LONDON/SHANGHAI (Reuters) - When the new SAT was given for the first time in March, the owner of the test took unprecedented steps to stop “bad actors” from collecting and circulating material from the all-important college entrance exam.

Students chat as others line up to take part in SAT examinations at Asia-World Expo near Hong Kong Airport in Hong Kong, China October 3, 2015. REUTERS/Bobby Yip

But in the months since, China’s largest private education company has been subverting efforts to prevent cheating, Reuters found.

The company, New Oriental Education & Technology Group Inc, has regularly provided items from the tests to clients shortly after the exams are administered. Because material from past SATs is typically reused on later exams, the items New Oriental is distributing could provide test-takers with an unfair advantage.

New Oriental has put some of the exam items on its Chinese website. On Dec. 6, for instance, the Beijing-based company posted a reading passage that had been used on a version of the SAT administered in the United States three days earlier. New Oriental also has been posting information about recent questions on the TOEFL, the English-language exam widely used by colleges to assess foreign applicants. TOEFL questions are also sometimes recycled.

New Oriental also gave students access to a March version of the SAT that was administered in the United States, two students from Beijing told Reuters. One of the students showed Reuters 36 pages from that test.

In addition, the news agency viewed a copy of a full version of the SAT given in Asia last month. Most pages of the document were emblazoned with the words “Beijing New Oriental School,” a major tutoring operation run by New Oriental. A person who identified himself as a test-prep teacher at the school posted 15 pages of that exam on Chinese social media.

In response to the Reuters findings, New Oriental issued a statement condemning “illegal and illegitimate business practices, whether committed by competitors or by any of our current or past employees ... We are reviewing what has been raised and will take disciplinary actions against anyone who violated our policies and procedures.”

The Reuters findings cast new doubt on the ability of America’s standardized testing giants to contain cheating in Asia, where security breaches pose an increasing threat to the integrity of U.S. college admissions. Hundreds of thousands of students from China and other Asian nations are now enrolled at American campuses.

The SAT’s owner, the New York-based College Board, has blamed the cheating epidemic on an industry of nameless “bad actors” operating beyond the arm of the law. New Oriental, however, is one of the best-known companies in China.

A CHINESE CELEBRITY

Hundreds of thousands of students enroll in New Oriental’s test-prep classes. It has a stock market capitalization of $6.6 billion and a listing on the New York Stock Exchange. New Oriental’s founder and executive chairman, Michael Minhong Yu, is a business celebrity in China.

Yu’s company is also a business partner of Educational Testing Service, or ETS - the New Jersey non-profit that both owns the TOEFL and provides security for the SAT.

A popular 2013 feature film, “American Dreams in China,” tells the story of how a businessman, loosely modeled on Yu, launches a test-prep company after failing to obtain a visa to study in the United States. It includes a dramatic scene in which the hero confronts attorneys for “Educational Exam Services,” an American company that had sued the Chinese firm “New Dream” for copyright infringement.

Although the companies in the film are fictional, that scene is based on fact: New Oriental was caught misusing TOEFL materials more than a decade ago. In 2004, the Beijing Higher People’s Court found that New Oriental had violated the copyright of ETS, the test’s owner, by distributing content from the TOEFL without permission. The court ordered the Chinese company to pay damages.

The fresh signs that New Oriental is misusing SAT and TOEFL material are a blow to ETS.

After the copyright case, ETS and New Oriental formed a partnership that made the Beijing company the official provider of TOEFL online practice tests in China. ETS touted the deal at the time as a way to expand access to the practice material in China. ETS is also a key partner of the College Board. It earns about $300 million in revenue a year from the College Board to provide security for the SAT and administer the test.

ETS thus finds itself in an awkward position: It failed to stop its Chinese partner from compromising both ETS’s own test and the signature exam of the College Board, ETS’s biggest client.

Zach Goldberg, a College Board spokesman, said his organization has begun investigating whether New Oriental is misusing SAT material.

