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JPMorgan's Job Ties to China Officials Spark New Probe

  • VOA News

FILE - A former JPMorgan executive alleged that Chinese Commerce Minister Gao Hucheng, shown at a news conference in Beijing in November, sought favorable treatment for his son from the company.

FILE - A former JPMorgan executive alleged that Chinese Commerce Minister Gao Hucheng, shown at a news conference in Beijing in November, sought favorable treatment for his son from the company.

JPMorgan Chase & Co. is coming under scrutiny again for employment ties to senior Chinese officials that may violate U.S. anti-corruption laws.

The Wall Street Journal reported this week that the company was being investigated because of its employment of Gao Jue, the son of Chinese Commerce Minister Gao Hucheng.

According to materials acquired by the Journal, Gao Jue did poorly on his job interviews, and an internal email described him as “immature, irresponsible and unreliable.”

The report added that Fang Fang, then head of China investment banking for JPMorgan, wrote in an internal email that Gao Hucheng had indicated to him repeatedly that he was willing to do whatever he could to help JPMorgan if the company could employ his son.

Lianchao Han, a visiting scholar at the Hudson Institute, a conservative think tank in Washington, told VOA it was obvious that the son did not deserve his position with JPMorgan.

“Gao Jue’s work performance is ... extremely bad," he said. "He had a lot of problems. Obviously, there is a motive, and an attempt [to earn favors].”

But he said it would be difficult to prove that any law was violated.

The Journal said U.S. prosecutors and regulators were investigating the hiring process at JPMorgan and other banks in Asia. The investigation includes the Foreign Corrupt Practices Act, a U.S. law that prohibits bribery of foreign government officials for commercial benefits.

Columbia University visiting scholar Boshu Zhang said the hiring should not surprise anyone.

“This is very common thing in China. ... If those big foreign companies want to get business benefits from China, they understand they have to follow an unspoken Chinese rule," he said. "In order to earn money, they have to [follow] the special Chinese business rule."

This is not the first time JPMorgan has come under fire for hiring the sons and daughters of China’s elite.

In 2013, the U.S. Securities and Exchange Commission began investigating whether the company’s Hong Kong office had hired the children of state-owned company executives for the express purpose of winning underwriting business and other contracts.

The Journal reported that JPMorgan was expected to reach a settlement with the SEC and the U.S. Justice Department, likely to include a fine and an overhaul of its business practices.

Hong Kong authorities are also investigating the hiring practices of JPMorgan. Former executive Fang Fang was arrested in the Chinese territory last year.

This report was produced in collaboration with the VOA Mandarin service.

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