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Further Investigation | Force for Good

Further Investigation

18/05/2019 forceforgood

Further Investigation

Although Prof. Xiaowei Rose Luo initially agreed with the student’s conclusions concerning the INSEAD-HOUYI partnership, she quickly changed her position in the ensuing months. She was keen to disregard HOUYI’s legal and reputational issues as being historical and emphasized its supposed collaboration with Harvard and Wharton. The student was dissatisfied with this response and conducted further investigation, finding information casting doubt on the reputation of Mr Cui Wei, HOUYI’s founder, the legality of the agreement itself, and the research area of Prof. Juan Ma, the INSEAD® faculty member who had proposed the partnership. These concerns were raised directly by the student with an email to Dean Prof. Ilian Mihov, who referred the student to Mr Austin Tomlinson, INSEAD’s Global Director for Alumni Relations. Despite Mr Tomlinson’s promise to investigate further, he did not offer any refutation of the evidence that the student had uncovered. Notwithstanding, some of that evidence subsequently vanished from the Internet, including the removal from INSEAD’s official website of the announcement of the INSEAD-HOUYI partnership. INSEAD® was clearly trying to keep the HOUYI partnership low profile.

Force for Good – Case Study 2019/11 [DOWNLOAD]


 “Given up evil and Returned to good”

Despite Prof. Xiaowei Rose Luo’s initial warm feedback given in response to the student’s reflection paper on March 15th 2019, the nature and tone of her comments about the HOUYI investigation altered rapidly within a short space of time. She stated that HOUYI has already “given up evil and returned to good” and mentioned that Prof. Juan Ma, who had recommended HOUYI as a prospective partner in China to INSEAD®, was involved in the collaboration between Harvard Business School and “Beijing Post EMBA Alumni Association”. In addition, she kept emphasizing that HOUYI had previously collaborated with Harvard and Wharton. This being the case, not obtaining references from these two institutions would be a serious lack of due diligence on INSEAD’s part.

All the above lead the student to conduct further investigation into the INSEAD-HOUYI agreement. He found it ironic that Prof. Juan Ma’s specialisms include Corruption and Institutional Distrust” and “Doing Business in Emerging Markets[1]. After all, if an EMBA student could easily investigate the legal and reputational issues of a company (HOUYI) with a simple internet search, how is it possible that a Professor whose research area includes corruption and institutional distrust could overlook them? Was this a result of carelessness or a conflict of interest?

Further Investigation & Results

As the student investigated HOUYI further, he discovered that its founder, Mr Cui Wei [崔巍], was ranked with related risk 358 points as “high risk” on the Chinese enterprise credit investigation agency, Qichacha.com (企查查). The credit investigation shows that Mr Cui [崔巍] holds a wide range of companies with a portfolio extending from education to food manufacture (Is currently listed by the court as a breach of). Of the seven companies listed as being held by Mr Cui Wei [崔巍], there is no company named as “HOUYI Institute of Advanced Education”. Moreover, Mr Cui Wei [崔巍] is only listed as a legal representative of one revoked consulting company. Basically, Mr Cui Wei [崔巍] is not in a position to sign any contract on behalf of a company, as he is not a legal representative of any company.

[FIGURE-09] CREDIT INVESTIGATION – HIGH RISKY [SOURCE: QICHACHA.COM]

[FIGURE-10] CUI WEI – HOLDING STRUCTURE [SOURCE: QICHACHA.COM]

[FIGURE-11] CUI WEI – LEGAL REPRESENTATIVE –  BE CANCELLED [SOURCE: QICHACHA.COM]

In other words, on November 23rd 2018, Prof.Ilian Mihov, Dean of the world-leading business school INSEAD® signed a 5-year contract with a natural person who represented a non-existent company.

