Sunday, March 27, 2011

Disaster profiteers

A few days after the devastating earthquake and tsunami destroyed cities and killed thousands across northern Japan, I got a note through LinkedIn from an acquaintance in Canada that seemed innocuous enough.

"Hi Alex,

I and a friend in China would like to supply the Japanese government with goods for their relief effort. I wondered if you have any Japanese government contacts who can either contract with him directly or steer him in the right direction."

At the time, I was touched at the number of emails I was receiving from friends around the world who knew my connection to Japan and wanted to help the hundreds of thousands of people whose homes had been destroyed and were now huddled in shelters without adequate food, heat or medicine.

The Canadian's response to my email saying I would do what I could to help was straightforward. He looped in his friend, whom we'll call Kevin, in China, and outlined what they might be able to provide: blankets, food, all "on short notice". That should have been my first clue - of course it's on short notice. These are donations to a disaster zone.

Then Kevin wrote.

"Hi Alex,

i can provide both canned and bulk packed food stuffs. as for the logistics i need to get a better idea of the conditions of the ports as well as the airstrips in the affected zones, if necessary i can go myself to asses this. as for the issue of the jammed roads i can assist with the arrangements and logistics for temporary landing zones for aid helicopters and coordination of air drops, as well as work out a means of opening the roads and coastal shipping channels so that we may move supplies through and around japan. As [the Canadian] mentioned i am available on short notice to meet with Japanese authorities, i can be in japan by early evening if necessary so that we can begin to coordinate our part for the relief effort."

I was a little taken aback by Kevin's note - he needs to "get a better idea of the conditions of the ports"? didn't he have a television? - but this still didn't set any alarm bells ringing. As I had done with other requests, I sent out a note to a network of friends in Japan and the US asking for contacts in Japan who could help facilitate what sounded like a generous donation of much-needed supplies, from China no less. I even introduced him to a Japanese businessman friend who had found a way to donate the products his company made and get them up to the quake zone.

Kevin then emailed my friend:

"Hi Daisuke,
>> firstly i would like to commend you on your tremendous efforts thus far,
>> it is rare to meet people such as yourself and i only wish it could have
>> been under better circumstances. If you will be willing to work with me,
>> and help put me in contact with the right people to organize large scale
>> shipments of supplies to Japan i can also assist you with the logistical
>> aspects of distributing the goods to all the victims. first i must come to
>> japan to asses the status of the air strips, roads, and ports: i will need
>> your help to gain permission from the local authorities to travel to these
>> areas. at the same time i can arrange for fast shipments of goods such as
>> blankets, clothes, shoes, batteries, flashlights, and raw dried foodstuffs
>> such as rice, red beans, and dried corn. I will need your assistance with
>> finding out the budget for these supplies as well as arranging the
>> contracts etc. depending on the status of the ports and air strips i will
>> determine the quickest way possible to get goods into the country. if you
>> will be able to help me arrange a meeting with some of the coordinators of
>> the relief effort i can be on the next flight to japan. once in japan i
>> will be able to better coordinate the air drop sites as well as the
>> alternative routes for getting supplies to victims in all areas. please
>> feel free to contact me any time day or night ..."

It was only with this email that Kevin's real game became obvious to me. Kevin and the Canadian saw the earthquake as a perfect business opportunity for their sourcing company. Though they clearly had no experience in selling goods into a disaster zone (if they did, they never would have asked me for help) they were perfectly happy to monopolize the time of local officials, the military and others who were working around the clock to help - all in order to make a quick buck. This, while people who actually knew what they were doing were rushing to get donations to the affected areas.

When I wrote Kevin to ask if this was his intention, he insisted that he was not trying to make any money at all, but that this was "billions of dollars worth of supplies" that needed to be paid for, and the Japanese government had the money. He even thought this a good moment to plug his own business. "now," he wrote, "i am able to get the cheapest prices and the quickest ship dates ...".

Yes, after a decade and a half of writing about business, even having spent time working with hedge fund managers, I was still surprised at the complete absence of a moral calculus here. I told Kevin and the Canadian that I was only helping people who were making donations, not trying to profit from disaster.

A week later, I received an email from the Canadian with the subject line "You are right". As an elected local official, he said, he proposed a fund-raising event to offer donations to Japan. Would I be interested to help?

Would you have helped him?