U.S. probe of JPMorgan hiring in China involves ex-Premier Wen's daughter - NYTimes
HONG KONG (Reuters) - JPMorgan (JPM.N) paid $1.8 million over two years to a small consulting firm run by the daughter of former Chinese Premier Wen Jiabao, The New York Times reported on Thursday, a relationship that is part of a wider U.S. probe into the Wall Street bank's hiring practices in the region.
Citing documents, public filings and interviews, the newspaper said JPMorgan had a $75,000 a month contract with a consultancy run by Lily Chang, which appeared to have only one other employee. The paper said Chang is the alias of Wen Ruchun, the only daughter of Wen Jiabao, who as premier had oversight of financial institutions at the time of the contract.
U.S. authorities are investigating JPMorgan's hiring practices in China as part of a wider bribery probe into whether the bank traded contracts and jobs in order to win business. Investment banks globally have a long history of hiring people with key connections who can help win advisory roles on important and lucrative deals.
The practice was widespread in China from the early-2000s, when investment banks engaged in so-called 'elephant hunting' - chasing mandates to manage the multi-billion dollar stock offerings of the country's big state-owned enterprises.
The distinction between hiring a relative of a foreign official who may be well connected, and employing such a person with the express hope of winning specific business, is key to proving violations of the U.S. Foreign Corrupt Practices Act (FCPA). The U.S. Securities and Exchange Commission's (SEC) anti-bribery unit is leading the JPMorgan probe, a person familiar with the matter previously told Reuters.
On August 7, JPMorgan disclosed in a regulatory filing that it had a request from U.S. regulators regarding employees in Hong Kong, but did not elaborate. The New York Times followed with a report detailing the nature of the probe, later confirmed by Reuters.
In its August report, The New York Times said two of JPMorgan's hires under investigation were of the son of the head of a Chinese state-run financial conglomerate, and the daughter of a former railway official.
Citing people with knowledge of the matter, Bloomberg News reported in late-August that JPMorgan had an internal spreadsheet that linked appointments to specific deals pursued by the bank. It said JPMorgan, in response to the SEC probe, started an internal investigation in Hong Kong, which was later expanded across Asia, covering interns as well as full-time staff.
In The New York Times report on Thursday, the paper said Wen Ruchun's firm, Fullmark Consultants, was paid a total of $1.8 million by JPMorgan in 2006-08.
A spokeswoman for JPMorgan in Hong Kong said on Thursday that the bank was "cooperating fully with regulators". She declined to comment further and referred to the bank's November 1 quarterly filing in which it gave further information about the probe, disclosing that, in addition to the SEC, the U.S. Department of Justice and agencies from other jurisdictions were investigating hiring practices in Hong Kong.
Reuters could not immediately reach Wen Ruchun for comment.
A visit to the Beijing office cited by The New York Times as Fullmark's headquarters revealed no company of that name, suggesting the business has either closed or moved.
JPMorgan at one point hired Tang Xiaoning, the son of Tang Shuangning, chairman of state-controlled financial conglomerate China Everbright Group, and a former banking regulator, The New York Times reported in August.
After the younger Tang joined JPMorgan, the bank won several important assignments from Everbright, including advising a subsidiary on a stock offering, the newspaper reported.
The SEC is also probing JPMorgan's hiring of Zhang Xixi, the daughter of a now-disgraced Chinese railway official. The bank went on to help advise the official's company, which builds railways for the government, on its plans to go public, The New York Times reported in its August article.
According to the newspaper's latest article, there is no indication from documents seen by The New York Times that Wen brokered any deals or investments between JPMorgan and companies affiliated with her family. (Reporting by Michael Flaherty, with additional reporting by Lawrence White and Ben Blanchard; Editing by Ian Geoghegan)
- Tweet this
- Share this
- Digg this
Trending On Reuters
The government sold a 10 percent stake in state-run behemoth Coal India on Friday, in a bumper sale which saw demand from institutional investors marginally exceed supply, giving a welcome boost to the government's faltering divestment drive. Full Article