Another interesting finding was that the Chinese food manufacturer Beingmate (producer of milk powder) announced on March 30th 2018 Prof. Mrs Juan Ma[2] as an independent board member with a monthly honorarium of approx. US$10,000. [3]

[FIGURE-12] JUNA MA – BEINGMATE [SOURCE: FINANCE.SINA.COM.CN]

As the student continued diving deeper, Prof. Xiaowei Rose Luo’s tone became increasingly defensive. After she received all the information mentioned above, Prof. Xiaowei Rose Luo then explained that HOUYI was not a strategic partner of INSEAD®; rather, HOUYI is just a service provider who provides admissions service to INSEAD®. Additionally, she mentioned that INSEAD® has already signed a five-year contract with HOUYI, and INSEAD® has no reason to terminate the contract. Besides, Prof. Xiaowei Rose Luo pushed that “Beijing Post EMBA Alumni Association” had already been renamed to HOUYI, and HOUYI has “given up evil and returned to good”. She dismissed HOUYI’s legal and reputation issues with the assertion that it is normal for start-ups to have a shameful history.

Over the next few weeks, more details emerged online of the INSEAD-HOUYI collaboration as news of the joint promotion event[4] was published by HOUYI on its website on March 1st. According to the news report, on April 15th 2019, the collaboration programme was launched on the Fontainebleau campus of INSEAD®.

    

[FIGURE-13] JUNA MA – INSEAD-HOUYI JOINT PROMOTION EVENT [SOURCE: POSTEMBA.ORG.CN]

                

[FIGURE-14] HOUYI INSEAD® POST EMBA – FUTURE BUSINESS LEADERSHIP PROGRAMME – WECHAT PROMOTION APP [SOURCE: WECHAT]

Furthermore, the brochure of the programme “INSEAD® Post EMBA – Future Business Leadership Programme” was available on the internet. Six Nobel Prize winners and former President of France Mr François Hollande, former President of United States Mr Bill Clinton and former Prime Minister of the United Kingdom Mr David Cameron were listed as coaches of the programme in the brochure. In the WeChat Promotion App, which was hosted by HOUYI, according to HOUYI, the son of former Prime Minister Australia Kevin Rudd has been already registered to the programme. High-profile family organisations, such as the Rothschild, Rockefeller, Dumas, Pinault and Wendel foundations, were also listed in the brochure. (see Appendix 05: INSEAD® Post EMBA – Future Business Leadership Programme – Brochure – Translated by court certified Translator in the United States of America)

In the faculty list of the programme, all but three are professors of INSEAD®. Moreover, INSEAD® would issue an official certificate upon completion of the course. In the WeChat Promotion App of HOUYI, it is clearly described that after completion of the course, the students of this joint programme will have access to the INSEAD® global alumni network. The tuition fee for the programme is a staggering amount of 128K RMB (approximately US$185,000).

Dean Prof. Ilian Mihov’s initial reaction

The aggressive promotion using former politicians and their family members as references is unusual and suspicious. The student started to doubt whether the Dean Prof. Ilian Mihov had been updated and whether he had reviewed the reflection paper. On May 16th 2019, the student sent the reflection paper directly to the Dean Prof. Ilian Mihov via email and asked to meet or talk the following month, with proposed dates and location.

Dean Prof. Ilian Mihov did not reply to the email. However, Prof. Xiaowei Rose Luo called the student and shared that the dean was upset and felt the reflection paper is a personal rebuke of his leadership skills as dean. She claimed that the student should not invite the dean and suggest location and dates to meet. Besides, she repeated that there is no evidence that HOUYI is currently doing anything illegally.

On May 18th 2019, the student contacted the admission office of HOUYI, whose contact information was available as QR Code in the WeChat Promotion App of HOUYI (mobile: +86 18210525***). The student essentially repeated the same undercover investigation as the journalist of China.com did in August 2018, posing as a potential candidate interested in the INSEAD-HOUYI Programme. The admission officer of HOUYI revealed extensive private information without invitation in the WeChat conversation with the student. (The names, gender, companies and locations of their so-called ‘alumnus until March 3rd 2018’, in excel sheets and word documents.)

The student mentioned in the conversation that he does not speak English well and may not fulfil the academic prerequisite of the INSEAD-HOUYI programme. The admissions officer sent a brochure of a domestic programme of HOUYI and recommended the student apply to the domestic programme initially for 79.8K RMB (approximately US$113,000). The admission officer mentioned that joining the domestic programme first will provide opportunities to join “INSEAD-HOUYI – Future Business Leaders Programme” later. She also mentioned that the INSEAD-HOUYI programme courses in China are essentially the same as the domestic (China-Only) programme offered solely by HOUYI.

