Ex-J.P. Morgan Asia executive arrested as officials investigate corruption, corporate hiring practices

The arrest is the latest event in a continuing investigation to crack down on the bribery of officials

Enforcement of anti-corruption laws is continuing in locations like Asia, with news this week that Hong Kong officials have arrested a former J.P. Morgan executive.

There were several news reports that Fang Fang, who was formerly J.P. Morgan's chief executive for China investment banking and vice chairman of investment banking in Asia, was arrested and later questioned.

His arrest comes in a wider investigation of the bank's Asian hiring practices, The Wall Street Journal reported. Four or more other banks are also being reviewed for compliance with anti-corruption laws, especially as it relates to hiring of employees.

U.S. officials are looking into whether banks have violated the Foreign Corrupt Practices Act (FCPA) by hiring employees who are related to or may have other connections to Chinese officials.

The Journal reports J.P. Morgan provided U.S. prosecutors e-mails from Fang that relate to the hiring of the son of China Everbright Group Chairman Tang Shuangning.

Shuangning, according to The New York Times, “approached Mr. Fang in March 2010 about a job for his son at the bank,” a report in The New York Times said. Mr. Fang jumped at the chance, suggesting in an email to colleagues that they discuss “how we can leverage more on this account going forward.”

The son, Tang Xiaoning, who used to work at Goldman Sachs and Citigroup, then began working at JPMorgan. The bank later got assignments from China Everbright Group, The Times reported.

Hong Kong's Independent Commission Against Corruption searched Fang’s office in March, news reports said. This week, Fang was ordered not to leave Hong Kong. Fang declined to comment on the situation to a reporter from The Times.

J.P. Morgan declined to comment on the matter, as well.

It was also reported that Fang Fang has been investigated by U.S. Securities and Exchange Commission for a possible role in a “Sons and Daughters” program, according to the International Business Times. The wider inquiry is looking at if JPMorgan hired children of Chinese officials to win over business deals, the report said.

When reviewing details about Fang, the newspaper reported, “There is nothing unusual nor illegal about a business executive joining a government institution in China. Nor is there an inherent problem with hiring the child of an important official. But Fang’s problems with law enforcement arose when he allegedly tried to hire certain children in order to obtain specific deals.”

There are also new inquiries by U.S. officials on possible violations of the FCPA, with one of the latest being related to Goldman Sachs. It appears the inquiry relates to the bank’s hiring practices in Asia, according to InsideCounsel.

 

Further reading:

More definitions are provided about FCPA in new appeals court ruling

Goldman Sachs is latest U.S. company to get investigated for FCPA concerns

U.K. releases guidelines for new Bribery Act

 

 

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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