NEW YORK/HONG KONG Nov 14 JPMorgan Chase & Co
paid $1.8 million over two years to a small consulting
firm run by the daughter of former Chinese Premier Wen Jiabao,
The New York Times reported on Thursday, a relationship that is
part of a wider U.S. probe into the Wall Street bank's hiring
practices in the region.
Citing documents, public filings and interviews, the
newspaper said JPMorgan had a $75,000 a month contract with the
consulting firm run by Lily Chang, which appeared to have only
one other employee. The paper said Chang is the alias of Wen
Ruchun, the only daughter of Wen Jiabao, who as premier had
oversight of financial institutions at the time of the contract.
U.S. authorities are investigating whether JPMorgan
improperly gave jobs to well connected people in Asia to win
business. The probe has spurred several JPMorgan executives to
hire lawyers in the United States, a source told Reuters on
Banks globally have a long history of hiring people whose
connections can be professionally useful. Investment banks in
China often hired well-connected people starting in the
early-2000s, when the firms were looking to underwrite stock
offerings for the country's big state-owned enterprises, a
practice known as "elephant hunting."
If a bank hires unqualified applicants to help win business
from the employees' relatives it may be construed as a bribe
under the U.S. Foreign Corrupt Practices Act.
JPMorgan is now reviewing all of its Asia hires and deals to
see whether any deals the bank landed can be directly linked to
"Sons and Daughters" hires. So far no smoking gun has been found
and the bank's internal investigation is continuing, the source
said. The New York Times reported that the U.S. government's
investigation could take years.
Two people familiar with the matter said the government's
investigation was focusing on how the bank hired politically
connected people for its two-year analyst program, which trains
About seven years ago, JPMorgan decided to limit the number
of "connected employees" in its analyst program to about a
dozen, the sources said. Top JPMorgan managers created a
spreadsheet to keep track of bankers assigned to mentor the
connected employees, and which deals those mentors were working
The goal was to prevent the mentors from working on deals
directly related to their mentees' families, said the sources,
who requested anonymity because they were not authorized to
speak for the bank on the matter.
The U.S. Securities and Exchange Commission's anti-bribery
unit is leading the government's JPMorgan probe, a person
familiar with the matter previously told Reuters. The Department
of Justice is also involved, as are authorities in other
jurisdictions, the bank said in a November regulatory filing.
In August, The New York Times reported two of JPMorgan's
hires under investigation were the son of the head of a Chinese
state-run financial conglomerate, and the daughter of a former
A spokeswoman for JPMorgan in Hong Kong said on Thursday
that the bank was "cooperating fully with regulators". She
declined to comment further and referred to the bank's Nov. 1
quarterly regulatory filing.
JPMorgan at one point hired Tang Xiaoning, the son of Tang
Shuangning, chairman of state-controlled financial conglomerate
China Everbright Group, and a former banking regulator, The New
York Times reported in August.
After the younger Tang joined JPMorgan, the bank won several
important assignments from Everbright, including advising a
subsidiary on a stock offering, the newspaper reported.
The SEC is also probing JPMorgan's hiring of Zhang Xixi, the
daughter of a now-disgraced Chinese railway official. The bank
went on to help advise the official's company, which builds
railways for the government, on its plans to go public, The New
York Times reported in its August article.
According to the newspaper's latest article, there is no
indication from documents seen by The New York Times that Wen
brokered any deals or investments between JPMorgan and companies
affiliated with her family.
Reuters could not immediately reach Wen Ruchun for comment.
A visit to the Beijing office cited by The New York Times as
Fullmark's headquarters revealed no company of that name,
suggesting the business has either closed or moved.