“You fired yourself” my board shouted at me through a Zoom call.
I had just made them both 10 million dollars in profit this year as CEO of ZipX. As a gift a 6 months earlier, one gave me a book of Ghandi quotes with a personalized note that said “You will always have a job.” I wasn’t surprised by this turn of events.
I started Trusu, a logistics company in 2016 with my friend & cofounder Osman that brought western goods in Southeast Asia. We built it, got acquired in 2018, and then Osman left. I luckily grew the sales early on and was promoted to CEO of the company that acquired mine. Our sales ballooned to $50,000,000 USD.
We were bought by a 70 year old Taiwanese logistics woman named Morty Langslow, who built up the conglamerate Lengton Group since she was 16.
https://www.techinasia.com/ecommerce-expats-startup-trusu-acquired-hong-kong-logistics-firm-zipx
On the day of the acquisition, she handed Osman and I each $5,000 in cash which I promptly put in a bank and reported as income.
She made a disgusted face when I told her that.
“That was a gift” Was this the first test of how corrupt this company would be?
My cofounder only stayed on for a year before leaving. Even though he vested and was legally owed money from our acquisition. She tried to extort him by withholding his salary until he would agree to give back his shares for $1.
According to the terms of our acquisition, I had another year before I could leave. This was going to be a long year.
Win win
Morty actually only owns a minority share of Lenton Group. She allowed government bodies like DPDGroup in France and JapanPost in Japan to buy the majority: https://www.lapostegroupe.com/en/dpdgroup-takes-a-majority-stake-in-lenton
She actually has a giant umbrella of clone companies of Lenton Group in countries all over Asia which she owns a majority of and is filled with her family members. One time I got her son to draw it all out for me as none of it made sense.
It was such a good scam.
She sold 90% of Lenton Group to these big investors and remained CEO so she could maintain all relationships and direct sales where she needed.
Then she would occasionally redirect sales and deals from Lenton Group to one of the clone companies that she owned a majority in.
If a $10,000,000 deal came into Lenton Group, she would only see $1,000,000 of that. But if she directed that to one of the clone companies, she could keep all $10,000,000.
The other companies have separate websites, separate teams, but the same logistics network run by Lenton Group. So she didn’t have to worry about managing anything different, in fact the work flow was exactly the same as if Lenton Group had taken the sale but with none of the profit.
In turn, she got to say she brought some business to Lenton Group through their logistics network with had a very low pre-negotiated margin with her other businesses.
This alone was an amazing deal. It must have taken decades to build and work this out. But it wasn’t enough to have a bunch of shell companies taking all the profit.
What if she could get Lenton Group to pay for all the expenses of the shell companies too?
Her shareholders were in other countries, they just had to trust whoever she said was working there was actually working there. She had them all technically hired under Lenton Group and working on her shell companies, maintaining the websites.
This is where I got acquired into the mix. I was made CEO of one of the shell companies. It took a long time to see the whole picture. I was suspicious when they kept telling me I couldn’t come to the office anytime their shareholders were around.
I was then told I needed to be paid from Lenton Group and not my own company for “compliance reasons.” My salary is withheld until I sign a document saying I am also a LinEx employee in addition to being CEO of ZipX. LinEx is a subsidiary of Lenton Group. I never spent a single day in their office or doing work for them.
You may be asking, how did the honest employees you are directing have to say about this?
They weren’t happy but what would they do? Get fired by speaking up?
They don’t have the ear of their investors. DPDGroup is a 100,000 employee public company. Who are you going to call in that bureaucratic mess?
They have all since been able to find better jobs.
The code for all the shell companies was written by this team of Lenton Group employees. Nearly all business expenses like maintaining the website are likely to this day still paid for by Lenton Group. No profit is spared. Employees eventually hired by the other shell companies are even originally hired and trained by Lenton.
Family is important
Her family members held multiple positions at several of the shell companies but always took a nice salary from Lenton Group.
Her sister ran the Taiwanese subsidiary.
Her brother, Charles Chu, ran several of the Chinese shell companies like Jifeng, while maintaining the role of Managing Director of Lenton Group China: https://www.dpd.com/cn/en/2019/11/01/dpd-china-launch-event/
Jifeng was completely full of debt.
Another brother was fresh out of jail for business fraud.
Her nephew was an employee in the basement. I would shoot the shit with him while he played video games all day complaining about the company.
Her son, Alex Langslow, was Manager of Marketing & Communications at Lenton Group while also director at my company, ZipX. He couldn’t be on the website or be mentioned on any public documents.
Was I just a white, foreign face to this company?
I had no access to the bank accounts and they hired a very slimey CFO would only report to her and her son. Anytime I ask him to do something for ZipX, he says to bring it up to Morty.
At this point, I was a regular in the family. They held weekly dinners and let me crash in their various extra apartments when I was traveling through China. Sometimes I could carpool with them and their private driver if I was early enough.
Her son didn’t seem to understand the family business was corruption. He spent most of his time day dreaming about camping and paragliding. I don’t think he really had a choice but to work in this company his whole life. He invited me to Cocaine fueled yacht parties on the water with his group of other spoiled rich kids. He tells me some very homoerotic stories about their last bachelor party in Bali. The men in the family requested my presence multiple times to help entertaining company guests over KTV. If you are not familiar, there’s a very awkward version of KTV where you pick women from a lineup to sing karaoke with you and they sit next you, hold your hand, and compliment you on your singing for a few hours.