Curiously, the news report of China.com mentioned earlier also revealed the tuition amount of 79.8K RMB of the disreputable association which misused the trademark of Beijing University. If you open the brochure of the domestic programme recommended by HOUYI, unsurprisingly you will see the name “Beijing Post EMBA Alumni Association”. (see Appendix 06: Brochure of the domestic programme of HOUYI)

Given up evil and return to good”? Observably, that statement from Prof. Xiaowei Rose Luo is not correct. Six months after HOUYI signed the agreement with INSEAD®, HOUYI is still running its illegal business under the name “Beijing Post EMBA Alumni Association”, continuing to recruit students for an illegal programme which had already been exposed in the Chinese media.

To confirm the connection between INSEAD® and HOUYI, the student asked to have permission to visit an INSEAD® campus in Fontainebleau. The admission officer mentioned that a campus visit is not available for the INSEAD-HOUYI programme. The student mentioned that the Assistant Prof. Juan Ma (Academic Director of the programme) is in his network, and he will contact her directly to arrange an appointment for campus visits. The admission officer replied that Professor Juan Ma is responsible for the academic part of the programme.

On the same day, May 18th 2019, the student sent an email to Dean Prof. Ilian Mihov with all the documents including brochures and alumnus lists provided by HOUYI and explained the investigation conversation. The student wrote at the end of the email to the Dean “…Executive education was viewed as a “money-spinner” by US business schools… while Asian schools had very little experience in this field…” – INSEAD® case 08/2014-5089. If INSEAD® wants to keep this “money-spinner”, I could understand. However, the value created with “HOUYI Institute of Advanced Education” now, will likely destroy more values in the future. “If you need evidence to stop the contract with “HOUYI Institute of Advanced Education.”, I have provided all of them.. Also, all chatting history of the investigation with HOUYI (in Chinese) was sent to Prof. Xiaowei Rose Luo via WeChat.

Prof. Xiaowei Rose Luo called the student afterwards and urged him not to discourage the enthusiasm of the deans to do business in China. After the above evidence was submitted to INSEAD® and Prof. Xiaowei Rose Luo, the student asked a classmate to independently discuss the HOUYI matter and raise the concern again with Prof. Xiaowei Rose Luo. During the independent call with the classmate on May 23rd, even though all the evidence was already provided on May 18th, Prof. Xiaowei Rose Luo maintained the same defence and explained to the classmate that HOUYI had already “given up evil and returned to good”. Prof. Xiaowei Rose Luo mentioned in the call that Dean Prof. Ilian Mihov had been informed of the student’s concern in December 2018 already and the dean had said that, HAD HE KNOWN THIS IN ADVANCE, HE WOULD NOT HAVE SIGNED THE CONTRACT. However, the contract has been signed and there is no evidence showing that HOUYI is still conducting illegal activities. Moreover, Prof. Xiaowei Rose Luo also explained how as an entrepreneurial start-up HOUYI collaborated with top-tier business schools Harvard and Wharton. (see Appendix 08: Transcript and translation of audio recording Prof. Xiaowei Rose Luo & Classmate – Translated by court certified Interpreter in the United States of America)

HOUYI revealed the private information of more than 2000 individuals it claimed as alumni without invitation to the student – not only violating China’s information protection law but also violating the General Data Protection Regulation of the European Union due to the inclusion of European citizens in that list. If the admission office of HOUYI revealed massive data, what will their student do if they have access to the INSEAD® alumni network as described in the programme brochure? In response to the student’s raising his concerns over this with Prof. Xiaowei Rose Luo, she sent voice message expressing her admiration for HOUYI for having so many alumni. She mentioned that she could not understand why the student submitted these data to INSEAD®. (see Appendix 09: Transcript and translation of voice message of Prof. Xiaowei Rose Luo – Translated by court certified Interpreter in the United States of America)

According to GDPR, the Data Protection Officer (DPO) of INSEAD® who is responsible for managing compliance with the GDPR must contact the student to advise him how to handle the private data he had received. Unfortunately, no one from INSEAD® contacted the student after he reported the data breach committed by INSEAD’s affiliate – HOUYI.

