SHANGHAI Aug 20 China Everbright Bank's
decision to hire JPMorgan Chase & Co to
underwrite its initial public offering in Hong Kong was not
linked to the U.S. bank hiring the son of a high-level executive
linked to the Chinese firm, a spokesman for the Chinese bank
told state media.
The official China Securities Journal on Tuesday cited an
unnamed "person in charge" at Everbright Bank saying the process
of hiring JPMorgan was "open and transparent, and there was no
so-called issue of passing favours".
Everbright Bank could not be immediately reached for
U.S. authorities have opened an investigation into whether
the Wall Street investment bank hired the children of powerful
Chinese officials to help it win business in China, a person
familiar with the matter said on Monday.
The New York Times reported on Saturday that JPMorgan had
hired Tang Xiaoning, the son of a former Chinese banking
regulator who is now the chairman of China Everbright Group, the
state-controlled parent of Everbright Bank.
After Tang joined JPMorgan, the U.S. bank secured several
important assignments from the Chinese conglomerate, including
advising its subsidiary, Everbright Bank, on a stock offering,
the Times reported.
U.S. law does not stop companies from hiring politically
well-connected executives. But hiring people in order to win
business from relatives can be bribery, and the Securities and
Exchange Commission is investigating JPMorgan's actions under
the U.S. Foreign Corrupt Practices Act.
Lawyers in Hong Kong said the probe has sent a chill wind
through the sector, as rival banks scramble to review their own
records in a market where ties to political and business leaders
can be key to winning big deals.
Everbright Bank has been struggling to complete its Hong
Kong IPO. It shelved plans to float shares there in 2011 and
2012 and is now eyeing a third attempt in September this
Everbright Bank chose JPMorgan as one among nine
underwriters from a shortlist of 20 Chinese and foreign firms,
the paper reported the spokesman as saying. Others chosen
included Morgan Stanley, UBS, China
International Capital Corp and BOC International.