"JPMorgan tracked business linked to hiring in China; Workers with political contacts given preference" by Ben Protess and Jessica Silver-Greenberg | New York Times, December 08, 2013
NEW YORK — US authorities have obtained confidential documents that shed new light on JPMorgan Chase’s decision to hire the children of China’s ruling elite, securing e-mails that show how the bank linked one prominent hire to “existing and potential business opportunities” from a Chinese government-run company.
The documents, which also include spreadsheets that list the bank’s “track record” for converting hires into business deals, offer the most detailed account yet of JPMorgan’s “Sons and Daughters” hiring program, which has been at the center of a federal bribery investigation for months.
The spreadsheets and e-mails — recently submitted by JPMorgan to authorities — illuminate how the bank created the program to prevent questionable hiring practices but ultimately viewed it as a gateway to doing business with state-owned companies in China, which commonly issue stock with the help of Wall Street banks.
Meaning China is just as deeply entwined in this fia$co of an economic system.
The hiring practices seemed to have been an open secret at the bank’s headquarters in Hong Kong, according to the documents. In the e-mail citing the “existing and potential business opportunities,” a senior JPMorgan executive in Hong Kong emphasized that the father of a job candidate was the chairman of the China Everbright Group, a state-controlled financial conglomerate.
The executive also extolled the broader benefits of the hiring program, telling colleagues in another e-mail: “You all know I have always been a big believer of the Sons and Daughters program — it almost has a linear relationship” with winning assignments to advise Chinese companies. Until now, the indications of a connection between the hires and business deals have not been so explicit.
In addition to the documents, interviews with current and former JPMorgan employees suggest that some people inside or affiliated with the bank bristled at the hiring strategy. At least two whistle-blowers have raised concerns, with one filing a complaint in April 2011 with the Hong Kong stock exchange and another contacting US authorities this year.
Underscoring the worries, a junior banker in Hong Kong resigned from JPMorgan in December 2011, writing in an e-mail that “I do not think my family is in a position to help you to the extent as others did: Bring their family business to the firm.”
The scrutiny of JPMorgan, which has not been accused of any wrongdoing, could provide a template for federal authorities as they expand their investigation to include the hiring practices of at least five other Wall Street banks conducting business in China, according to interviews with people briefed in the inquiry who were not authorized to speak publicly.
Those investigations from the Securities and Exchange Commission, which are at an early stage, involve Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, and Morgan Stanley. All five banks declined to comment.
What's the big deal? Bribes and pay-offs are standard in the banking industry.
JPMorgan is cooperating with the government inquiries from the SEC and the US attorney’s office in New York, which are examining whether the bank improperly swapped job offers and consulting contracts for business with state-owned Chinese companies. China’s economy is highly regulated, and many of its biggest companies are state-controlled.
There is no indication that executives at JPMorgan’s headquarters in New York were aware of the hiring practices described in the documents. And authorities might ultimately conclude that the bank’s hiring, while aggressive, did not cross a legal line.
JPMorgan declined to comment. The SEC and the prosecutors in New York also declined to comment.
The breadth of the investigations underscore how pervasive the hiring practices may have become in China. For two decades, Wall Street banks have sought out China’s so-called princelings, turning family and friends of senior officials into employees and consultants.
The documents reviewed by The Times, along with the interviews, suggest that some executives at JPMorgan felt a need to scramble to compete with Wall Street rivals that already had footholds in China. JPMorgan may have adopted some of their hiring strategies — and even shared employees and consultants.
Goldman Sachs has been in there for years.
Fullmark Consultants, a firm that JPMorgan hired in 2006 to help improve its standing in China, also did business with Credit Suisse, according to interviews. Fullmark, which received a $75,000-a-month contract over two years from JPMorgan, was run by Wen Ruchun, the daughter of Wen Jiabao, who at the time was China’s prime minister, with ultimate responsibility over state-owned companies.
The SEC and prosecutors are building their investigation around the Foreign Corrupt Practices Act, a 1977 law that makes it illegal for US companies to exchange “anything of value” with foreign officials to win “an improper advantage” in obtaining business.
Then they are indicting the entire system, because that kind of thing is rampant across all global indu$tries.
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I'll look at the past week, but I don't think the Globe followed up in what would be another in a long, long list of one-day wonders when it comes to Sunday Globe specials.
Readers, I also have a stack of articles regarding JPMorgan and fraud; however, I am getting the feeling they will never be posted here. It's mostly mouthpiece media, and I'm $imply tired of that tra$h. I'm getting the feeling they will be deposited in the recycling bag soon. Sorry.
I'll look at the past week, but I don't think the Globe followed up in what would be another in a long, long list of one-day wonders when it comes to Sunday Globe specials.
Readers, I also have a stack of articles regarding JPMorgan and fraud; however, I am getting the feeling they will never be posted here. It's mostly mouthpiece media, and I'm $imply tired of that tra$h. I'm getting the feeling they will be deposited in the recycling bag soon. Sorry.