Prof. Xiaowei Rose Luo asked the student to provide one-slide executive summary to consolidate all the evidence he had collected thus far so that she could find an opportunity to discuss the matter with Dean Prof. Ilian Mihov and executives of INSEAD®. (see Appendix 10: Transcript and translation of voice message of Prof. Xiaowei Rose Luo – Translated by court certified Interpreter in the United States of America) The student refused to do it, since he considered all the evidence to be clear at a glance.

The response of the Dean Prof. Ilian Mihov

Dean Prof. Ilian Mihov replied to the email of May 16th 2019 (the invitation), after he received the email about the investigation in a separate email on May 18th. On May 23rd 2019, the Dean Prof. Ilian Mihov replied as follows.

“I am not sure exactly the purpose of this association. I put on copy our global director for alumni relations, Austin Tomlinson. Can you please share your ideas with him?”

On May 24th 2019, the student replied as requested to the Dean Prof. Ilian Miho and Mr Austin Tomlinson  Global Director of Alumni Relations. “I got the feeling that you’ve been set up and fell into a trap. I hope that Austin is someone you can trust. You and INSEAD® are now two victims of a “Ponzi scheme”. The purpose of this association “HOUYI Institute of Advanced Education” is to “launder itself” from an illegal fraud agency to a legitimate institute besides the financial interest! … None of the Deans of other B-Schools signed contracts with this association! You’re the first…” In the email, the student also suggested to stop the collaboration with HOUYI immediately and investigate all professors and staff of the school who were involved in the case. Additionally, the student suggested INSEAD® “Prepare an official statement to explain this case in English and Chinese… (Be prepared but not publish it online to save face and reduce unnecessary attention.)”

At the end of the email, the student suggested to Mr Austin Tomlinson, “It will be great if you could cross-check randomly with some alumni in China to get their opinion about this case”.

The one and only reply from Mr Austin Tomlinson on May 24th 2019, “Thank you for your email and thank you for taking the time to outline this situation in detail. I will share the email below with a few of my colleagues internally and will revert in detail soon.”

A few days later, Prof. Xiaowei Rose Luo contacted the student via WeChat and mentioned that the school is continuing to investigate the collaboration. Together with Mrs Dora Ng (Director, Corporate Partnerships, Executive Education) and Mr Austin Tomlinson (Global Director for Alumni Relations), they have had a meeting. Prof. Xiaowei Rose Luo mentioned that Mr Austin Tomlinson will contact alumni in China to cross-check their view about the agreement with HOUYI. (see Appendix 11: Transcript and translation of voice message of Prof. Xiaowei Rose Luo – Translated by court certified Interpreter in the United States of America)

At the end of May, the student found out that the news about the signing ceremony published on the INSEAD® webpage was removed. (identical news report: see Appendix 01: Announcement of INSEAD-HOUYI Strategic Partnership – Translated by court certified Translator in the United States of America) And news report in the official INSEAD® official WeChat account was also deleted. However, the WeChat App of which was made to promote the INSEAD-HOUYI – Future Business Leaders Programme is still accessible.

[FIGURE-15] SCREENSHOT BACKUP – INSEAD OFFICIAL WECHAT ACCOUNT – “[小崔]牛了“ [SOURCE: WECHAT MAY 17TH 2019]


Questions & Answers

Why do you think Dean Prof. Ilian Mihov asked you to share your investigation with the Global Director for Alumni Relations?

The reputation of the programme relates indirectly to the reputation of alumni. And Dean Prof. Ilian Mihov actually does not want to communicate about this topic at all NO MATTER the way of my written communication.

Why INSEAD® has deleted news about the signing ceremony in its Webpage and WeChat?

A good question. It seems like Dean Prof. Ilian Mihov realised that this partnership will damage the image of INSEAD®. Perhaps his personal reputation as well.

Have you back-up the news report about the signing ceremony in the Webpage of INSEAD®?

No need to back-up. The content is identical to the HOUYI’s report which is still available on-line (in Chinese).

Why HOUYI didn’t delete the news report? What is your opinion?

Even INSEAD® forces HOUYI to delete the news, HOUYI wouldn’t delete it. It is a reference of HOUYI. The joint programme office of HOUYI in China was disbanded at end of July. Now the news report is still available online. It basically says INSEAD® has no control of this so-called strategic partnership.

