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  • Dec 18, 2014
  • Updated: 8:59pm
NewsChina
BANKING

JP Morgan Chase faces US probe for hiring Chinese princelings

PUBLISHED : Sunday, 18 August, 2013, 9:30am
UPDATED : Monday, 19 August, 2013, 3:51pm

JP Morgan Chase was caught in the spotlight yesterday after media reports suggested the bank hired sons and daughters of senior Chinese officials in the hope of winning deals from major state-owned enterprises.

The revelation of JP Morgan's hiring of the son of China Everbright Group's chairman and a former railway official's daughter comes at a sensitive time for Sino-US relations.

News of the investigation came ahead of state-owned China Everbright Bank's plan late this year to raise several billion US dollars in a Hong Kong listing. A dozen US and European investment banks, including JP Morgan, were competing for roles to underwrite Everbright Bank's IPO. China Everbright Group chairman Tang Shuangning is also the chairman of its subsidiary China Everbright Bank.

The New York Times reported on its website yesterday, citing a confidential US government document, that the US administration had opened an antibribery-related investigation into JP Morgan. Specifically, it was probing the bank's hiring of the son of Tang, who is a former top banking regulator before he became China Everbright Group chairman. The investigation would also look into the bank's hiring of the daughter of Zhang Shuguang , former deputy chief engineer of China's railways ministry, for the bank's Hong Kong office.

A JP Morgan spokeswoman told the South China Morning Post that the bank had already disclosed relevant matters in a regulatory filing on August 7. In the filing, the bank said it received "a request from the [US] SEC [Securities and Exchange Commission] Division of Enforcement seeking information and documents relating to, among other matters, the firm's employment of certain former employees in Hong Kong and its business relationships with certain clients." No names were mentioned in JP Morgan's August 7 filing.

"We are fully co-operating with regulators," the spokeswoman added without elaborating further.

The investigation did not surprise China's banking community. Some online readers described such practices as an "open secret and global practice" as many Western leaders' sons and daughters often went to top financial institutions. For example, Chelsea Clinton, the only child of former US president Bill Clinton, joined Avenue Capital Group, a US$12 billion hedge fund, in 2006 when she was 26.

Tang's son and Zhang's daughter were not alone. Industry sources told the Post that the daughter of Vice-Premier Wang Yang had worked for a major European investment bank for many years in Hong Kong. The daughter of Han Zheng used to work for Standard Chartered Bank in Shanghai, where her father was the city's top official.

"It is not at all unusual for investment banks to hire wellconnected people, including children of management of existing or potential clients, whether in China or in other countries," said David Webb, a former investment banker and now a well- known independent investor and analyst in Hong Kong.

"However, if there is an indirect kickback going on, for example, by paying a large bonus linked to the winning of business from the employee's father's company or the government, or even putting the child on the payroll without actually requiring him to work, then that could be corruption and should be investigated by the relevant authorities, including Hong Kong's ICAC if the offence took place here," Webb added.

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caractacus
Socialism with Chinese characteristics?
dunndavid
If it looks like a duck, walks like a duck and quacks like a duck then it's probably a duck. Or in Chinese 如果長得像一隻鴨子,走路像一隻鴨子而且叫的像一隻鴨子那麼就應該是一隻鴨子。
John Adams
Mr Obama
DO IT !
Prosecute !
You don't deserve the title "President" until you start to act honorably , impartially and honestly
recanter
If you're gonna cheat, don't get caught!
caractacus
Crony capitalism, the Orwellian prediction come true.
John Adams
It's NOT necessary to hire princelings to get business in China !
I can cite many companies (including the company I work for ) that won their China market by sheer hard work over 20 + years : blood sweat and tears - and selling premium products with premium service ( even when certain competitors were openly bribing customers : our company refused to bribe and we even lead a "clean business" campaign in our narrow industry together with a few other honest competitors)
Sadly, I cannot count our USA competitors in that "honest" group. Our biggest USA competitor openly flouted all USA export control laws and got away with it.
Uncle Sam has one eye open and one eye closed.
caractacus
Two wrongs don't make a right. You sound typical, if you can point a finger at wrongdoing in a country other than China it means it's ok for Chinese to do anything, however illegal.
chaz_hen
Trust me...many, many Americans also support Snowden and are tired of the post 9-11 world of hyper security, out of control spying and trampling of the constitution.
Read the recent NY Times article about how the Department of "Homeland Security" has now grown so big and out of control that it regularly harasses Americans on their own land!

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