Healthcare

The varsity blues

Chinese pharma tycoon spends $6.5 million to get daughter into top college

Zhao-Tao-w

Zhao: worth around $4.7 billion

The achievements of Mencius, the second most revered of China’s sages after Confucius, are often traced back to his solicitous mother. Legend has it that widow Zhang moved house three times – from close to a cemetery to a marketplace and finally near to a school – to ensure that Mencius had the right kind of upbringing. He turned out to become an accomplished scholar with teachings that were canonised in the imperial examinations.

Mencius is often cited in China to highlight the importance of good parenting and a strong education. Regular WiC readers are probably aware of the widespread phenomenon of tiger moms and eagle dads (see WiC340). To groom their kids to be high achievers, parents go many extra miles, even hiring consultants to brush up the resumes of their toddlers.

Added to the list now is making astronomical donations to some of the world’s elite universities in exchange for a coveted spot in their undergraduate programmes.

The Los Angeles Times reported this month that Zhao Yusi, a Stanford University sophomore majoring in psychology and East Asian studies, was expelled in March due to findings that she had falsified some of the credentials in her college application.

The case was alleged to be linked to a payment of $6.5 million to an external college counsellor known as William “Rick” Singer. The revelation was part of the unravelling of Singer’s college admissions scam, which raked in over $25 million from 33 families between 2011 and 2018. The racketeering involved falsifying test scores and admission applications, as well as bribing varsity coaches and administrators. It also used a charitable entity called Key Worldwide Foundation for funnelling funds.

In Zhao’s case, Singer had targeted the school’s athletic admission scheme and portrayed her as a competitive sailor, according to the Los Angeles Times. There was little evidence of Zhao’s maritime prowess, the newspaper said, but Singer’s foundation donated $770,000 to Stanford’s sailing programme, of which $500,000 was linked to Zhao.

The top California-based college says that it was not aware of the $6.5 million in cash that changed hands between Zhao’s parents and Singer, however, and stated that it had received the $500,000 contribution to the sailing programme several months after Zhao was admitted.

The case has shone a spotlight on the Chinese family behind the donation – not least because it paid so much more than the amounts shelled out by others caught up in the Singer scam, including Hollywood actress Lori Loughlin, Desperate Housewives’ star Felicity Huffman, former Las Vegas casino executive Gamal Aziz and private equity investor John Wilson.

(The next highest-paying family, also from China, secured a place for their daughter at Yale University with a $1.2 million transfer to Singer.)

Singer’s biggest ‘donor’ has responded. “Mrs Zhao has come to realise she has been misled, her generosity has been taken advantage of, and her daughter has fallen victim to the scam,” explained Vincent Law, a partner at law firm Mayer Brown, in a statement. Law, who represents Zhao’s mother, noted that Singer’s consultancy “did not guarantee admission into any particular school”.

“Like many families from Asia, Mrs Zhao is not familiar with the admission process for colleges,” Law added, describing Zhao Yusi as a “victim” of the situation. Reportedly, Singer’s consultancy had been introduced to the Beijing-based family by a financial advisor at a Wall Street bank. Singer’s company was presented as a representative of “a substantial and legitimate non-profit foundation for supporting education” and she was told that the donation would be directed towards supporting academic staff salaries, athletic programmes and scholarships for underprivileged students that “can’t afford to attend Stanford”.

After receiving her offer from the school, Zhao Yusi later offered online tips on how to get into prestigious universities. “I’m not the kind who was born with a very high IQ or who can score 33 out of 36 in an exam just like that [i.e. in an ACT test]. But I made my way up step by step, through my hard work,” said the student, who had previously studied at Wellington College, a UK boarding school that commands fees of £13,250 ($17,300) a term.

The Zhaos have not been charged with any offences in relation to the Singer scandal. Yet the Shanghai-listed shares of their family business, Shandong Buchang Pharmaceuticals, have plummeted over 15% since the revelations were made public. (The company has been involved in at least seven bribery cases in the past three years, the Beijing News has reported, with some of its products failing quality tests.)

Founded by Xi’an native Zhao Tao (Zhao Yusi’s father), Shandong Buchang is a manufacturer of traditional Chinese medicines best known for selling cardiovascular treatments. Last year net profits hit Rmb1.9 billion as revenues reached Rmb13.7 billion ($2.02 billion). With a net worth of Rmb32 billion, the Zhao family was ranked number 82 on China’s Hurun rich list last October.

A medical graduate at the Xi’an Jiaotong University, a top institution in China, Zhao senior gained prominence by successfully treating a patient suffering from paralysis in Singapore in 1992 using traditional Chinese medicine techniques. The fame of doing so helped him make $900,000 in just 90 days in the city-state, which became the seed capital for Shandong Buchang, according to Jiemian.com.

Zhao’s business success led him to become a major philanthropist, including to charities in countries connected with President Xi Jinping’s Belt and Road Initiative (BRI).

Indeed in June 2017, Zhao even met with US President Donald Trump and wife Melania, during a trip to the US intended to help promote the BRI.


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