CFOs and other senior executives need to be aware that giving jobs to relatives and friends of government officials for business opportunities is a form of bribe.
JPMorgan Chase & Co managing director Timothy Fletcher, who had worked in the bank's Hong Kong unit before, is barred from the industry for life by the US Federal Reserve over his role in a China hiring program.
According to the Fed’s announcement on Thursday, Fletcher had “improperly administered” the program to hire relatives of Chinese officials “in order to obtain improper business advantages for the firm.” The Fed added that Fletcher consented to the prohibition.
The scandalous China hiring program dubbed internally as a “Sons & Daughters Program” led to a penalty of US$246 million in 2016 for the violation of the the US’s Foreign Corrupt Practices Act (FCPA).
JPMorgan hired about 100 interns and full-time workers at the request of government officials in China and other parts of Asia from 2006 to 2013.
According to US regulators, the bank as a result generated US$100 million in revenues.
Credit Suisse fined for the same reason
Last year, Credit Suisse Group AG was fined for the same reason. The bank had to pay about US$77 million to settle US probes into its hiring of people related to government officials in China and other Asia Pacific countries for lucrative business.
While Credit Suisse’s Hong Kong unit would pay a $47.03 million criminal fine and enter a non-prosecution agreement, the Swiss bank would pay $29.82 million to settle related U.S. Securities and Exchange Commission civil claims, according to a statement by the regulator.
The bank violated the Foreign Corrupt Practices Act by hiring and promoting people connected with Asian government officials from at least 2007 through 2013, as a quid pro quo to win banking business, SEC said.
Credit Suisse offered jobs to more than 100 individuals referred by or connected to government officials, resulting in millions of dollars of business.
Those hires included more than 60 people recommended by officials from Chinese state-owned companies, an SEC order stated.
“Bribery can take many forms, including granting employment to friends and relatives of government officials. Credit Suisse’s practice of engaging in these hiring practices violated the law, and it is now being held to account for having done so,” said Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit.