When US federal prosecutors opened a criminal probe of hiring practices at JPMorgan Chase & Co. and other banks in China, many people howled, suggesting that the American government was meddling in hiring decisions and the like. But the investigation has turned up some interesting information that implies prosecutors were right to take a closer look.
The key issue apparently is whether the decision to hire the offspring of powerful bureaucrats in China was somehow tied to business deals, perhaps as quid pro quo for doing business.
that investigators have uncovered "emails 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 article states.
"The spreadsheets and emails--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."
One executive in Hong Kong sent an email to colleagues saying "you all know I have always been a big believer of the Sons and Daughters program," noting that the program almost has "a linear relationship" with winning assignments to advise Chinese companies.
On the surface, this would appear to confirm that the motivation to hire these people was based on winning mandates. Whether it is enough to prove a violation of the US Foreign Corrupt Practices Act is unclear.
In a sense, this is bad news for all top banks. Some think that the entire group competed to hire the sons and daughters of powerful people. At least two whistleblowers have emerged from JPMorgan. If they end up with a payout, we might see others emerge elsewhere.