JPMorgan Banking Exec Retires Amid Ongoing Hiring Practices Inquiry
Amid a United States government-led investigation into the banking hiring practices in Asia, Chief Executive Officer Fang Fang of JPMorgan Chase’s (NYSE:JPM) investment banking unit in China has ended his twelve-year tenure. As Bloomberg learned through sources familiar with the matter, Fang submitted his resignation last week because he wanted to spend more time with his family. “Fang Fang has informed us of his desire to retire,” Therese Esperdy, co-head of Asia-Pacific corporate and investment banking, said in an internal banking memo circulated on Monday. “The decision was made by him,” The Wall Street Journal reported. Yet, the 48-year-old banking executive has become a key figure as U.S. officials examine whether JPMorgan or any of its employees violated the Foreign Corrupt Practices Act, sources told the Journal.
The timing of the 48-year-old banking executive’s retirement coincided with the bank’s release of a series of emails in which Fang discussed the hiring son of China Everbright Group (CEVIY.PK) Chair Tang Shuangning, as the publication learned through individuals familiar with the inquiry. Both the Federal Bureau of Investigation and Prosecutors from the Department of Justice want to uncover whether the son’s employment with JPMorgan helped the bank win important contracts from the company. JPMorgan — the world’s largest investment bank by fees — revealed in August that the Securities and Exchange Commission had requested information on the so-called “Sons and Daughters” hiring program, including the employment of certain individuals in Hong Kong as well as particular client relationships, but the bank has not been charged with any wrongdoing. Still, JPMorgan is the central institution in the federal investigation into international hiring practices.
Descendents of prominent and influential senior communist officials — known as Chinese Princelings — have significant political clout, meaning the ability to make business dealings run more smoothly for foreign companies in China, a country where cultural misunderstandings and bureaucratic red tape can make business difficult. Regulators have long believed that the banking industry has made use of the scions of politically well-connected families, and the SEC and the Department of Justice have questioned officials to determine whether any financial institution acted with “corrupt” intent or with the expectation of receiving government business in exchange for a job. Under the 1977 Foreign Corrupt Practices Act, a company is prohibited from giving a personal benefit or “anything of value,” meaning a bribe, to a decision maker in return for “an improper advantage” in securing or retaining business. All this is to say banks can hire the family and friends of Chinese officials so long as the bank did not explicitly trade job offers for business deals.