• US agencies probe big banks on China nepotism

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    NEW YORK CITY: US investigations into the hiring by large banks of the children of powerful Chinese officials are heating up, people familiar with the probes told Agence France-Presse.

    The US Securities and Exchange Commission has subpoenaed JPMorgan Chase for its communications with some 30 senior Chinese government officials, according to these sources.

    At least six other banks have received written demands about dozens of hires, according to these people and bank securities filings: Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS.

    The US Department of Justice and the Federal Reserve Bank of New York are also involved in the investigations.

    The banks are suspected of having hired the well-connected youth in exchange for other business in China, including with government-controlled corporations.

    Such a quid-pro-quo could run afoul of the Foreign Corrupt Practices Act, a US anti-bribery law.

    The probes are a lingering cloud over JPMorgan, which has paid billions of dollars in penalties over the last two years to settle probes into its bundling of mortgage securities, its foreign exchange trades and other matters.

    The investigation centers on a JPMorgan hiring initiative between 2006 and 2013 informally known as the “Sons and Daughters” program.

    Regulators have been troubled by the 2007 recruitment of Gao Jue, who was considered by bank officials the “worst candidate” according to sources. Gao is the son of Chinese Commerce Minister Gao Hucheng, who has authority to approve or block mergers.

    The SEC subpoena includes JPMorgan correspondence with Wang Qishan, who heads the Chinese government’s anti-corruption campaign, sources said.

    The SEC has also demanded JPMorgan provide a list of any Chinese government officials who have recommended so called “princelings,” the children of Chinese officials.

    AFP

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