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Sun August 18, 2013
U.S. Investigators Launch Probe Of JPMorgan Chase In China
Originally published on Sun August 18, 2013 2:49 pm
The Securities and Exchange Commission has launched an investigation of JPMorgan Chase's operations in China, reportedly looking into whether the investment bank hired the children of high-ranking Chinese government officials in an effort to secure business.
The Wall Street Journal quotes from an SEC filing that says U.S. regulators are investigating "business relationships with certain clients."
The New York Times writes that in one instance, JPMorgan reportedly hired a former Chinese banking regulator's son who later became chairman of the China Everbright Group: "After the chairman's son came on board, JPMorgan secured multiple coveted assignments from the Chinese conglomerate, including advising a subsidiary of the company on a stock offering, records show."
In another example, JPMorgan's Hong Kong office hired the daughter of a Chinese railway official, The Times says. The official "was later detained on accusations of doling out government contracts in exchange for cash bribes, the government document and public records show," according to the newspaper. The Times adds:
"The former official's daughter came to JPMorgan at an opportune time for the New York-based bank: The China Railway Group, a state-controlled construction company that builds railways for the Chinese government, was in the process of selecting JPMorgan to advise on its plans to become a public company, a common move in China for businesses affiliated with the government. With JPMorgan's help, China Railway raised more than $5 billion when it went public in 2007."
JPMorgan says it is fully cooperating with investigators.
As background, The Journal comments:
"Many investment banks and other multinationals have hired children of senior Communist Party figures who are commonly known as 'princelings.' They may help multinational companies develop relationships in China. International investment banks including Credit Suisse, Goldman Sachs, Citigroup, Bank of America and Macquarie Group have all brought the children of current or former political officials on board, according to previous reporting by The Wall Street Journal."