You received the feedback and grade of reflection paper on March 15th and HOUYI posted the kick-off of the programme in China on March 1st. And Prof. Xiaowei Rose Luo mentioned she has already talked to the Dean Prof. Ilian Mihov in December 2018 about your concern which was summarised in the reflection paper? Why didn’t Dean Prof. Ilian Mihov terminate the agreement? What is your opinion?

The agreement was signed on November 23rd 2018 and the announcement of Beijing University and media report were in July and August 2019. From my point of view, these two documents clearly proved the unsuitability of HOUYI and are strong enough to be used as evidence to terminate the agreement immediately, due to the short time lapse between Beijing University’s announcement and the signing of the agreement.

The main reason to keep this agreement is financial interest. The simple calculation below might help you to understand why Dean Prof. Ilian Mihov would not like to terminate the HOUYI strategic partnership agreement.

If 40-60 students join the INSEAD-HOUYI programme annually and INSEAD® takes 100K USD (conservative estimate,) in tuition fees (total tuition $185k USD, assume that HOUYI takes $85k USD), the annual revenue of the programme is 4-6 million USD. A FIVE-YEAR AGREEMENT EARNS 20-30 MILLION USD. A degree student of the Dual-Degree EMBA programme tuition will bring in $50K USD of revenue for INSEAD®. To earn 20-30 million USD, INSEAD® will need approximately 400-600 Dual-Degree EMBA students, which would will take INSEAD® 10-15 years.

I could understand that it is very difficult for Dean Prof. Ilian Mihov to face and accept that the first strategical partnership agreement in the field of non-degree executive education in China ended up being with a company with a lot of legal and reputational issue. If he terminates the agreement so soon after its signing, he will lose his face in front of INSEAD’s board, staff, students and alumni.

Dean Prof. Ilian Mihov may have approached the matter with a mentality of: “WHAT HAPPENS IN CHINA STAYS IN CHINA”. Perhaps he thinks, since all media reports about HOUYI’s problems are IN CHINESE, nothing will end up in the international media.

My classmate humorously observed that signing a contract with a non-existent company which has legal and reputation issues is all part of Dean Prof. Ilian Mihov’s ‘Blue Ocean Strategy’. He called Dean Prof. Ilian Mihov a “modern-day Robin Hood” – stealing money from China’s infamous affiliate to fund his moralizing campaign urging business executives to do good, making INSEAD® “A force for good”.

Why did you refuse to write a one-slide summary of your findings for Prof. Xiaowei Rose Luo to discuss with Dean Prof. Ilian Mihov?

The evidence provided in the email to Prof. Xiaowei Rose Luo, Dean Prof. Ilian Mihov and Mr Austin Tomlinson was clear and self-explanatory. After I received the recorded call from my classmate and Prof. Xiaowei Rose Luo, it is quite clear that she was trying to mediate differences at the sacrifice of principle. You can’t wake someone up who is pretending to sleep. So, it is a waste of time to summarise anything.

What is your opinion about Prof. Xiaowei Rose Luo’s conversation with your classmates?

I have already realised that Prof. Xiaowei Rose Luo is not in the position to influence the Dean Prof. Ilian Mihov to make the decision to terminate the contract. After her initial attempt, she altered rapidly. The recorded call on May 23rd was a confirmation of my assumption.

[1] HTTPS://WWW.INSEAD.EDU/FACULTY-RESEARCH/FACULTY/JUAN-MA

[2] HTTP://DATA.EASTMONEY.COM/NOTICES/DETAIL/002570/AN201803301115299977,JWU4JWI0JTLKJWU1JTLIJWEWJWU3JWJLJTHL.HTML

[3] HTTP://VIP.STOCK.FINANCE.SINA.COM.CN/CORP/VIEW/VCI_CORPMANAGERINFO.PHP?STOCKID=002570&PCODE=30546706&NAME=%C2%ED%E4%B8

[4] HTTP://WWW.POSTEMBA.ORG.CN/NEWSDETAILS/1228

Force for Good – Case Study 2019/11 [DOWNLOAD]