Construction Law

2011 Japan Earthquake and Tsunami/Construction Fallout/Avoid Relief Scams

By John P. Ahlers

The north coast of Japan was rocked by a 9.0 magnitude under sea earthquake on Friday, March 11, 2011. The megathrust triggered extremely destructive Tsunami waves of up to 33 feet high that struck Japan minutes after the quake and traveled inland up to 9 miles. It was the most powerful quake to ever hit the country (since records were kept) and is described as the most difficult crisis to strike Japan since World War II. The toll on human life is staggering, as is the property damage. The Japanese National Police Agency has confirmed 9,301 deaths, 2,722 injured and 13,786 people missing. 125,000 buildings are damaged, and the cost of rebuilding Japan could be the highest recorded for a natural disaster since data were first compiled in 1965. The World Bank reports that the repair costs could be as much as $235 billion.

To exacerbate matters, Japan is presently dealing with three (3) nuclear reactors that have suffered explosions due to hydrogen gas built up within their outer containment buildings. The International Atomic Agency described the crisis as "extremely serious" and residents within a 12 mile radius of three (3) nuclear plants have been evacuated. As a humorous aside, maybe we should let Iran have all the nuclear power they want!?

The fallout from this disaster will be felt throughout the world, particularly in construction. The effect on the construction industry, among others, will include:

1. Japanese contractors are mobilizing in the aid in the reconstruction. Japanese contractors are responding to the government's request to deliver construction gear, equipment and workers to repair the damage. The country, however, does not have sufficient stockpiled materials and materials will likely have to be imported from the rest of the world.

2. The cost of raw materials is rising. Copper rose this week on expectations that Japan will need more metal as it rebuilds after the devastating Tsunami. Metal is used in manufacturing an array of products, including pipes and wiring for construction. Japan's economy, which is the third largest in the world after the U.S. and China, accounts for about 10% of U.S. imports. Analysts expect that the commodity markets will remain volatile until Japan gains control over the damaged nuclear plants. The ripple effects in the U.S. construction market will likely include higher prices for some time to come.

3. Oil price climbed to above $100 per barrel after a crackdown on protestors in Bahrain increased tensions and threatened to pull in Saudi Arabia and Iran, the OPEC heavyweights. Japan is expected to boost imports of fossil fuels as the third largest economy recovers from the earthquake disaster. Crude rose as $101 per barrel last Thursday and gas at the pumps is up $0.42 per gallon since the middle of February. The Middle East crisis combined with the disaster in Japan will undoubtedly force oil prices to rise even higher in coming weeks

With the heart wrenching images from Japan dominating the news in recent days, for those inclined to donate money for the earthquake and Tsunami victims in Japan, U.S. law enforcement officials have been issuing warnings about scam charities. There are many legitimate organizations that are soliciting donations specifically for victims in Japan, including the American Red Cross, World Vision, Save the Children and Mercy Corps, as well as many others that are expected to join the effort. After natural disasters, fraudsters try to profit from the good intentions of Americans. Internet sites are springing up with addresses similar to those of trusted websites. For example, a might have the address "redcross.com" instead of the authentic American Red Cross website, "redcross.org." Here are some of the tips to avoid scam solicitations:

A. Telephone.

• Never give personal or financial information, including a credit card number to someone who calls you unsolicited.
• Legitimate charities may solicit by telephone, but if asked, will always send you authenticated paperwork. It is recommended that you hang up on anyone claiming to represent an organization with a name that "sounds like" a well known charity's name.

B. Online.

• Be cautious of emails that claim to be from charities that promise links to photographs or video of disaster areas. Unless you previously made a donation to a particular group, and provided it with your email address, delete any incoming emails seeking a donation.
• To find a charity's website, do not click on a link that you see on a website or email. Instead type the charity's name into a search engine. Legitimate non-profits' Internet addresses typically and in a ".org" not ".com."
• Do not donate via requests on Facebook, Twitter or other social networking sites. Scammers can be behind those appeals as well.

C. Door-to Door Solicitations.

• Catastrophes soon have waves of door-to-door crooks ringing doorbells, if you donate in this manner, be very careful. Never give cash, checks should never be written to individuals, but to the organization. Ask for written materials about the group. If the person has nothing to offer, consider it a red flag.
• Be wary of claims that 100% of the donations assist victims. All charities have fund raising and administrative costs. Legitimate organizations typically spend up to 25% of the donations on such costs.

Full post as published by Construction Law Blog on March 27, 2011 (boomark / email).