JPMorgan investigated for hiring Chinese officials’ kids
Monday, August 19, 2013
NEW YORK (AP) — U.S. regulators are looking into whether JPMorgan Chase hired the children of Chinese officials to help it boost its business in China, The New York Times reported.
The Times said Sunday details of the civil investigation were in a confidential U.S. government document that it saw. According to the document, the anti-bribery unit of the Securities and Exchange Commission asked JPMorgan for records about some of the bank’s hires in China.
According to the Times, the document shows that the bank hired the son of a former Chinese banking regulator who is now chairman of the China Everbright Group, a state-controlled financial conglomerate. The paper reported that after the chairman’s son joined the bank, JPMorgan won several assignments from Everbright.
JPMorgan’s Hong Kong office also hired the daughter of a Chinese railway official.
The official was later detained on accusations of taking cash bribes in exchange for handing out government contracts, the Times reported, citing the U.S. document and public records.
The woman came to JPMorgan at the time that The China Railway Group was in the process of picking JPMorgan to advise it on its plans to go public. JPMorgan helped China Railway raise more than $5 billion when it went public in 2007.
Information sought by the SEC included “documents sufficient to identify all persons involved in the decision to hire” her, the Times reported.
JPMorgan referred to the investigation in a securities filing earlier this month. It said the SEC’s enforcement division is seeking information about the bank’s employment of some people in Hong Kong and its business relationships with some clients, but didn’t give any other details.
On Sunday, JPMorgan issued a statement saying “We publicly disclosed this matter in our 10-Q filing on Aug. 7, and are fully cooperating with regulators.” A spokeswoman for the New York bank declined to comment further.
The Times report said it’s common for global companies to hire the children of Chinese politicians, but that it’s unusual for a company to hire the children of officials of state-controlled companies.
The government document did not definitively link JPMorgan hiring to its ability to win business, or suggest that the employees were unqualified, the Times reported. It also noted that there’s nothing illegal about hiring well-connected people, as long as they’re qualified for the job.
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