Peter Navarro blasts China’s trade policies.
  • Peter Navarro blasts China’s trade policies.
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"Once more into the breach!” shouts steelmaker Nucor, as it rallies troops to fight China’s trade abuses. But in its zeal, Nucor has been criticized for another kind of breach: of ethics.

Now the big Charlotte, North Carolina company is marching its troops through San Diego by plunking $1 million into a China-bashing documentary. That is its right. But the circuitous route of this financing is puzzling, to say the least.

Late last year, Nucor donated money to MSNBC’s Dylan Ratigan Show for an unusual bus trip around the United States, focusing on such things as jobs and innovation. At various stops, Ratigan’s shows would hit on these themes. Critics wondered if this was an unholy alliance. Would Ratigan tout Nucor?

“I won’t talk about Nucor on the air, absolutely not,” Ratigan vowed. Then he broke the vow: in a five-minute segment of one show, Ratigan toured a Nucor plant, loudly praising the company’s “incredible” steelmaking process and “family” atmosphere that enhances productivity.

The Associated Press cocked an eyebrow. So did TV networks, critics, and bloggers. MSNBC was giving editorial plugs to its sponsor. The rave reviews should have been in a paid ad.

“We were hit hard by competing media outlets for our support of the Dylan Ratigan Show,” says Patrick McFadden, executive director of Nucor Public Affairs. But the company’s war with China continues.

An academic who has been blasting China’s unfair trade tactics is Peter Navarro, business professor at the University of California Irvine. This is the Navarro who lost five elections in San Diego — for mayor in 1992, city council in 1993 and 2001, county supervisor in 1994, and Congress in 1996.

In books, TV shows, seminars, and the like, Navarro has been strafing China for such practices as keeping its currency artificially low, subsidizing its manufacturers, paying very low wages, polluting the environment, and shipping dangerous products.

Greg Autry

Greg Autry

Navarro and Greg Autry, a PhD candidate at UC Irvine, recently coauthored a blistering attack on Sino-cheating, Death by China. The book calls China the biggest threat to global peace since Nazi Germany. The tome scalds China’s “ruthless rulers,” “thugs,” “frighteningly amoral society,” and “deadly consumer products,” attacking “America’s policy of appeasement” toward China.

And that’s why Navarro and Dan DiMicco, Nucor chief executive, have formed a bond. Death by China urges business executives “to be like Nucor.” Enthuses the book, “If American corporate executives want to better understand the art of fighting back against Chinese mercantilism and protectionism, they need look no further than Nucor…and the example set by its [chief executive officer], Dan DiMicco [who] spends considerable time in the public arena lobbying for real trade reform with China.” This contrasts with “naive or even turncoat” approaches by other chief executives.

It’s little wonder that DiMicco has high praise for Death by China. He has also heaped kudos on other Navarro books. Navarro and DiMicco have cowritten online op-eds slamming China for both Barron’s and the Wall Street Journal.

So when Navarro wanted to do a documentary based on Death by China, he turned to Nucor. “We were approached by Peter Navarro to support his film, which we felt was important work and needed to be done,” says McFadden.

UCAN’s Michael Shames involved the consumer advocacy group in shady funding of an anti-China documentary.

UCAN’s Michael Shames involved the consumer advocacy group in shady funding of an anti-China documentary.

But then came the mystifying twists and turns. Navarro wanted the deal done through Utility Consumers’ Action Network (UCAN), the San Diego nonprofit that fights utilities. Navarro has done extensive work for the organization on telecom issues, and he and Michael Shames, head of the organization, are friends. “UCAN was suggested by Peter as being the best vehicle for the film, so we made the contribution as requested,” says McFadden.

Internal UCAN paperwork supplied to me by a whistle-blower shows the money trail. In March, Michael Shames entered into a consulting agreement with Death by China Productions LLC. The California secretary of state lists the address of this firm as the same as the accountant who registered it — obviously, not true. However, one contract signed with UCAN puts the address at a fixer-upper home near the ocean in Laguna Beach. Navarro told the accountant not to reveal the address or ownership information to me.

UCAN agreed to pay $1 million to the production company in three installments, the last of which will be January 15 of next year. According to an internal document I have received, UCAN has deposited two checks from Nucor — one for $600,000 and one for $400,000.

On March 7, Shames wrote McFadden, “This is to acknowledge receipt of $600,000, the full sum of which will be used to fund the production of documentary film work under the direction of Peter Navarro.”

So, UCAN gets $1 million from Nucor and passes it through to Death by China Productions LLC. But why? Is there a tax advantage for Nucor to run the money through a nonprofit organization?

In interviews, lawyers and accountants specializing in corporate taxation have differing views. The question is whether Nucor could have paid the production company directly and written it off as an ordinary or necessary business expense, or gotten a better tax deal paying it to a nonprofit organization first.

“It seems somewhat deceptive,” says one attorney, wondering if going through a charitable organization “might be easier to explain to shareholders.” All told, he thinks that Nucor could get the write-off either way — also the opinion of a second attorney.

“The corporation may be more likely to get a tax deduction if it goes through a nonprofit,” says another attorney. Still another flatly says Nucor would get the bigger write-off running the money through a nonprofit.

“There is a concept that running money through a charity looks better; there is a cachet or aura about using a nonprofit — an aura of goodness,” says an accountant.

“We have no preference regarding for-profit or nonprofit associations and contribute to both,” says McFadden. “We have no idea if Peter plans on mentioning Nucor in the film or not.”

