News / Asia

    US Investigation Spotlights China's Princelings

    US Investigation Spotlights China's Princelingsi
    X
    September 19, 2013 8:19 PM
    The U.S. Securities and Exchange Commission (SEC) is investigating JP Morgan’s Hong Kong office for hiring the children of high-level Chinese officials. Observers say the hiring of these so-called “princelings” is to open business opportunities in mainland China. But could the practice, which dates back almost two decades, also be considered bribery? Yinan Wang and Yi Chen look at the practice in a report voiced by Colin Lovett.
    The U.S. Securities and Exchange Commission (SEC) is investigating JP Morgan’s Hong Kong office for hiring the children of high-level Chinese officials.  Observers say the hiring of these so-called “princelings” is to open business opportunities in mainland China.  But could the practice, which dates back almost two decades, also be considered bribery? 

    The SEC has investigated at least seven cases of bribery of Chinese officials, involving major American firms, since 2010.

    This SEC investigation is reportedly centered on two children of top Chinese officials who were hired by JP Morgan’s Hong Kong office.  The New York Times reports that in 2007, the bank hired Zhang Xixi, the daughter of Zhang Shuguang , a senior official at the China Railway Group who is now on trial in Beijing for allegedly accepting millions in bribes.

    Then in 2010, it hired Tang Xiaoning, the son of China Everbright Group Chairman Tang Shuangning.  Both companies are state-run enterprises. After they were hired, became JP Morgan clients.

    Gordon Chang, author of The Coming Collapse of China, says that these hirings have come to be known as "Elephant Hunting."

    “What’s going on here is that there are elephants out there. They’re very important state officials. They have children and those children have gone to very good business schools around the world and if you want to hunt these elephants, if you want these big [contracts], you’re gonna go into the jungle, and that’s exactly what’s been going on here," said Chang.

    Chang says this practice is universal in China, where people rely on guanxi, which literally means “connections” or “relationships,” and carries a sense of mutual obligation between the two parties.

    Analysts say it is more common to see money, travel, and entertainment used to bribe officials rather than jobs for their children.

    But some of the hiring cases involve massive salaries. UBS hired the son of Li Ruihuan, a former member of the elite standing committee of China’s Politburo, for a reported compensation package of $10 million.
     
    A 1977 U.S. anti-corruption law prohibits U.S. companies from providing things of value to a foreign official to secure or retain business. While financial institutions are eager to hire princelings, they often don’t stay for long.

    “If the children of China’s leaders stay in the U.S., one thing is that the U.S. is a mature market so there is no opportunity to break out," said Ming Xia, a political science professor at City University of New York. "Another aspect is if they hold a position in the U.S. for a long time, on the whole it is a middle-level management job, which doesn’t bring sudden huge profits."

    Even though the decades-old practice of hiring princelings has been on the decline recently, the SEC decision to investigate is bringing new attention to the issue.

    Ming Xia believes the investigation may reflect U.S. worries about China’s crony capitalist model.

    “To some level the U.S. is aware, especially at the strategic level, that China’s model of capitalism can pose a huge threat to the global investment, business, and capital flows environments, capable of causing some kind of corrosion to the U.S. and Western way of life," he said.

    The SEC investigation is ongoing and there has been no official word on its status.

    This report was produced in collaboration with the VOA Mandarin service

    You May Like

    Native Americans Ask: What About Our Water Supply?

