Earlier this month, I raised the question of whether or not prosecutors in Manhattan can pierce the corporate veil in their criminal charges against New York Crane and its proprietor, James F. Lomma.
Many of you responded that this case raises serious concerns over the risk of business owners being held personally liable when accidents happen on a construction site.
This time, I’m posing a question that is critical to Lomma’s case and others pending in U.S. courts: When is it safe to buy from China, and what due diligence is required when sourcing from overseas suppliers?
Perhaps we can now add crane parts to the list of other questionable goods coming from the Far East—drywall, toothpaste, toys, to name a few.
As we know, Lomma’s firm purchased a slewing gear from RTR Bearing Co. Ltd., a China-based company. A weld on that gear, performed by RTR, failed. The crane collapsed on the Upper East Side in May 2008 and killed two construction workers.
Evidence filed in a civil case against Lomma and others shows that RTR, founded in 1998, is an ISO-certified manufacturer of large-diameter bearings. Even today, its website discusses—in broken English—its fabrication capabilities in detail.
“All I will tell you is this: Jimmy Lomma and New York Crane purchased a bearing from what they believed was a reputable company in China,” says Paul Shechtman, a lawyer representing New York Crane in the criminal case.
Bernadette Panzella, a lawyer in the civil case, is suing Lomma and others on behalf of Donald R. Leo, the father of the crane operator who fell 13 stories and died tragically in the collapse. She has produced an affidavit signed by Jun “Joyce” Wang, the so-called general manager of RTR, who claims that the company actually is not a manufacturer at all but merely a holding company that brokers export deals.
“My company, RTR, has a very small office with seven workers, including me,” says Wang in the affidavit, signed in the U.S. embassy in Paris on April 27, 2009. It continues, “RTR does not employ any engineer, has no factory and does no manufacturing.”
Wang adds that she is 28 years old, graduated from a four-year university (major in Russian) and has never been to the United States. The name RTR stands for “Road to Rome,” she says, adding that she founded RTR in January 2007, not 1998 as the Website says. ENR’s efforts to reach Wang have not been successful.
The plaintiffs claim that New York Crane knew RTR was substandard and failed to perform due diligence on the company, according to a statement of facts filed in the criminal case. An email from Wang to New York Crane says she was “afraid” that RTR’s welding technique was “not good” and that RTR did not “have confidence” that it could perform the work.
However, a recent report in trade publication Cranes Today states that Wang changed her mind. It reports, “Thank you for the drawing, we fully understand your meaning…We can do this."
So then, which is it? Is RTR a competent manufacturer, or not? The Lomma case, both civil and criminal, may hinge on this question.
Glenn Fuerth, a lawyer who represents New York Crane in the civil cases, says that Wang’s affidavit is full of false statements. “Her affidavit…is inconsistent with the representations that she made to New York Crane,” he says, adding that “her position in the affidavit was found by OSHA to be untrustworthy.”
The U.S. Occupational Safety and Health Administration, which investigated the collapse and assisted in the criminal probe, concluded that the Chinese weld caused the accident. It then recommended that “RTR Bearing should improve their welding techniques.”
However, as we have also noted in numerous ENR reports, OSHA did not cite Lomma for any safety violations. People involved in the case say this is so because Lomma was not an employer on site, and OSHA only has authority to cite employers.
Calls to OSHA were not returned, but ENR's Freedom of Information Act request produced an accident report in which it is says one of the parties made false statements to the investigators, but due to redactions, it is unclear which one.
Either way, this case raises more eyebrows about the quality of manufactured goods coming from China.