ETS spokesman Tom Ewing said his company “has a process in place to identify and address copyright infringement worldwide. For confidentiality and proprietary reasons we do not discuss specific instances of alleged copyright infringement.” He declined to discuss the ETS partnership with the Chinese company.

The findings also spell further trouble for New Oriental. Its shares plunged 14 percent, erasing more than $1 billion of its market value, after Reuters reported Dec. 2 that former and current New Oriental employees said the company had helped write college application essays and teacher recommendations for clients. (reut.rs/2gHWbwZ)

BIG TUTORING BUSINESS

The accusations raised in that report are being investigated by the American International Recruitment Council, which certifies agencies that recruit foreign students on behalf of U.S. colleges. New Oriental has contracts with a number of American universities that pay the company when it refers Chinese students who enroll.

In response to the Dec. 2 article, New Oriental said it did not condone application fraud. It also downplayed the importance of the business unit at the center of the story: It noted that the division that helps students apply to college accounted for only 8 percent of New Oriental’s total net revenue of $1.5 billion in the fiscal year ended May 31.

In contrast, the New Oriental unit that’s providing the SAT and TOEFL materials – the test-prep and English language business – represented 84 percent of the company’s revenue, according to its most recent annual report.

Joseph Simone, a China intellectual property rights specialist in Hong Kong, said if standardized test owners “are able to generate clear evidence of willful infringement” of copyright, they could file criminal complaints against New Oriental. ETS and the College Board would not comment on their plans.

A Reuters analysis of a New Oriental website, toefl.xdf.cn, found that the company has posted detailed descriptions of TOEFL material, including four tests given this month.

The day after the exam was given on Dec. 10, for example, New Oriental posted a question that the company said had appeared on the spoken-English section of the TOEFL: “If you can have a part-time job at the university, what position would you choose? A lab assistant, a campus tour guide, or a library assistant? Please give specific reasons.”

Reuters interviewed a student who took the TOEFL on Dec. 10 in Xi’an, a city in northwest China, and confirmed a question like that was on the exam. “I chose library assistant!” she said, laughing. A second student who took the TOEFL elsewhere that day confirmed her test included a writing prompt posted by New Oriental about the best age to travel abroad.

NEW ORIENTAL’S WEBSITE

New Oriental has also been circulating SAT material for years, an analysis of its website, sat.xdf.cn, shows. Reuters found more than a dozen instances in which New Oriental posted SAT essay prompts or reading passages from exams that had been administered in the U.S. and Asia between 2012 and this month. Those exam materials were not released for practice by the College Board, which means some of the items potentially could be reused on tests.

For instance, New Oriental posted a reading passage about the U.S. Family and Medical Leave Act. The passage came from a version of the SAT that was given on Dec. 3, Reuters determined.

How New Oriental got the material is unclear, although the post says that it was “reviewed and compiled” by its educational research team.

“We require our teachers to take tests periodically to sharpen their test taking skills, keep their knowledge up to date and be adequately prepared to effectively teach students,” the company said in its statement to Reuters. “We believe this practice is fully consistent with industry practice elsewhere, including that of established private educational service providers in the U.S.”

When the College Board first offered a redesigned SAT in March, the organization banned tutors and other non-students from taking the exam that day. They were not supposed to take the SAT in December, either.

Goldberg, the College Board spokesman, said those who take the exam “agree not to share test content. While challenging to enforce, it is important that test takers abide by this policy for test security reasons and for the protection of our intellectual property.”

Goldberg said that when the organization learns that materials are being misused, it takes “appropriate measures.”

Any pressure on New Oriental to change its business methods could put the company in a bind. It has become a powerhouse in China by promising an unrivaled ability to help students get into the college of their dreams.

“It’s created a culture so that everybody thinks, if I want to apply for American schools, I have to take tests,” said Perry Gao, a researcher at Harvard Graduate School of Education who was once a New Oriental client. “And if I have to take tests, then I have to go to New Oriental.”