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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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John Adams
Mr Obama at al. in USA Govt : GO FOR IT !
Just for once indite a USA company for malfeasance in China, DO IT !
If you dare........!
DO IT , instead of bad-mouthing all international companies who break your own internal- USA-country rules, which rules you never srtictly apply to USA companies
John Adams
Yes Mr Obama
DO IT !
I can cite cases when your own USA companies have blatantly dis-obeyed your own USA laws, and I have even reported the cases to the USA consulate in HK.
But never once, not even once, did Mr USA take action
Hypocrites to the core
No wonder Snowden is a hero everywhere except in the USA. The real reason is that Snowden exposed your hypocrisy, just as did Jesus with the Pharisees and the Saducees
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!
daily
Why should anybody be surprised about this?.............Many investment banks have been doing this for many years. Why else do you think they would want to hire incompetent Chinese graduates that returned from the States?............for their English written skills or for their "paid-for-MBA's"?............don't be so naive!
KwunTongBypass
What needs to be investigated?? Isn't this what everybody calls "the way to do business in China"?
chaz_hen
Ever read a story about an unsuccessful Princeling in China? This "revelation" is merely the tip of the iceberg.
goncalo
Nooo, they would never do such a thing!

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