• Mon
  • Apr 21, 2014
  • Updated: 9:37pm

JPMorgan Chase

JPMorgan Chase is the largest bank in the United States, and one of the world’s largest public companies. 

BusinessBanking & Finance

Chinese web users cynical over JP Morgan bribery probe

PUBLISHED : Monday, 19 August, 2013, 2:32pm
UPDATED : Tuesday, 20 August, 2013, 1:05am

Chinese web users expressed cynicism on Monday about a reported US investigation into banking giant JP Morgan Chase over its hiring of influential officials’ children, with some calling the practice widespread and an “open secret”.

The US Securities and Exchange Commission (SEC) is mounting a bribery probe into JP Morgan for allegedly employing officials’ relatives to help secure lucrative contracts in China, the New York Times reported at the weekend.

The children include the son of former Chinese banking regulator Tang Shangning, who is now chairman of the state-run financial conglomerate China Everbright Group.

The American investment banking giant secured a succession of sought-after deals from China Everbright after hiring him, the newspaper said, citing a confidential US government document.

Another case involved the daughter of a Chinese railway official who was later arrested in connection with a bribery scandal, it said, adding that the China Railway Group selected JP Morgan to advise it on becoming a public company.

The report triggered widespread vitriol on China’s Twitter-like weibo social networks, with some users speculating it was common practice in the country.

“I think there would be dramatic findings if investigations were carried out into every mid-level manager from mainland China” at other investment banks, wrote one observer.

Another user, MegCH, said JP Morgan was unfortunate to be singled out: “Isn’t this a regular trick of investment banks, state-owned companies and some government agencies? JP Morgan is just unlucky.”

Some others questioned why the investigation was being conducted by US authorities.

“This is really ridiculous. Shouldn’t Chinese authorities launch probes into such matters?” asked one person whose pseudonym was a Chinese saying that means: “I try to be righteous although the general moral tone is low”.

The Times said the government document did not show a clear link between JP Morgan’s hiring policy and its ability to secure business, nor did the records suggest that the hired employees were unqualified, or that they necessarily helped it secure business.

The bank has not been accused of any wrongdoing, the paper added.

Share

3

This article is now closed to comments

newgalileo
The practice widespread and an “open secret” indeed. Actually I find many U.S. companies pretty clever in doing it. Most however do it with a long-term view. They sponsor "the right kids" to study in the USA, or train there, often in their US headquarters. Then they return to China to work in the company. It is rather a long-term investment to have high-level employees with a strong guanxi network. What is different in this case is the blatant links to get an immediate return, which is mostly not the case. EU companies do it rather less than US companies.
Sifu_628
"Quanxi" or exploiting relationships with officials in the pursuit of business opportunities is a common practice within and beyond China. Capitalists are predatory in their nature and will seek every advantage possible to gain over their competitors. It's simply in their DNA.
The question remains: what's in the makeup of public officials tasked with upholding the wellbeing of their citizens? Are they to secure benefits for themselves, their children, friends and cohorts or protect and enhance the interests of citizens who they govern.
Attacking JPMorgan and other bankers is necessary but does not get to the root-cause of this problem.
newgalileo
You are so right!? Guanxi is indeed common practice and more than often linked to corruption in China. As China is more capitalist than Western countries, it is indeed super predatory. The West is just trying to play catch up with the Chinese masters!

Login

SCMP.com Account

or