[Congressional Record Volume 158, Number 150 (Wednesday, November 28, 2012)]
[House]
[Pages H6485-H6486]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HEIDTMAN STEEL
(Ms. KAPTUR asked and was given permission to address the House for 1
minute.)
Ms. KAPTUR. For decades, America's trade policy has been broken. When
Congress granted permanent normal trade relations to China, those of us
in Congress who opposed the deal were promised that U.S. businesses
would be treated fairly in China. Well, that didn't happen. Instead, we
see cases of corruption and outright theft with little or no justice
for U.S. companies.
In our Ohio district, one of our local manufacturing companies,
Heidtman Steel, was the victim of corrupt business practices in China.
Heidtman supplies steel to the U.S. auto industry. Heidtman took a
chance by trying to do business in China. Do you know what? They
essentially were robbed by a Chinese company. After 8 years of trying
to get justice, Heidtman is still owed $7 million.
I've asked the Chinese Ambassador and their government for answers to
this case, and our Federal trade establishment needs to be more
forceful on issues of business fraud. America and the Congress should
not stand idly by as American companies are fleeced and as the promises
of a level playing field are broken.
[From the Toledo Blade, Nov. 21, 2012]
Heidtman Steel Products, Inc. Says Chinese Firm Owes It $7 M
(By Ignazio Messina)
A Toledo company that has supplied steel for the Detroit
Three automakers and raw materials to steel mills says it was
duped eight years ago by a Chinese business that claimed to
have a great supply of coking coal for sale.
After nearly a decade of legal wrangling overseas, Heidtman
Steel Products Inc. is still owed nearly $5.9 million, plus 5
percent interest from the Chinese company. The interest
brings the award to about $7 million.
``A simple business transaction. Well, it never shipped and
they never returned the money,'' said Mark Ridenour, chief
financial officer for Heidtman Steel. ``I think we got ripped
off, to be perfectly honest. I think we got shanghaied.''
Toledo Mayor Mike Bell and about 20 local businessmen left
for China on Nov. 13 and are to fly back today.
The mayor has been urging Toledo businesses to explore
doing business with Chinese investors and businessmen.
The trip to China to seek investors is Mr. Bell's fourth.
His spokesman, Jen Sorgenfrei,
[[Page H6486]]
reached in China on Tuesday morning, declined to make the
mayor available for comment about the problems Heidtman Steel
had in China.
In December, 2010, an arbitrator in Geneva agreed with
Heidtman and ordered the Chinese company--Hebei Huiyuan Group
Tangshan Import & Export Co. Ltd.--to repay $3.5 million plus
other costs for 44,000 tons of coke it had promised to
deliver but did not. Two years later, Heidtman is still
without its money and never received the shipment.
In 2004, when coke was difficult to obtain and the price of
steel was sky-high, John Bates, Heidtman's chief executive
officer, thought he had found a supply of coke to satisfy his
customers.
``We became aware that there was maybe some coking coal
available in China for export to the United States, so our
CEO went over and met with some individuals,'' Mr. Ridenour
said. ``We signed a contract [and] made a payment in order to
obtain this coking coal, which we would then turn around and
sell to a steel producer; in this case, it was SeverStal.''
The deal with Hebei was signed on Nov. 13, 2004, and the
money was wired three days later. The coke was supposed to be
waiting on a dock in China north of Beijing on Dec. 5, 2004.
After Hebei failed to deliver the coke, Heidtman agreed to
cover the difference between the contract price and the cost
of buying 44,000 tons of coke on the dock from another seller
to honor its commitment to SeverStal. In January, 2005,
SeverStal demanded $1.68 million from Heidtman for the
purchase price difference of that coke and extra shipping
costs.
The arbitrator awarded Heidtman $3.51 million as
reimbursement and the $1.68 million it had to pay to
SeverStal. Heidtman was also awarded $440,000 plus $185,876
in legal fees, hearing costs, and arbitration fees.
Xu Jianguo, chairman and legal representative of Hebei,
could not be reached for comment at his office in China. Mr.
Xu and the company are listed on a variety of Chinese-
language Web sites. One site calls him ``the city of Tangshan
coke king'' and says that he has been chairman of the board
of the Entrepreneurs Association of Hebei Province, Tangshan
City Federation executive committee.
Mr. Ridenour alleged Mr. Xu asked for an additional $10
million after the coke shipment didn't arrive at the docks.
John Carey, a lawyer with Eastman & Smith Ltd. who is
working for Heidtman, said the arbitration award has been
ignored but there are legal options in China.
``We have a two-year window to do something with it in
China,'' Mr. Carey said. ``We have had a Chinese lawyer in
Beijing for about a year trying to help us. . . . We have
been told by everybody and their aunt that you can go through
the Chinese judicial process if you want to; it will take a
really long time; it will be really expensive, and really
there is no certainty for outcome.''
Derek Scissors, an expert on China and an Asian scholar at
the Heritage Foundation in Washington, said he was not
surprised to hear about Heidtman's troubles with the Chinese
company. He said American companies should first check out
businesses in China before proceeding because recovering
money in a legal dispute is very difficult.
``No certainty for an outcome is an understatement,'' Mr.
Scissors said. ``The fundamental problem for the U.S. is that
it wants to encourage private Chinese companies, but private
does not mean ethical or well run. . . . It could be owned by
thieves and all of these companies have the shelter that they
are not going to be forced to pay unless they have other
overseas exposure.''
Mr. Scissors said American companies in similar disputes
will not get a judgment on any basis of law. ``There is no
rule of law in China,'' he said. ``Decisions are made on a
political basis and the top one is keeping people employed,
so if the Chinese company says it would have to lay off
workers to pay this order, then forget it, you are not going
to get squat.''
Mr. Ridenour admits Heidtman should have used an
international letter of credit rather than paying up front
for the coke.
``This was our first foray into China and maybe our last,''
he said. ``It's a story about the perils of doing business in
China without having your behind protected.''
Heidtman and its law firm have asked for help from U.S.
Sen. Rob Portman (R., Ohio), U.S. Rep. Marcy Kaptur (D.,
Toledo), the U.S. Department of State, the U.S. Department of
Commerce, the American Embassy in Beijing, and the
International Chamber of Commerce.
Miss Kaptur said she is trying to ``get justice'' for
Heidtman by going through official channels.
``I am seeking a personal meeting with the ambassador from
China to the United States and we have asked for that meeting
and we are waiting for a reply,'' she said. ``We are
operating with a country that does not have reciprocal trade
practices. They do not have a rule of law and they do not
abide by the normal practice of global trade.''
She said Heidtman's situation is a cautionary tale.
``This is indicative of many American companies doing
business in China,'' Miss Kaptur said.
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