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The Influence Game
China Internship Program Points to Widespread Bribery

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.

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  • Enemy Leopard

    How is this substantially different from legacy admissions at elite American universities?

    • Andrew Allison

      If legacy admission is based on alum monetary contributions, it doesn’t.

  • JR

    Another shake down by the Obama Administration. What else is new?

  • Fat_Man

    Rick: How can you close me up? On what grounds?

    Captain Renault: I’m shocked, shocked to find that gambling is going on in here!

    [a croupier hands Renault a pile of money]

    Croupier: Your winnings, sir.

    Captain Renault: [sotto voce] Oh, thank you very much.

    [aloud]

    Captain Renault: Everybody out at once!

  • Anthony

    “We hace a political system that gives inordinate power to those at the top, and they have used that power not only to limit the extent of redistribution but also to shape the rules of the game in their favor, and to extract from the public what can only be called large gifts. Economist have a name for these activities: they call them “rent seeking”, getting income not as a reward to creating wealth but by grabbing….” (Joseph E. Stiglitz)

    Is there really any difference (Internship Program) or honest surprise (those at the top have learned how to suck money from the rest in ways that the rest are hardly aware of)?

  • http://davidhdennis.com/ David H Dennis

    I’m curious, why do we care about what J P Morgan or other firms does in China? Seems to me it should be up to the Chinese authorities to deal with the problem, if they indeed consider it a problem. I think their law should control in their own nation, not ours.

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