An unanswered question is who owns Death by China Productions LLC. Is it Peter Navarro? I could not get the answer through state records or the accountant who registered the production firm. Possibly Navarro gets a tax break if the money goes to UCAN first.

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Comments

clockerbob Aug. 24, 2011 @ 11:08 a.m.

The company, China Construction America, has won contracts on major public works projects, including the Tappan Zee and Alexander Hamilton Bridges, the No. 7 subway line extension and the $91 million Metro-North Railroad station at Yankee Stadium. .... In one of the largest loans by a single lender in the city since 2008, the Bank of China lent $800 million late last year to refinance a building on Park Avenue housing JPMorgan Chase and Major League Baseball….The Bank of China recently agreed to lend more than $250 million to refinance an office tower at 3 Columbus Circle. The economic chasm between (our banker) CHINA and USA is widening. How many global trade deals or mineral resources (Mines-1 in Afghan & oil wells -2 IN Iraq) has China brokered for while we've been debating our budget? iF YOU'LL NOTE IN THE DEBT CEILING DISPUTE THE ONLY THING THAT BOTH the Republicans and Democrats agree on is that we will pay the interest on our national debt to China before we pay social security, Medicare, our armed forces etc.Meanwhile, on the "morning joe" tv show a guest lifts a coffee cup and reads from the bottom made in china. then says cups and caps are all china makes.

<p>www.clockerbob.com

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Don Bauder Aug. 24, 2011 @ 12:44 p.m.

Navarro's opinions on China are legitimate ones. I wouldn't handle the situation as he and Nucor would, but his conclusions are well-grounded. China is indeed a mercantilist nation. Other countries, are, too, particularly emerging ones. The questions I raised in this article are about the means by which the movie is being financed. I do not know why the money moved from Nucor to UCAN and thence to the production company. Neither Navarro nor Shames will answer any of my questions. Best, Don Bauder

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Dennis Aug. 24, 2011 @ 1:03 p.m.

China is flooding the US with substandard products claiming to be stainless steel. I have several expensive knife sets & other kitchen utensils made from chinese stainless steel. Every one of them has in a very short time developed pits and rust spots. American companies such as Revere Ware now have their products made in China with substandard materials and continue to charge high prices for the products.

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Don Bauder Aug. 24, 2011 @ 3:12 p.m.

There is no question that China is flooding the nation with substandard and often dangerous products. There is no question China is keeping its currency artificially depressed. It pays very low wages and ignores the environment. The competition is unfair. The question is whether we want to launch a trade war with China. History shows us that trade wars depress the world economy. If Navarro's documentary poignantly dramatizes China's mercantilism, he and his sponsor Nucor will have provided our nation a service. I want to know about the flow of money. Why did it go from Nucor to UCAN to the movie's producer? Does Navarro own the production company? Best, Don Bauder

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SurfPuppy619 Aug. 24, 2011 @ 4:57 p.m.

There are only 2 news shows I would recommend on TV -Dylan ratigan and Judge Naplitano's Freedom Watch.

Lou Dobbs is close too.

Navaro is on the money. ANYONE with any business sense knows China is ripping us off, and has been for years with th ehelp of Bush type Presidents and a bought and paid for congress who allows it.

This is ALL YOU NEED TO KNOW, this video was 100% on the money and true 20 years ago-and nothing has changed. Watch it, learn, help save America;

. http://www.youtube.com/watch?v=Rkgx1C... .

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Don Bauder Aug. 24, 2011 @ 6:21 p.m.

No argument. China is ripping us -- and other countries -- off. Best, Don Bauder

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hibob Aug. 24, 2011 @ 10:46 p.m.

Sigh. "Come to good, stay to do well ..."

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Don Bauder Aug. 25, 2011 @ 7:17 a.m.

Some are cocking an eyebrow at nonprofits. Best, Don Bauder

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Twister Aug. 29, 2011 @ 2:41 p.m.

"Rat again?" Are you kidding? Is this a comic-book world or NOT? That CAN'T be his real name!

Twister

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Twister Aug. 29, 2011 @ 2:44 p.m.

"Dere's a (or x-billon) sucka(s) borned ever minuet."

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Don Bauder Aug. 29, 2011 @ 8:26 p.m.

Every minuet? There are wonderful minuets in so many symphonies -- particularly those by Mozart. Best, Don Bauder

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Twister Aug. 29, 2011 @ 8:35 p.m.

Dey dans not, neider du dey spin, yet . . .

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Twister Aug. 29, 2011 @ 2:56 p.m.

"'Twill be interesting to see who gets canned at UCAN. Do I smell a WT suit?

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Don Bauder Aug. 29, 2011 @ 8:28 p.m.

There are many unhappy workers at UCAN and some are playing the role of whistleblower. If UCAN merges into TURN, there will be some bloodletting, surely. There may be plenty even if there is no merger. Best, Don Bauder

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Twister Aug. 29, 2011 @ 3:02 p.m.

Sunset. As in power links? As in the end is near, as in the twilight zone? Shadows? Sunlight? Transparency? Who knows what potboilers lurk in the hearts of men . . .?

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Don Bauder Aug. 29, 2011 @ 8:29 p.m.

Those who write potboilers are on the prowl for such material. Best, Don Bauder

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Don Bauder Aug. 29, 2011 @ 8:36 p.m.

Full moon and well-stocked arms? Best, Don Bauder

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