"JPMorgan Chase to pay $264m in bribe case" by Ben Protess and Alexandra Stevenson New York Times November 18, 2016
NEW YORK — Vying for lucrative deals in China, JPMorgan Chase deployed all the usual wining-and-dining tactics that big banks use to woo clients. JPMorgan, federal authorities now say, also had ways of sweetening the deal that crossed a legal line.
Federal prosecutors and regulators announced on Thursday a settlement of roughly $264 million with the bank and its Hong Kong subsidiary, accusing them of a vast foreign bribery scheme that may have spread to a number of Wall Street banks.
The case centered on JPMorgan’s hiring practices in China, where it is accused of hiring the children of Chinese leaders to win business in the fast-growing nation. Some of the well-connected candidates were unqualified, authorities said, and often “performed ancillary work” — telltale signs of hidden bribery.
The case could lay the groundwork for authorities to pursue penalties against other big banks as well. Banks including HSBC, Goldman Sachs, and Deutsche Bank have hinted that they face investigations into their hiring practices in China as part of a larger sweep by the agency that began in 2013.
“We do not expect this to be the last action resulting from that sweep,” Andrew J. Ceresney, the head of enforcement at the Securities and Exchange Commission, told reporters Thursday.
In the investigation of JPMorgan, it was not immediately apparent whether the bank would be accused of carrying out a quid pro quo arrangement, an issue at the heart of whether JPMorgan violated US law governing foreign bribery.
The bank argued that the hiring of well-connected employees was routine in China, and that its own hires fell into a gray area of foreign bribery laws.
But the prosecutors and regulators say that as JPMorgan hired more and more candidates based on referrals from Chinese leaders, senior bankers in several instances explicitly tied those jobs or internships to securing deals with Chinese government-run companies.
To be hired, a referred candidate had to have, in the bank’s own words, a “directly attributable linkage to business opportunity,” a scheme that enabled the company to win or retain business resulting in more than $100 million in revenue for the bank or its affiliates, prosecutors and regulators said.
“The common refrain that this is simply how business is done overseas is no defense,” said Robert L. Capers, the US attorney in Brooklyn, whose office helped lead the criminal investigation into the bank. “This is no longer business as usual; it is corruption.”
Still, authorities acknowledged that JPMorgan cooperated with the probe and they lowered the penalty accordingly. The bank, authorities stated, also disciplined two dozen employees and “took significant employment action” that led to the departure of six employees who participated in the misconduct.
I think that takes care of things.