Sunday, August 18, 2013
They just wanted to get an edge in the Chinese market
And being one of the leading banksters on Wall St. only took them so far. So now the federal government is looking into whether or not JP Morgan Chase followed the ancient Chinese method of bribing high officials.
Federal authorities have opened a bribery investigation into whether JPMorgan Chase hired the children of powerful Chinese officials to help the bank win lucrative business in the booming nation, according to a confidential United States government document.Now it could be just coinky-dink that the hirings occurred at the same time as the favorable business decisions were made. And it could be that JP Morgan Chase is too big to manage. But a business decision like this would definitely have been made at the very top.
In one instance, the bank hired the son of a former Chinese banking regulator who is now the chairman of the China Everbright Group, a state-controlled financial conglomerate, according to the document, which was reviewed by The New York Times, as well as public records. After the chairman’s son came on board, JPMorgan secured multiple coveted assignments from the Chinese conglomerate, including advising a subsidiary of the company on a stock offering, records show.
The Hong Kong office of JPMorgan also hired the daughter of a Chinese railway official. That official was later detained on accusations of doling out government contracts in exchange for cash bribes, the government document and public records show.
The former official’s daughter came to JPMorgan at an opportune time for the New York-based bank: The China Railway Group, a state-controlled construction company that builds railways for the Chinese government, was in the process of selecting JPMorgan to advise on its plans to become a public company, a common move in China for businesses affiliated with the government. With JPMorgan’s help, China Railway raised more than $5 billion when it went public in 2007.
The focus of the civil investigation by the Securities and Exchange Commission’s anti-bribery unit has not been previously reported. JPMorgan — which has had a number of run-ins lately with regulators, including one over a multibillion-dollar trading loss last year — made an oblique reference to the inquiry in its quarterly filing this month. The filing stated that the S.E.C. had sought information about JPMorgan’s “employment of certain former employees in Hong Kong and its business relationships with certain clients.”
In May, according to a copy of the confidential government document, the S.E.C.’s anti-bribery unit requested from JPMorgan a battery of records about Tang Xiaoning. He is the son of Tang Shuangning, who since 2007 has been chairman of the China Everbright Group. Before that, the elder Mr. Tang was the vice chairman of China’s top banking regulator.
The agency also inquired about JPMorgan’s hiring of Zhang Xixi, the daughter of the railway official. Among other information, the S.E.C. sought “documents sufficient to identify all persons involved in the decision to hire” her.
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