JPMorgan Gives Regulators Evidence of Nepotism in China
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 Securities and Exchange Commission and the Department of Justice are now questioning officials to determine whether financial institutions have acted with “corrupt” intent or with the expectation of receiving government business in exchange for a offering certain applicants jobs. 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 a bank can hire the family and friends of government officials so long as the bank did not explicitly trade job offers for business deals.
From a confidential email obtained by the New York Times, it seems the politically well-connected job hunters in China can do more than just get on a bank’s payroll; they can land a job in JPMorgan Chase’s executive suite of offices in midtown Manhattan. The publication reported Sunday that an internal company email showed a top Chinese regulator, Xiang Junbo, directly asked JPMorgan Chief Executive Officer Jamie Dimon for a “favor.” The favor was hiring a family friend. The young woman, as she was described by the Times, now works at JPMorgan. But the publication declined to reveal her name as she has not been accused of any wrongdoing and she is not a public figure.
The revealing email was part of a package of documents JPMorgan submitted to federal regulators as part of an ongoing investigation into banking industry hiring practices. Such practices are known as “Sons and Daughters” hiring programs, which gives politically-connected applicants fewer interviews and other special treatments.