Pedestrians are reflected in the windows of the JPMorgan Chase Asset Management offices in the central business district of Hong Kong, China. US 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.

Reuters/Hong Kong

JPMorgan paid $1.8mn over two years to a small consulting firm run by the daughter of former Chinese Premier Wen Jiabao, The New York Times reported yesterday, a relationship that is part of a wider US 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.
US 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 multibillion 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 US Foreign Corrupt Practices Act (FCPA). The US 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 US 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 yesterday, the paper said Wen Ruchun’s firm, Fullmark Consultants, was paid a total of $1.8mn by JPMorgan in 2006-08.
A spokeswoman for JPMorgan in Hong Kong said yesterday that the bank was “co-operating 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 US Department of Justice and agencies from other jurisdictions were investigating hiring practices in Hong Kong.