Well, maybe the problem is the MBA course they are doing. In Accounting at my MBA, the failure rate was massive - like 20%. That was probably the hardest course, but there are plenty that are tough.
I wonder as well if the problem is the people who are doing the MBA where you are. If you take an good engineer and make him do an MBA, he doesn't suddenly become an idiot ... what he will become is more aware of the other issues involved in running a business.