By Mak Yuen Teen

On May 5, 2020, Catalist-listed OEL (Holdings) Limited, announced the appointment of a new chairman and executive director, Zhang Jian, which was effective on May 4, 2020. The continuing sponsor of OEL is RHT Capital.

According to the announcement, Zhang Jian has a DBA and EMBA from West Coast University Los Angeles, US and he was referred to as Dr Zhang Jian in several places.  Zhang had been appointed several years earlier as Executive Director, President and CEO at the Libra Group in November 2013, where he left in May 2014. In Libra Group’s announcement then, he was also referred to as Dr Zhang Jian. The continuing sponsor at Libra Group was PrimePartners Corporate Finance.

OEL’s announcement stated that he was appointed at Libra in June 2013, although based on the appointment announcement at Libra, he was appointed in November 2013.  In other words, it seems that he only stayed for six months at Libra, and not eleven months.

Since I am not familiar with the West Coast University mentioned in Zhang’s appointment announcement at OEL, I checked it out online. I found a West Coast University with a Los Angeles campus. This university’s website can be found here:

https://westcoastuniversity.edu/

Its website said that it has the following campus locations: Orange County Campus, Ontario Campus, Miami Campus, Los Angeles Center for Graduate Studies, Los Angeles Campus and Dallas Campus.

Across its campuses, it offers pre-degree and bachelor degree programmes in Nursing, a bachelor degree programme in Dental Hygiene, and graduate programmes in Occupational Therapy, Physical Therapy and Pharmacy. It also offers a number of online programmes mainly in Nursing and other areas of healthcare, Bachelor of Science in Business Administration and Master of Business Administration.

However, based on its website, it does not offer DBA and EMBA degrees – at least not anymore.

On May 2, 2015, there was a report in The New Paper titled “Fake qualifications: 36 foreigners prosecuted in 2014.” The report mentions students in Singapore who attended classes at a local private school graduating with degrees from West Coast University-Panama (WCU-P). One doctorate student interviewed was among 76 students who graduated in 2008. However, WCU-P turned out to be an unaccredited university.

The private school in Singapore offering the programmes had claimed that the university was based in Los Angeles. However, WCU-P is actually based in Panama City, Panama, and has affiliated campuses in countries such as Bangladesh, Iran and Nigeria. The report said that it should not be confused with the California-based West Coast University, which is known for its nursing courses.

WCU-P offers a large number of programmes, including EMBA and DBA. So did Zhang obtain his EMBA and DBA degrees from the Panama-based WCU or the Los Angeles branch of the California-based WCU, which specialises in Nursing and other healthcare programmes? Perhaps the LA-based WCU did in fact offer EMBA and DBA programmes in the past.

Did the nominating committee, board and sponsors confirm his qualifications, since the LA campus of WCU does not appear to currently offer EMBA and DBA programmes? Are his degrees from the accredited California-based WCU or the unaccredited Panama-based WCU?

The appointment template states: “The Nominating Committee has reviewed the qualifications and experience of Dr Zhang Jian, and has recommended to the Board of Directors his appointment as the Chairman and Executive Director of the Company…The Board of Directors of the Company having reviewed and considered Dr Zhang Jian’s qualifications and experience and the Nominating Committee’s recommendation, has approved his appointment as the Chairman and Executive Director of the Company.” (emphasis is mine).

Clearly, the NC and board both considered Zhang’s qualifications to be relevant in determining his suitability for appointment. Can they confirm which WCU did Zhang obtain his degrees from?

Did the sponsor also check the qualifications in advising on his suitability to be appointed as chairman and executive director? In the announcement, the sponsor said that it had not independently verified the contents of the announcement so it would appear the answer is “no” – which then again raises the question of the value of having a sponsor under the sponsor-based regime.

In OEL’s case, the specialisation may also be relevant because OEL has diversified into healthcare. Investors may be attracted to invest in OEL on account of the fact that Zhang had obtained his degrees from WCU Los Angeles which specialises in healthcare programmes. Perhaps Zhang did earn his EMBA and DBA degrees from the accredited WCU in Los Angeles after all and a clarification can put investors’ minds at ease.

More generally, I have noticed in a number of listed companies, corporate leaders and directors have honorary and doctorate degrees from universities that are unaccredited or described as “degree mills” based on online searches. In some cases, certain named universities could not be found at all, although in some cases,  there are unaccredited universities or “degree mills” with similar-sounding names. Some have since been shut down following action taken by authorities.

Some examples I have found include Honolulu University, Kennedy Western University and Western Pacific University (USA). For example, in the case of Honolulu University, the university’s website itself states: “Honolulu University is not accredited by an accrediting agency recognized by the United States Secretary of Education.”

If unaccredited qualifications are not acceptable for ordinary employees, is it acceptable for corporate leaders and directors to cite such qualifications and for these to be considered as part of the assessment for their appointment? Should disclosing qualifications from unaccredited institutions and degree mills be considered false or misleading disclosures?

While I have not done any formal empirical study, I have also observed anecdotally that companies with founders, directors or CEOs with qualifications from questionable institutions often seem to have accounting and corporate governance issues. If we think about it, it is not surprising because if they use unaccredited degrees to embellish their resumes, it would make sense that they may also be more likely to use “creative accounting” to embellish their results or creatively skirt around corporate governance rules.  This may be a “coming soon” project for me – to find all those companies with such founders, directors and CEOs.

Identifying corporate leaders and directors who do so and avoiding or shorting their companies’ stock may make for a good investment strategy. Indeed, in 2018, when short-seller Blue Orca attacked HK-listed Samsonite, one of its claims was that Samsonite’s then-CEO Ramesh Tainwala had falsely represented that he has a doctorate in business administration from the Union Institute and University in Cincinnati. After verifying with the university’s registrar office and the United States National Student Clearinghouse, it was confirmed that Tainwala merely enrolled into the programme from February 1992 to September 1993 but had never obtained a degree from Union.

While the false doctorate title was omitted in Tainwala’s company biography, Blue Orca said that the representation of Tainwala’s doctorate had frequently been cited in online biographies and other documents, including in Wall Street Journal and Bloomberg databases up until 2018. The false credential was also evident in formal settings such as Samsonite’s 2011 earnings call, where Samsonite referred to Tainwala as “Dr”.

That being said, investors should not be swayed by impressive-sounding educational pedigree. My impression is that it is quite common for questionable companies to appoint directors with doctorates or other higher qualifications from top-tier universities, or those who hold professorship or adjunct professorial titles in such universities. It is part of window-dressing. Last year, I wrote about several related companies that were bulging with board members with doctorates from top-tier universities (and with other honorifics), which had destroyed massive shareholder value.

However, dropping out of a top university can also apparently be an “achievement” that can reel in unsuspecting investors. In the spirit of the Mark Twain saying “I have never let my schooling interfere with my education”, Michael Dell, Larry Ellison, Bill Gates, Steve Jobs and Mark Zuckerberg all dropped out of college (although mostly great ones, not degree mills as no one drop out of those).

One of the biggest recent frauds in the U.S. is that involving Theranos, the blood-testing company, where its founder Elizabeth Holmes dropped out of Stanford University. This helped create the narrative that she was like the other brilliant entrepreneurs before her who did so. In her case, perhaps she should have stayed on a bit longer and maybe do a course or two in corporate governance and ethics – as should perhaps Travis Kalanick, who dropped out of college and was then effectively booted out of Uber after a series of scandals there.