What Won't Improve Quality of Chinese Products

The Chinese government executed the former director of their Food and Drug Administration.  Zheng Xiaoyu accepted $850,000 in bribes from eight firms. Zheng optimized his personal income at the expense of the public and drug company customers.

The U.S. variation on this theme saw one third of publicly traded companies cheating on stock option grants at the expense of shareholders. Many corporate executives stole much more than $850,000. Yet only a handful face prosecution, much less jail time. Most issue a statement not admitting guilt, while returning ill begotten gains.

In China and America, leaders chose to optimize their pay at the expense of others. Noted management guru W. Edwards Deming said "Sub-optimization is when everyone is for himself. Optimization is when everyone is working to help the company."

Zheng's returning the bribes and confession were not enough to justify mercy. China executed him as a warning.  It came amidst a series of health scandals rocking the China brand. Canadian news called it "the strongest signal yet" that officials are serious about tackling product safety issues.

"Zheng Xiaoyu's grave irresponsibility in pharmaceutical safety inspection and failure to conscientiously carry out his duties seriously damaged the interests of the state and people. The social impact has been utterly malign."

Yan Jiangying, spokeswoman for the State Food and Drug Administration, said the case had brought only shame to the watchdog. "This kind of serious case of law breaking by a small minority of corrupt elements, as far as the entire system is concerned, really made us feel ashamed."

Small minority or systemic practice? China has a long history of huilu (payola), as do American branded multinationals.  Corporate giant Halliburton's Facilitating Payments Policy states:

It may be difficult to distinguish a legal facilitating payment from an illegal bribe, kickback or payoff.

China's action shows how ignorant they are about tackling their dangerous quality problems.  Given the execution, how many will step forward to report corruption? Dr. Deming spoke of the need to drive out fear as it distorts communication, processes and figures.

While people need to be held responsible for their illegal deeds, actions that impose fear could make China's quality problems worse. Dr. Deming asked "Are you in favor of quality?" If so, American and Chinese leaders have much to learn. That includes business and government leaders.  The Bush team has a long track record of "glitches", bumbling and instilling fear.

News reports indicated up to half of water in coolers in Beijing might be below standards. The official reponsible called it an "isolated incident". Might he be in fear for his life?

Way Congress Might Jettison Gitmo: Spinoff!

The U.S. Congress may take a lesson from the business pages to divest itself of the detention facility at Guantanamo Bay. They could sell it to private equity underwriter (PEU) for various uses. Who will line up to buy it? Will it be The Carlyle Group's new public infrastructure division or Mitt Romney's old employer, Bain & Company?

A smart acquirer would hold onto the asset hoping for Romney's election to the Presidency. Mr. Romney stated in a recent debate that he wants "more Guantanamo's". For holding onto the prison for two years max, a PEU could make some serious money selling it back to the feds.

If Mitt isn't elected other options remain for any enterprising PEU. The Cheney's like to vacation in "the tropics." Putting Dick on an advertisement for the resort might draw the persistently creepy from all over the world to the hot spot. In the ad Dick could say "It won't cost an arm and a leg, just a leg."

Bush Speaks on Different Americas

At the White House Conference on the Americas U.S. President George Bush noted "John Edwards is wrong about the two Americas. There's really five Americas. I normally use my toes to count out the five but since this is television I'll use my hand. This little Piggy is poor and has little purchasing power, this little piggy went to market and charged her bills on an already maxed out credit card, this little piggy had roast beef, while this little piggy had none, and this little piggy invested in a PEU (private equity underwriter) and screamed 'wee, wee, wee' after the syndication returned incredible profits. Oh and this whole hand wrote the check buying a huge Paraguayan estate sitting atop one of the world's largest freshwater aquifers. Don't you know water will be the next oil..."

Carlyle Pays Through the Nose for Sequa Corp.

With all those overflowing bank vaults of cash, The Carlyle Group decided to put some of it to work. They announced an agreement to purchase Sequa Corp for a 50% premium driving the stock up some $60 a share to $172 per share.

After a quick review of the company's 2006 annual report, it's clear Sequa will pay no taxes in the future should Carlyle use debt to finance even a small part of the $1.99 billion acquisition price. Their relatively small bottom line could disappear quickly under a pile of interest charges.

The diversified company occupies several Carlyle niches, aircraft and automotive parts and technology. One doesn't have to read far to find the U.S. military is a key customer. That should make Chairman Emeritus, ex. Defense Chief Frank Carlucci happy.

However, one division should bring a unique business to the Carlyle fold. Tuxedos! So the next time President Bush invites all his high dollar, big donor friends to dine with the Queen of England, After Six can handle the gentlemen's formal dress.

Democracy Quiz

Which of the people's legislatures plan to work the whole month of August?

a. Iraq
b. U.S.
c. both Iraq and U.S.
d. neither country

The correct answer is d, which makes sense when one considers the U.S. exported its version of democracy to the Middle East. Is this the model Bremer and company used in setting up Iraq's government?

In a story on appropriations bills CNN said "Congress is expected to recess, as usual, for most of August." It appears their time off is more important than the people's business. Why should Iraqi's feel otherwise?

Santorum's Sanitarium

Ex Senator Rick Santorum (in blue shirt) predicts something bad will happen in the next few months to make voters already disgusted with Iraq more open to war with Iran. He stated "between now and November, a lot of things are going to happen, and I believe that by this time next year, the American public's going to have a very different view of this war, and it will be because, I think, of some unfortunate events, that like we're seeing unfold in the UK."

Does anyone else find it funny Rick can give us a warning, but Homeland Security can't. A newly released al Qaida tape squarely predicts "good news" for its American faithful. This usually means a strike. Follow this up with the threats to Wall Street investment bank, Goldman Sachs and Homeland Security's silence looks rather ominous. The question is whether the event will be planned or an accident, especially given U.S. bioweapon lab errors. Might we need the services of Dr. Bill Frist?

NRA to Move to Baghdad?

If Halliburton can move their corporate offices to Dubai, United Arab Emirates because that's where the business is, where should the NRA move? Iraq seems to be the obvious choice as politicians encouraged citizens to arm themselves after the most recent rash of violence.

"People have a right to expect from the government and security agencies protection for their lives, land, honor and property, but in the case of (their) inability, the people have no choice but to take up their own defense."

After four years with little success in exporting democracy, is it time to export the NRA? Aren't they needed more in Baghdad than at home in the U.S.? And as Americans aren't we giving, sharing people?