Corporate Scandal that diminish the society’s confidence Thorough compliance and initiation of the sectoral association are required

26.06.2017

Togo Iryo Journal (Unified Medical journal):

An unprecedented scandal of MLM (Multilevel Marketing), so-called “network business”, company is swaying the industry. This scandal may erode the society’s long-standing confidence toward MLM, which is fostered in recent years through achieving fairness of MLM business in the background of strict restriction by Act on Specified Commercial Transactions. Thorough compliance is necessary for healthy development of the industry because there are some cases in the business that medical professions relate to the sales. In this journal, I sought problems and issues that the business industry has through the scandal.

Foreign media also observes

The topic company under discussion is about Total Swiss International (CEO: Wang Wen Qin), which does network business of supplements with the “TOTAL SWISS” brand. On September 29 last year, some offices of this company were investigated by Taiwanese governmental department of health and the police with being confiscated with its products or promotional goods, and Mr. Wang was arrested with other 6 top members. The charges are infringement of the Health Food Control Act, the Act Governing Food Sanitation, sales of unapproved supplement and excessive advertising etc., and the company sold no less than 200 million NTD in total during the period from January 2015 up to September last year, when the investigation was done. Not less than 300 policemen and food prosecutors engaged in the investigation in a tense mood, and the scene was broadcasted by not only Taiwanese but also overseas media. In addition to this extensive investigation, the news also captured attention of people in Taiwan because distributors of the company repeatedly accused of their health damages caused by ineligible medical practice by Mr. Wang Wen Qin. According to the local news, the prosecutor indicted the 7 top members including Mr, Wang of the infringement of the Health Food Control Act, fraud etc. on February 11 this year, and requested the court to confiscate Mr. Wang’s illicit income of 3.2 million RMB (11.8 billion JPY).

Ignored Act on Specified Commercial Transactions

“Earned a doctorate of Physics from Taiwan National University, earned a doctoral degree (chemistry and biochemistry) from New York University. Senior inspector of biochemistry institute in Nuremberg University (Germany). Affiliate professor of medical department in Singapore University. Former member of nursery organization institute of WHO”. This is the profile of Mr. Wang Wen Qin referred by himself, and the company partially refers it in its brochure. All things are false and his final educational background is graduation from Tainan 1st junior high school. A few months ago before the investigation held, an investigative bureau inquired about the profile to the archive center of New York University and obtained an answer of “no such person in the list of graduates” from the center. Mr. Wang Wen Qin answers to the interrogation from the local prosecutor that the phrases of the product effect on ads and his profile are advertised exceedingly by the distributors arbitrarily and imputes his responsibility to the distributors with saying “the members did not buy the products because of my profile”. The impact of the scandal also hit to Japanese Total Swiss subsidiary and swayed the related persons. As a matter of fact, the company also does business in Japan. We cannot sit by and watch this as a problem of someone else. A distributor of the company told “it is my first hearing of the arrogation of the educational background of Mr. Wang Wen Qin. This is his betrayal to the distributor” and unsheathed his anger. No wonder. The company still remains the false profile on its webpage and there is no sign of correction or callback of the company brochure, though it has passed a half year since the investigation took place. It is an obvious breach of Act on Specified Commercial Transactions.

Lack of corporate ethics

Japanese players in the MLM industry are also swayed by the scandal. Companies in the industry repeated bitter and vicious experiences in the past, such as that accumulated confidence from the society was eroded, and not only the company causing scandal but also other innocent companies and distributors are involved in strict criticizes from the society, once a MLM company causes a scandalous happening. This Total Swiss scandal is the most serious in the past in that it contains a matter of criminality. The lack of ethics depreciating compliance by Mr. Wang Wen Qin is directly reflected to the company activity and causes some serious breaches of the laws. “Our company is named after our pursuing for the safeness” This is the catch-phrase that Total Swiss set in the company brochure. As tokens of “warranty for product quality and responsibility”, which sustains their “pursuing for the safeness”, the company puts a mark of (1) production and manufacturing in Switzerland, (2) manufacturing in GMP certified factory, (3) “Swiss Vitamin Institute”, (4) “Haral” certification, (5) certification logo of “European Vegetable Union”, (6) “Green Label” and so on. Everyone may believe that the company uses these logos after legitimate procedure, if they look the company brochure. Mr. Wang Wen Qin prints these associations’ logo even in his name card. But, regarding the GMP mark, it means the certified factory that meets the standards of manufacturing and product management recommended by WHO, and all products manufactured in the factory can be provided with the logo. Similarly, regarding the mark of Swiss Vitamin Institute, any company can describe the fact that it undergoes its product analysis from the institute if it actually takes the analysis. The problem is the mark except the two and the name of the Switzerland. Though I do not describe the detail of the associations or the organization because of the space constraint, any of the associations or the organizations carries a certain authority and history. Then what can happen if Total Swiss uses the logo marks arbitrarily without official certification or permissions for use from these associations or organizations?

No notice for infringements

To come right to the point, the company is using the logo mark arbitrarily. Needless to say it is a breach of the law. The writer of this article has solid and detailed evidence from the associations to sustain the breach. In addition, the company uses a similar design of the flag of the Switzerland as their company logo printing it next to the company name. Mr. Hajime Takayama, General Manager of Total Swiss Japan, told the writer “it was a very hard procedure, because we had to get permission from the country”, but he does not show any evidence to prove the difficulty. Furthermore, the authority of the Swiss Confederation blames the company for “it is a silly behavior of the company which leads misunderstanding of people as if the company would deal with products of Swiss Made value”. “European V-Label” office also protests the company with saying “you are not the certified. Your use of our logo is illegal”. The company also uses the mark of “American Halal” by “IFNCA” (Islamic Food and Nutrition Council of America) illegally without permission. IFNCA cautions the company not to use its logo without permission by posting its protest in the space of “black list” on the web. “European Vegetable Union” is also illegally used with its certification logo mark, so the union sends a notification to the company to require stopping using of the logo as it is an infringement of the law. The same is as “Green Label” certification mark. Mr. Wang Wen Qin is using the mark of “Green Label Singapore” illegally with insisting that he has a license to show the logo exclusively. This is just a fraud.

Safeness of foods is also a matter

What the writer of this article watched most carefully in this news collecting was safeness of the products of the company. The writer checked if the contents of the label really meet the legal standard in Japan or not, since it is concerned as the products are taken into our body. We cannot wipe out the concern about the safeness since the CEO of the company is a man who hoaxed its distributor by telling fake backgrounds and did illegal things aforementioned. The writer carefully and precisely researched by asking the public authorities, because this topic is possible to be charged for defamation or prevention of business for the company. The concern for the safeness was proven right. Some products were confirmed to breach the clause of the law which stipulates the Japanese standard of food labeling, though the details are omitted by the space constraint. Needless to say, the penalty for selling food products without labeling in accordance with the standard is heavy. I am not sure how this kind of fraudulence or illegal acts aforementioned hurts the pride of the people in the network business industry, or erodes confidence to the business from the society, but the impact may not be so small. This scandal asks many questions to the relevant people in the industry. Some of the questions also made MLM hosting companies reminded corporate ethics, thorough compliance and so on. Sectoral associations which undertake a role to support healthy development of the MLM industry were also asked some questions. Particularly, the most important in the questions to the associations is to take a strong initiation for the member companies in order to make infringement actions extinct, with contacting to the regulatory administration closely. Now, all relatives to the network business industry are asked in what way they seriously confront the strict eyes from the society.