the offices remuneration based on a percentage of the trade deals they finalize;

Exploit the wealth of experience and knowledge in the state's international trade community to create and coordinate a state-wide network of information sources, educational programs to cultivate companies new to trade. This effort could be funded by grants or corporate sponsorships;

Work with?high schools and junior colleges to create a state-wide network of Trade Institutes offering educational opportunities and apprenticeship programs to get young people involved - and excited - about careers in international trade; and,

Lastly, and most importantly, foster an environment within the trade agency that encourages professionalism, accountability, and a proactive, creative, and visionary approach toward promoting the state internationally.

All this takes vision, purpose, energy, and a sense of common good, but, sadly, that's what's lacking in Sacramento. Politics reign supreme and the people be damned.

International business is a daunting enough exercise and California's international traders need all the help they can get; they don't need to be cut off at the neck by the broad sweep of a scythe wielded by legislators and others who have no concept of the destructive impact of ill-considered, band-aid quick-fixes, and want only to flap their arms, make a lot of noise and convince everybody that they're doing their jobs.

The proposal to simply shutter the California overseas trade offices would, in the long run, harm the state and its economy. It shows a fundamental lack of understanding of the role that personal relationships and face-to-face contact have in solidifying long-term and successful international business deals.

Reforming the offices - holding them accountable and supporting them as they deserve - would be a start in launching a long-needed critical appraisal of how "business" is done in Sacramento and spotlighting the deeply-rooted and systemic problems that, over the long-run, have the potential of dragging the state into an even deeper economic quagmire.
My fear is, to paraphrase, M'sieur Rick, that "We'll always have Sacramento."

Too bad. California, the nation, and the world deserve better.

Please get back to me with your comments. Feel free to call me at 323-255-6565 or e-mail me at mwhite@caltradereport.com.


Michael D. White
CalTrade Report



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