    They say they have been facing a dangerous water contaminant for decades - uranium – but the problem has received far less attention than water contamination by lead in Flint, Michigan

    Pakistan's President Urges Nation Not to Celebrate Valentine's Day

    Mamnoon Hussain criticizes Valentine's Day, which falls on Sunday this year, as a Western import that threatens to undermine the Islamic values of Pakistan

    Mother of IS Supporter: Son Was Peaceful, 'Role Model'

    Somali-American Abdirizak Mohamed Warsame pleaded guilty Thursday to charges of conspiring to provide material support to Islamic State militants

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Two-thirds of World Faces Water Shortagei
    X
    February 12, 2016 7:31 PM
    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Two-thirds of World Faces Water Shortage

    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Gateway to Mecca: Historical Old Jeddah

    Local leader Sami Nawar's family has been in the Old City of Jeddah for hundreds of years and takes us on a tour of this ancient route to Mecca, also believed to be the final resting place of Adam's wife, Eve.
    Video

    Video New Technology Aims to Bring Election Transparency to Uganda

    A team of recent graduates from Uganda’s Makerere University has created a mobile application designed to help monitor elections and expose possible rigging. The developers say the app, called E-Poll, will make Uganda's democratic process fairer. From Kampala, VOA's Serginho Roosblad reports.
    Video

    Video As Refugees Perish, Greek Graveyards Fill

    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video Russia Bristles at NATO Expansion in E. Europe

    Russian Foreign Minister Sergei Lavrov is meeting Friday with the head of NATO after the Western military alliance and the United States announced plans for the biggest military build-up in Europe since the Cold War. Russia has called NATO's moves a threat to stability in Europe. But NATO says the troop rotations and equipment are aimed at reassuring allies concerned about Russia as VOA's Daniel Schearf reports from Moscow.
    Video

    Video To Fight Zika, Scientists Target Mosquitoes

    Mosquitoes strike again. The Zika virus outbreak is just the latest headline-grabbing epidemic carried by these biting pests, but researchers are fighting back with new ways to control them. VOA's Steve Baragona takes a look.
    Video

    Video Mosul Refugees Talk About Life Under IS

    A top U.S. intelligence official told Congress this week that a planned Iraqi-led operation to re-take the city of Mosul from Islamic State militants is unlikely to take place this year. IS took over the city in June 2014, and for the past year and a half, Mosul residents have been held captive under its rule. VOA's Zana Omar talked to some families who managed to escape. Bronwyn Benito narrates his report.
    Video

    Video Scientists Make Progress Toward Better Diabetes Treatment, Cure

    Scientists at two of the top U.S. universities say they have made significant advances in their quest to find a more efficient treatment for diabetes and eventually a cure. According to the International Diabetes Federation, the disease affects more than 370 million people worldwide. VOA’s George Putic reports.
    Video

    Video NATO to Target Migrant Smugglers

    NATO has announced plans to send warships to the Aegean Sea to target migrant smugglers in the alliance's most direct intervention so far since a wave of people began trying to reach European shores.
    Video

    Video Russia's Catholics, Orthodox Hopeful on Historic Pope-Patriarch Meeting

    Russia's Catholic minority has welcomed an historic first meeting Friday in Cuba between the Pope and the Patriarch of Russia's dominant Orthodox Church. The Orthodox Church split with Rome in 1054 and analysts say politics, both church and state, have been driving the relationship in the centuries since. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Used Books Get a New Life on the Streets of Lagos

    Used booksellers are importing books from abroad and selling them on the streets of Africa's largest city. What‘s popular with readers may surprise you. Chris Stein reports from Lagos.
    Video

    Video After NH Primaries All Eyes on South Carolina

    After Tuesday's primary in New Hampshire, US presidential candidates swiftly turned to the next election coming up in South Carolina. The so-called “first-in-the-South” poll may help further narrow down the field of candidates. Zlatica Hoke reports.
    Video

    Video Smartphone Helps Grow Vegetables

    One day, you may be using your smartphone to grow your vegetables. A Taipei-based company has developed a farm cube — a small, enclosed ecosystem designed to grow plants indoors. The environment inside is automatically adjusted by the cube, but it can also be controlled through an app. VOA's Deborah Block has more on the gardening system.
    Video

    Video Exhibit Turns da Vinci’s Drawings Into Real Objects

    In addition to being a successful artist, Renaissance genius Leonardo da Vinci designed many practical machines, some of which are still in use today, although in different forms. But a number of his projects were never realized — until today. VOA’s George Putic reports.