JP Morgan Faces Probe Over Well-Connected Chinese Hiring
J.P. Morgan Chase & Co, the U.S.'s biggest bank, is being investigated over their hiring practices in China — centering on the allegation that the company's hiring of the children of Chinese officials might be connected to sealing up some lucrative business deals.
.J.P. Morgan Chase & Co, the U.S.'s biggest bank, is being investigated over their hiring practices in China — centering on the allegation that the company's hiring of the children of Chinese officials might be connected to sealing up some lucrative business deals.
The New York Times first reported the news, which seems to add some details to a cryptic comment from the bank itself in their quarterly filing last month: that the S.E.C.'s anti-bribery unit was looking for information on “employment of certain former employees in Hong Kong and its business relationships with certain clients.” The Times report cites a confidential government document, cautioning that "the records do not indicate that the employees helped JPMorgan secure business. The bank has not been accused of any wrongdoing." It's not illegal for companies to hire well-connected individuals, of course. Investigators, however, are looking for evidence that those hires were taken on with the intent of brokering a business deal down the line in exchange.
It looks like investigators are interested in learning more about a handful of particular employees of the bank. For example:
— Zhang Xixi, the daughter of a Chinese railway official who has previously faced accusations of exchanging bribes for contracts. The document also requests information on “all JPMorgan employees who performed work for or on behalf of the Ministry of Railways” for the past 6 years.
—Tang Xiaoning, son of Tang Shuangning, who chairs a major Chinese financial conglomerate called China Everbright Group.
JP Morgan's hiring practices wouldn't be unique to business in the country: companies rely on close political connections in order to do business there. According to the Times, however, J.P. Morgan's actions stand out because it's less common for institutions to straight up hire the children of executives at state-owned companies. Meanwhile, the bank faces a few other investigations from American authorities: a pair of criminal and civil charges relating to the bank's mortgage-backed securities offerings from 2005 - 2007, and charges against two former employees in the "London Whale" trading disaster probe.