The Wall Street Journal has a doozy of a story about corruption at J.P. Morgan’s China offices, which systematically hired unqualified relatives of Chinese officials:
A decade ago, a J.P. Morgan Chase & Co. managing director in Asia sent an email to the investment-banking team: “As you know, the firm does not condone the hiring of the children or other relatives of clients or potential clients…In fact, the firm’s policies expressly forbid this,” the director wrote.
Within two years, however, the team had begun orchestrating the hiring of dozens of relatives of powerful government officials in Asia with the express purpose of winning business, U.S. authorities said Thursday. The bank had created a separate channel to get unqualified applicants through the hiring process, and it later began tracking profits from any subsequent business awarded because of the hires, they said. […]
All told, the bank hired around 100 applicants referred by government officials at Chinese state-owned firms, and earned at least $35 million as the result of a “corrupt scheme,” according to the settlement documents. The agreement ends a multiyear, high-profile investigation that had called into question whether the U.S. government was threatening to criminalize standard business practices in some countries.
J.P. Morgan ultimately settled for $264 million under the Foreign Corrupt Practices Act, effectively admitting that its practice of hiring unqualified “princelings” amounted to bribery. And according to the Journal, a host of other banks including Citigroup, Deutsche Bank, and Goldman Sachs are currently under investigation for similar practices.
The details of J.P. Morgan’s brazen corruption scheme are fascinating but hardly surprising. Does anybody think China is the only country with ‘princelings’ who get cushy jobs because companies hope to leverage their connections for business opportunities? Such behavior is standard practice in DC, particularly in the lobbying arena.
Read the whole thing here.