One night over Christmas dinner, Morty invites an executive from DPDGroup, Valerie Dubuisson. Something is different about this, Morty is speaking more freely around her than usual. She gives her a fancy bottle of wine and asks her what kind of pricing ZipX should use to win the other bidders for a government deal. Before the night is over she offers my office for her husband to work out of when he is in our part of town.
Over the next 6 months Morty, her son, and her brother, are constantly sending me prefilled purchase orders with the bid Valerie told them to use. I am just supposed to sign my name. There’s so many of them.
It’s my name importing everything. My name exporting everything.
My 2 years are almost up now.
I start to get nervous as I realize she hasn’t even signed our equity agreement. A document she should have signed almost 2 years ago when we got acquired.
Clearly I am next casualty.
ZipX makes far too much money from those government deals. Alex tells me she said there is “too much profit.” and that he was asked to start buying nice meals 3 times a week if I wanted to join him sometimes.
I obliged.
I find out way too much about Alex over this time. Last week he didn’t respond because he had pot brownie and unprotected sex with a girl I started dating. I appreciated his trust of my lack of STDs but advised him to use a condom as sex can create babies. He is 30 years old.
Later he repeats how he’s been buying nice meals while I am in the room with Morty.
She suddenly tells him “No, no, I never said that.”
I have never seen Alex look so stressed. He swears she did. He doesn’t seem to understand my presence might be changing her memory.
He receives an additional $50,000 bonus and another $50,000 to renovate his kitchen. I am shocked they included kitchen renovations on our financial documents.
I inform Morty I no longer want her son around me or the office I have to be in. She told me we are a family and brothers fight all the time. She gives me a $100,000 bonus.
This is the only time I have seen her be generous. Gross.
Joe, the other minority shareholder of ZipX who isn’t related to Morty starts asking ZipX to hire his family members so he can get a cut of all this too. They make his stay at home wife Head of Marketing. My employees tell me they don’t want to work with her. That she has no idea what she is doing. I pass along these notes.
As CEO I have to manage all our employees not just the nepotism hires. Other employees start asking me why Alex isn’t fired when he doesn’t respond to any email or call. I have no power to fire him but I decide to shame him into doing his job. I have all employees on a rotation every hour individually asking Alex why he isn’t responding when they send him a task.
Alex starts to get mad at me. I tell Alex he can explain why he makes so much more than them yet does no work.
It seems to work.
My 2 years are up
This company is an obvious scam and I am ready to leave china.
Morty has been making all kinds of excuses about why she hasn’t signed my equity agreement citing “poor corporate governance.” She has had over 50 years of a running multiple businesses.
On the other hand, she might be going crazy at the same time. Her last few requests of me were to start making “music videos” and marketing ourselves with this cute lady bug she’s been drawing.
Morty withholds my salary while I ask about my exit. I decide it doesn’t matter if she’s crazy or greedy. She really only has a few tricks.
I see an email where she is now acquiring one of her brother Charles’s shell companies.
One of the times I crashed at his apartment, he said I could store my stuff there. Sensing out relationship was about to end soon, I asked for it back. He said it was gone. He had thousands of dollars of my stuff. Some of it had sentimental value to me.
I asked Morty what to do, she said “That’s between you and Charles.”
Out of desperation, I asked Alex for his advice. He got mad at me for asking. Finally, he said “Just write it off.”
Talking with Morty and her family is getting nowhere. She informs me that we still have “too much profit” even though she told me she didn’t say that before. Iit doesn’t look good for their public filing so we will put half the profit on accounts receivable allowing her to split it over two years with the majority showing in the second year.
Unfortunately, that means my equity is going to be severely cut if I try to sell at book value with my exit this year.
“Terrible timing.” she says
I finally lawyer up
Lucky for me, ZipX itself is based in Hong Kong, not China. So I have a chance at this I figure.
As CEO I have access to to all company emails and financial documents over the last 2 years. The fraud is so obvious I figure this will be easy.
12 lawyers in a row tell me I don’t have a case. They tell me people don’t really sue here in Hong Kong. Just talk to Morty directly, this is likely just a misunderstanding.
I want a 13th opinion.
I finally google lawyer ranking in Hong Kong and contact the top few who have dozens of awards. The only one gets back to me is this British Expat lawyer. He is in his 50s and charges $1,500 an hour.
He was worth it.
He looks over everything and tell me this is pretty common in Hong Kong. The legal system here is so screwed up we may not have a great time in court.
He asks for more and more documents. It becomes clear to me that some of the more damning things Morty said were in zoom calls. She always kept them out of emails and our very frequent Whatsapp and Wechat messages.
My lawyer seemed to know exactly how to write to her. Within the first few letters, she was already threatening to “complain about him to the local Law Society.” This was a good sign he said.
He also said her lawyer had numerous typos and unclear replies. Maybe it was yet another unqualified relative.
It only took a month for her to settle.
Whistleblowing
At the same time I hired the lawyer, I started whistleblowing to the CEO / CFO of DPDGroup about this whole thing.
My lawyer advised me to pause it while she settled so I continued after she paid me.
I provided everything. Texts, emails, financial reports proving everything.
Fortunately for me DPDGroup has a “zero tolerance approach to all forms of bribery, corruption and fraud”.
To this day nothing changed.
Special thanks to the Wall Street Journal and Forbes for listening to my report and saying this wasn’t relevant to their mostly American audience.