A friend of mine asked me the other day whether I believed the Chinese parents in the US college admissions scandal. To his surprise, I immediately said yes.
Now for a bit of backstory regarding these parents and then why I believe them and then why this is actually incredibly relevant for any foreign company that does business in China. See Families who paid largest sums in admissions scheme say they were duped for the stories of the Chinese families involved in this scandal and why they are claiming that they were duped and did nothing wrong. Essentially, they are saying that they were told to make these payments to help the universities and to improve their kids’ chances of going to these universities and they believed that the money they paid would be legally employed and they had no reason to believe otherwise.
The US college admissions scandal has so far implicated Hollywood celebrities, a high-end lawyer from a Wall Street Law Firm, a “slew of CEOs,” among others, charged with paying college personnel to get their kids into elite (and semi-elite) US universities. I previously wrote about this in THE College Cheating Scandal and Overseas Corruption: Not Worth It, where I used it as an example of how bribes often get paid when they are not even necessary.
In this post I will talk about how the international lawyers so often see foreigners get duped because they 1) don’t understand “the system” in a foreign country and then 2) compound that problem by — for whatever reason — not bringing on the right people to help them. Having seen so many foreigners get duped under somewhat similar circumstances in both China and the United States and around the world, what the Chinese parents describe is actually quite believable to me.
Let me explain….
I cannot tell you how many times my firm’s foreign direct investment lawyers and the immigration lawyers at my firm have been told fraud stories by potential and actual clients. The below are just a smattering:
- Many years ago, a Chinese company paid a non-lawyer $50,000 to form a company in the United States because doing so is so difficult and this can only be done by people with really good connections. None of this is even remotely true and it should cost about 1/10 this.
- Chinese person pays a lawyer in China $200,000 for a “guaranteed” US visa. Nobody can guarantee anyone a visa and nobody should be charging anything approaching $200,000 to even try.
- Korean company pays a Korean-American hundreds of thousands of dollars to get the zoning laws changed on a property the Korean company had bought in the United States and the Korean-American reports back that he has succeeded. Only problem is that the zoning was fine all along and the Korean-American had not done a thing.
I truly could go on and on but I will use just one more example that directly involved my firm and me. Many years ago I was doing work for a Russian company, run by a very good friend of mine and someone I’ve known for a very long time. I cannot get into too much detail on this matter and I will need to change the facts a bit because I don’t want to reveal too much, but suffice it to say that this company wanted to get some papers that were being held by a government office and that office would not turn them over to my client. We took on the matter of securing these documents for this client for an upfront fixed fee. Our plan was to sue the governmental entity to try to get a court order requiring them to relinquish them. But before we did that, one of our lawyers went to the government’s office to try one last time to get the documents, this time under threat of a lawsuit. While there — and yes, probably under threat of the lawsuit — the government official told our lawyer that under some obscure rule, the government would give our client the documents if nobody else tried to claim the documents as theirs within some fairly short time period.
So all we did was wait out the time period and then we walked to the government office and left with a box of documents. No matter how much I insist otherwise, my client clearly believes that my law firm used its connections to work some sort of hocus-pocus.
Why do things like the above happen? Because of cultural differences. Because people just assume that because something is done just so in their country it is also done just so everywhere else as well. Because people simply do not know how things are done in another country and they also do not know how to retain the right people to help them in that other country.
Why is this relevant to you, the foreign company that does business in China? It’s relevant because this sort of thing happens to foreign companies in China all the time as well and all you need to do to find examples of this is to read this blog.
But how can you prevent this? Hire the right people to help you. How can you hire the right people to help you? By choosing people who have stood the test of time and, by choosing people who have the background and experience and licenses that indicate they are actually right for the task for which you are hiring them. Most importantly, take your time in choosing your advisors because it can really really matter, both monetarily and perhaps even in terms of you staying out of jail.
Don’t get duped.
What are you seeing out there?
For some common China scams, check out the following:
- China Scam Week, Part 1, Come to China to Sign the Contract
- China Scam Week, Part 2, Bricks for Products
- China Scam Week, Part 3, The Switched Bank Account Scam
- China Scam Week, Part 4, The China Stock Option Scam
- China Scam Week, Part 5, Investing in Your Business to Steal Your IP
- China Scam Week, Part 6: The Fake Joint Venture