Tangled mess behind SITC collapse revealed
TODAY 8 FEB 2006
LOH CHEE KONG
[email protected]AS FUMING students in Vietnam contemplate
lawsuits to get their money back, it has
emerged that the way the recently collapsed
chain of Singapore-funded private schools
was run was a huge tangled mess.
Sources close to the Singapore International
Training Consultancy (SITC) Holdings,
which runs the private schools, revealed
that the business was run on a
multi-level marketing (MLM) model.
And each time an injection of funds was
needed, a new set of investors was roped in
to set up new schools. The 19 schools in Vietnam
were set up within a short span of two
years and 12 of them operated without the
required licences from the respective citiesÂ’
Department of Education and Training.
Each month, dividends of US$30 ($49)
to US$100 would be paid to shareholders.
Singaporean businesswoman Angela
Lee was approached to invest in the company
two years ago but rebuffed the proposal
asking for an investment of US$10,000
as she found the business model flawed.
She declined to help recruit more investors.
“They told me they were using an MLM
business model. But as an education platform,
you are a service provider. How can
you run the business like an MLM model,
which is product-based?” she told TODAY.
An SITC director also revealed that a
new set of investors was roped in to set up
a new school each time the business needed
an injection of funds, up to US$125,000
on each occasion. Each time, the school
saw full enrolment as fees were below cost.
In November 2004, the directors in Singapore,
alarmed at the pace of expansion,
asked their
Taiwanese consultant Michael
Yu, who had been managing the firm in Vietnam,
to stop building new schools. Within
months, he approached the directors and,
for the first time, asked directly for funds.
The financial mess was discovered when
a director went to Vietnam to check the accounts
in detail last June and it emerged the
schools had all along been running on deficit.
The directors have filed a police report
against Mr Yu, who has since gone missing.
The chain, a US$2 million investment
with 82 Singaporean shareholders, purportedly
included schools in China, Thailand,
Vietnam, Cambodia and Singapore. In truth,
many of these ventures never worked out,
the director told TODAY.
Last month, its businesses in Vietnam
collapsed, leaving the wages of 1,000 employees
unpaid and 30,000 students demanding
refunds. The schools have remained
closed despite notices claiming they
would open on Monday.
A former Singaporean regional manager
said SITC used as a marketing tool
“education vouchers” that could be bought
by anyone and sold for a quick profit. Typically,
the vouchers were sold for US$30
less than the course fees. As news of SITCÂ’s
difficulties spread, panic selling has made
the vouchers “worthless” overnight.
At least one group of Vietnamese students
plans to take SITC Holdings to court.
About 300 MBA students from Hanoi and
Ho Chi Minh City are filing a lawsuit against
SITC for “swindling”, said Mr Nguyen Hoang
Diep, a 29-year-old legal consultant who had
paid US$3,600 for a US$4,500 MBA course.
“Most of the MBA students hold key positions
in government agencies. We are prepared
to spend more to get justice done.”
A statement by the Ministry of Foreign
Affairs here said SITC “is a commerciallyrun
entity with no connection with the Singapore
Government”, adding that it hoped
the problems “will be resolved expeditiously
in accordance with Vietnam’s laws”.