Ethics training needed for Indiana firms doing business in China, expert says
Posted: 04/02/2013 at 6:00 pm
By: Tim Vandenack
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“We have to educate our people, make them aware of differences between here and China,” said Dennis Kelley, president of Indianapolis-based Pacific World Trade.
The topic has emerged in Elkhart County ever since charges surfaced that Elkhart County Commissioner Terry Rodino traded on his elected post to help engineer the sale of five recreational vehicles to a Chinese company. The deal, according to charges outlined in a civil lawsuit filed by a pair of estranged business partners, allegedly netted Rodino around $105,000, maybe more.
Rodino — who, as county commissioner, traveled to China three times as an ambassador of sorts to promote cultural and business links between the nation and Elkhart County — hasn’t yet formally responded to the suit. One of his lawyers, Spencer Walton, has rebuffed suggestions of wrongdoing, though, and Elkhart County’s legal rep doesn’t think Rodino violated the applicable state conflict-of-interest law.
Still, Indiana businesses and businessmen aren’t immune to ethical lapses when doing trade with China, intentional or not, and Kelley thinks it behooves those promoting trade there to get up to speed on the norms. Pacific World Trade consults Indiana communities trying to establish cultural and business relationships with China and also manufactures automotive products there for export to the United States.
“People just need to be aware of these things before they get on an airplane and go,” Kelley said.
PWT has advised many Indiana communities in developing so-called sister-city relationships in China, including Indianapolis, Columbus, Franklin, Kokomo, Fort Wayne, Anderson and Muncie, though not Elkhart County. Around 20 Indiana communities in all, Kelley estimates, have sister-city relationships in China, 16 of them, like Elkhart County, with locales in the province of Zhejiang.
The lure to establish ties with China is apparent — its economy is growing quickly and the nation has a lot of potential investment funds to spread around, Kelley notes. Nonetheless, good business practices can’t be forgotten.
Kelley didn’t comment directly on the allegations surrounding Rodino, but said he’s hoping to organize a series of seminars around Indiana on the issue of ethics and trade with China for the fourth quarter of the year. The focus would be the ethical differences in China and the United States as well as things like electronic security in light of recent reports of digital espionage against U.S. companies.
At least three Indiana-based companies have been linked to corruption or allegations of corrupt behavior in China in recent years:
• A Warsaw-based medical device company, Biomet Inc., agreed to pay more than $22 million in fines last year in response to charges of corruption levied by the U.S. Securities and Exchange Commission. The SEC, according to a press release, had charged that Biomet and four subsidiaries paid bribes to doctors in China, Argentina and Brazil to promote business.
• Indiana drugmaker Eli Lilly and Co. agreed last December to pay $29 million to settle civil charges by the SEC that subsidiaries in China, Poland, Russia and Brazil made “improper payments” to foreign government officials to win business, according to the news agency Reuters.
• An employee of Indiana-based Allison Transmission accused the firm of violating U.S. anti-corruption laws involving business in China, according to a 2011 Indiana Business Journal report. The worker was subsequently fired and he filed a wrongful-termination suit against the firm, which was settled in January 2011. Allison didn’t comment on the allegations, but the IBJ reported that the firm could face a federal review.
In another case, the Indianapolis Star late last year published an extensive report, The China Letter, outlining apparent improprieties, maybe outright bribery, involving a woman linked to the Indiana Economic Development Corp. The woman allegedly overstated her connections with the IEDC in promoting business ventures in China and profited personally, as described in the report.
In Rodino’s case, according to the suit against him, he helped secure the RV sale, profiting personally, ostensibly using his post as county commissioner to help open doors and opportunities. Rodino, who operates an Elkhart County pallet-making company, never used county funds in traveling to China. Others have said they always understood his intentions there to be two-fold — to encourage interest in Elkhart County and search for business opportunities.