Federal authorities have opened a bribery investigation into whether JPMorgan Chase hired the children of powerful Chinese officials to help the bank win lucrative business in the booming nation, according to a confidential US government document.
In one instance, the bank hired the son of a former Chinese banking regulator who is now the chairman of the China Everbright Group, a state-controlled financial conglomerate, according to the document, which was reviewed by The New York Times, as well as public records. 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.
The Hong Kong office of JPMorgan also hired the daughter of a Chinese railway official. That official was later detained on accusations of doling out government contracts in exchange for cash bribes, the government document and public records show.
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.
The focus of the civil investigation by the US Securities and Exchange Commission’s anti-bribery unit has not been previously reported. JPMorgan — which has had a number of run-ins lately with regulators, including one over a multibillion-dollar trading loss last year — made an oblique reference to the inquiry in its quarterly filing this month. The filing stated that the SEC had sought information about JPMorgan’s “employment of certain former employees in Hong Kong and its business relationships with certain clients”.
In May, according to a copy of the confidential government document, the SEC’s anti-bribery unit requested from JPMorgan a battery of records about Tang Xiaoning. He is the son of Tang Shuangning, who since 2007 has been chairman of the China Everbright Group. Before that, the elder Tang was the vice-chairman of China’s top banking regulator.
The agency also inquired about JPMorgan’s hiring of Zhang Xixi, the daughter of the railway official. Among other information, the SEC sought “documents sufficient to identify all persons involved in the decision to hire” her.
A spokesman for JPMorgan said, “We publicly disclosed this matter in