Hiring the Well-Connected May Pose Problems for U.S. Banks
Descendants of prominent and influential senior communist officials — known as Chinese “princelings” — have significant political clout, possessing the ability to make business dealings run more smoothly for foreign companies.
But under the U.S. Foreign Corrupt Practices Act, a company is prohibited from a personal benefit or bribe to a decision maker in return for business. Regulators have long monitored the international hiring practices of energy companies and pharmaceutical firms, but now the Securities and Exchange Commission and the Department of Justice have added a new focus: the banking industry.
In particular, regulatory authorities have opened a bribery investigation into whether JPMorgan Chase (NYSE:JPM) hired the relatives of powerful Chinese officials with ulterior motives, as government documents obtained by The New York Times show. One example of the bank’s allegedly corrupt practices cited in the document was the hiring of the daughter of a Chinese railway official. That official was eventually detained on accusations of handing out government contracts in return for cash bribes, the documents show.