Practice Test:Reading Comprehension
MARK HUGHES is a master of the fine art of survival. His Los Angeles-based Herbalife International Inc. is a pyramid outfit that peddles weight-loss and nutrition concoctions of dubious value. Bad publicity and regulatory crackdowns hurt his U.S. business in the late 1980s. But Hughes, 41, continues to enjoy a luxurious lifestyle in a $20 million Beverly Hills mansion. He has been sharing the pad and a yacht with his third wife, a former Miss Petite U.S.A. He can finance this lavish lifestyle just on his salary and bonus, which last year came to $7.3 million.
He survived his troubles in the U.S. by moving overseas, where regulators are less zealous and consumers even more naive, at least initially. Today 77% of Herbalife retail sales derive from overseas. Its new prowling grounds: Asia and Russia. Last year Herbalife’s net earnings doubled, to $45 million, on net sales of $632 million. Based on Herbalife’s Nasdaq-traded stock, the company has a market capitalization of $790 million, making Hughes’ 58% worth $454 million.
There’s a worm, though, in Hughes’ apple. Foreigners aren’t stupid. In the end they know when they’ve been had. In France, for instance, retail sales rose to $97 million by 1993 and then plunged to $12 million last year. In Germany sales hit $159 million in 1994 and have since dropped to $54 million.
Perhaps aware that the world may not provide an infinite supply of suckers, Hughes wanted to unload some of his shares. But in March, after Herbalife’s stock collapsed, he put off a plan to dump about a third of his holdings on the public.
Contributing to Hughes’ woes, Herbalife’s chief counsel and legal attack dog, David Addis, quit in January. Before packing up, he reportedly bellowed at Hughes, “I can’t protect you anymore.” Addis, who says he wants to spend more time with his family, chuckles and claims attorney-client privilege.
Trouble on the home front, too. On a recent conference call with distributors, Hughes revealed he’s divorcing his wife, Suzan, whose beaming and perky image adorns much of Herbalife’s literature.
Meanwhile, in a lawsuit that’s been quietly moving through Arizona’s Superior Court, former Herbalife distributor Daniel Fallow of Sandpoint, Idaho charges that Herbalife arbitrarily withholds payment to distributors and marks up its products over seven times the cost of manufacturing. Fallow also claims Hughes wanted to use the Russian mafia to gain entry to that nation’s market.
Fallow himself is no angel, but his lawsuit, which was posted on the Internet, brought out other complaints. Randy Cox of Lewiston, Idaho says Herbalife “destroyed my business” after he and his wife complained to the company that they were being cheated out of their money by higher-ups in the pyramid organization.
Will Hughes survive again? Don’t count on it this time.
1. Herbalife Inc is based in:
(1) Los Angeles
(3) New York
2. Daniel Fallow:
(1) Was a former attorney for Hughes
(2) Was a former distributor of Herbalife
(3) Co-founded Herbalife
(4) Ran Herbalife’s German unit
3. Which of the following countries is mentioned where Hughes operated Herbalife?
4. The complaint of Randy Cox of Lewiston, Idaho, against Herbalife was:
(1) The company did not pay them their dues
(2) The products supplied by Hughes were inferior
(3) Their higher-ups in the pyramid cheated them
(4) Hughes had connections with the Russian mafia
5. Which of the following countries is NOT mentioned in the passage?
6. In the year in which Hughes’ salary and bonuses came to US$ 7.3 million, what was the retail sales for Herbalife in France?
(1) $12 million
(2) $159 million
(3) $54 million
(4) $97 million
7. At the time when this article was written, if Herbalife had had a market capitalisation of $ 1 billion, what would have been Hughes’ share?
(1) $420 million
(2) $580 million
(3) $125 million
(4) $500 million
The first and most important rule of legitimate or popular government, that is to say, of government whose object is the good of the people, is therefore, as I have observed, to follow in everything the general will. But to follow this will it is necessary to know it, and above all to distinguish it from the particular will, beginning with one’s self: this distinction is
always very difficult to make, and only the most sublime virtue can afford sufficient illumination for it. As, in order to will, it is necessary to be free, a difficulty no less great than the former arises — that of preserving at once the public liberty and the authority of government. Look into the motives which have induced men, once united by their common needs in a general society, to unite themselves still more intimately by means of civil societies: you will find no other motive than that of assuring the property, life and liberty of each member by the protection of all. But can men be forced to defend the liberty of any one among them, without trespassing on that of others?
And how can they provide for the public needs, without alienating the individual property of those who are forced to contribute to them? With whatever sophistry all this may be covered over, it is
certain that if any constraint can be laid on my will, I am no longer free, and that I am no longer master of my own property, if any one else can lay a hand on it. This difficulty, which would
have seemed insurmountable, has been removed, like the first, by the most sublime of all human institutions, or rather by a divine inspiration, which teaches mankind to imitate here below the
unchangeable decrees of the Deity. By what inconceivable art has a means been found of making men free by making them subject; of using in the service of the State the properties, the persons and even the lives of all its members, without constraining and without consulting them; of confining their will by their own admission; of overcoming their refusal by that consent, and forcing them to punish themselves, when they act against their own will? How can it be that all should obey, yet nobody take upon him to command, and that all should serve, and yet have no masters, but be the more free, as, in apparent subjection, each loses no part of his liberty but what might
be hurtful to that of another? These wonders are the work of law. It is to law alone that men owe justice and liberty. It is this salutary organ of the will of all which establishes, in civil right, the
natural equality between men. It is this celestial voice which dictates to each citizen the precepts of public reason, and teaches him to act according to the rules of his own judgment, and not to
behave inconsistently with himself. It is with this voice alone that political rulers should speak when they command; for no sooner does one man, setting aside the law, claim to subject another to his private will, than he departs from the state of civil society, and confronts him face to face in the pure state of nature, in which obedience is prescribed solely by necessity.
1. The paradox in line 28 is resolved according to the author when an individual
A. submits to the rule of law and thus is at liberty to do anything that does not harm another person
B. behaves according to the natural rights of man and not according to imposed rules
C. agrees to follow the rule of law even when it is against his best interests
D. belongs to a society which guarantees individual liberty at all times
E. follows the will of the majority
2. The author’s attitude to law in this passage is best conveyed as
A. respect for its inalienable authority
B. extolling its importance as a human institution
C. resignation to the need for its imposition on the majority
D. acceptance of its restrictions
E. praise for its divine origin
3. The author would agree with all of the following except
A. government must maintain its authority without unduly compromising personal liberty
B. individual freedom is threatened in the absence of law
C. justice cannot be ensured in the absence of law
D. political leaders should use the law as their guide to correct leadership
E. the law recognizes that all men are capable of recognizing what is in the general interest