Just one week after two employees were charged in the “London Whale” bank records scandal, JPMorgan Chase & Co. has run afoul of the U.S. government once again. This time, however, the company’s issues come from another continent.
The Securities and Exchange Commission has opened a bribery investigation into JPMorgan’s Chinese operations. Reportedly, the investigation centers on allegations the bank hired the children of high-ranking Chinese government officials to secure important contracts.
According to The New York Times, a JPMorgan filing from earlier this month says U.S. investigators are looking into “business relationships with certain clients.” In one instance, JPMorgan reportedly hired a former banking regulator’s son who later became chairman of the China Everbright Group, a state-controlled financial conglomerate. After this hire, the company then received multiple coveted assignments from the Chinese government.
In another example, JPMorgan’s Hong Kong office hired a Chinese railway official’s daughter. This official was later accused of exchanging government contracts for cash bribes, according to public documents. Around the same time, the state-owned China Railway Group selected JPMorgan to advise its plans to become a public company. With the bank’s help, China Railway raised more than $5 billion when it went public in 2007.
A spokesman for JPMorgan says the company is “fully cooperating with regulators.”
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