Who Are These Guys?

Developing countries and nations which have gone through socio-political restructuring create a whole new class of landowners and new bourgeoisie business owners. In Russia, shock and surprise, the new power elite are a combination of high-ranking former Soviet officials, with lots from the dreaded KGB, and gangsters. In China, it’s the “princelings” (those with high-ranking familial relationships in power) and their designees. At least China seems to care about letting more of its citizens share the wealth. This kind of empowerment creates an unsavory combination born of inhumanity and fertilized in the ugly world of out-and-out bribery and corruption. But historically, it is where longer-term, legitimatized and normalized power comes from.

Not that we in the West should get too smug about the purity of our power elite. You have only to look at the alleged ties of the Kennedy clan, which produced a President and long-serving U.S. Senators, to gun-running during prohibition. Or to the background of the powerful family – the “House of Hohenzollern” – that eventually produced a monarchy that exercised its dominion over Prussia, Germany and Romania. “Hohenzollern” is a name that says it all. It literally means “high toll” and suggests that the banditry and highwaymen-actions of this family in their earliest days made them rich enough to rule.

When American companies seek their cheap labor manufacturing centers overseas, they face the limitations of the U.S. Foreign Corrupt Practices Act that makes it an American crime to bribe foreign officials… but they also face the reality that they are exceptionally likely to deal with the unsavory characters who own so many of the factories-as-sweat shops in poorly constructed buildings with horrific working conditions. Most Americans have focused on the horrors of forced labor or the use of child labor, even though for the poorest of families, not having their little ones work often is the difference between subsistence and starvation. But the mainstream of cheap manufacturing, even without forced or child labor, is equally horrific.

I learned who really ran things as the son of a U.S. diplomat living in Beirut, Lebanon decades ago. We lived in a pretty nice apartment, with our landlord taking a very swanky penthouse apartment at the top, with tons of Mercedes and drivers, lots of servants and a clearly ultra-luxurious lifestyle. I asked my step-dad where he had made his fortune. He looked at me with sad eyes and said, “He’s the head of the longshoremen’s union.” Oh. Lebanon’s Jimmy Hoffa.

Which brings me to the recent mega-disaster in Bangladesh where thousands were injured and over 800 people were crushed to death in the collapse of a huge building – Rana Plaza – that housed five textile sweat shops. Factories that made cheap clothes for Western buyers, including American (like J.C. Penny) and British companies. Despite the desperate warnings of a structural engineer reacting to serious cracks developing in the building in dangerous and vital support points in the building, the factory and building owners threatened employees who failed to go back to work with permanent loss of their jobs in a land plagued with poverty and massive unemployment. Why shouldn’t the owners require their workers back to a badly-built structure when the government itself admitted that 90% of the local buildings were not built in compliance with building codes? How else are contractors going to make money unless they hold back on the amount of required (expensive) steel or use a cheaper (and much less solid) quality of concrete? It’s just the way things are done there… and in oh so many developing countries.

Riots followed. Anger in the capital city of Dhaka and its suburbs seethed as crowds demanded the arrest of the callous building-owners and managers who let this happen. Eventually, the government was forced to make key arrests, but the kingpin in this mess reminded me of how ruthless criminals often become the founding members of wealthy dynasties that eventually forget their criminal roots. The culprit is a 35-year-old man named Sohel Rana (hence the name of the building), leader of a biker gang (his favored mode of transportation was also a motorcycle) an “untouchable as a mafia don, trailed by his own biker gang. Local officials and the Bangladeshi news media say he was involved in illegal drugs and guns...

“Criminality and politics have long intersected in Bangladesh, especially at the local level. But the garment industry has introduced what had mostly been the missing element: money. Savar land values [where the collapse occurred] soared as new factories hurriedly opened to meet the new Western demand… To build Rana Plaza, Mr. Rana and his father bullied adjacent landowners, the landowners themselves say, and ultimately took their property by force. His political allies gave him a construction permit, despite his dubious claims of title to the land, and a second permit later to add upper floors that may have destabilized the building. 

“Mr. Rana existed largely above scrutiny. Many local people say his political clout was such that not even the police dared to confront him. Television stations reported the cracks in the building the night before it collapsed, but no local authority prevented Mr. Rana from opening the building the next morning… ‘Money is his power,’ said Ashraf Uddin Khan, a former mayor of Savar, who accused Mr. Rana of being deeply involved in the drug trade. ‘Illegal money.’

“Before Rana Plaza collapsed, Bangladesh was already in turmoil, as opposition political parties were staging nationwide strikes, known as hartals, that paralyzed the country and placed huge pressure on factory owners to meet deadlines. Weeks earlier, the Bangladesh Garment Manufacturers and Exporters Association warned that the hartals had cost Bangladesh as much as $500 million in business.” New York Times, April 30^th.

So keep those workers working no matter what. Sohel Rana’s the cuffed guy in the protective helmet and bullet-proof vest pictured above. If only a few people had been killed, likely that Mr. Rana’s life would not have changed much at all. He’s a nasty SOB, but fault lies with so many players that as horrible a human being as he may be, he’s literally just an expendable scapegoat for a system that is very unlikely to change anytime soon.

A few days later, eight more victims died in a garment factory fire, and while the government closed 18 factories for “safety violations” on May 8^th, the country would have to shut down most of these sweat shops to make a difference. There’re will be hearings, political promises, token efforts as noted above, but really, greed will probably keep things the way they are.

I’m Peter Dekom, and global competition is pretty nasty, but we are the demand part of the equation that keeps the system running the way it always has.