{"id":27980,"date":"2016-11-17T16:27:30","date_gmt":"2016-11-18T00:27:30","guid":{"rendered":"https:\/\/cjnotebook.com\/?p=27980"},"modified":"2016-11-17T16:27:30","modified_gmt":"2016-11-18T00:27:30","slug":"jp-morgan-bank-pays-72-million-for-corrupt-hiring-scheme-in-china","status":"publish","type":"post","link":"https:\/\/cjnotebook.com\/?p=27980","title":{"rendered":"JP Morgan Bank Pays $72 Million for Corrupt Hiring Through Bribery in China"},"content":{"rendered":"<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\"><strong>NEW YORK<\/strong><\/span><\/p>\n<hr \/>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">JP Morgan of Hong Kong will pay $72 million as a penalty for corrupt hiring scheme in China, according to officials.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-20122 alignleft\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2016\/02\/brooklyn-federal-court-300x200.jpg\" alt=\"brooklyn-federal-court\" width=\"300\" height=\"200\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2016\/02\/brooklyn-federal-court-300x200.jpg 300w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2016\/02\/brooklyn-federal-court-90x60.jpg 90w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2016\/02\/brooklyn-federal-court-180x120.jpg 180w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2016\/02\/brooklyn-federal-court-95x64.jpg 95w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2016\/02\/brooklyn-federal-court.jpg 736w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/>JPMorgan Securities Limited , a Hong Kong-based subsidiary of multinational bank JPMorgan Chase &amp; Co., agreed to pay a $72 million penalty for its role in the hiring scheme.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">The corruption involved gaining advantage in winning banking deals by awarding prestigious jobs to relatives and friends of Chinese government officials, officials said.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">\u201cThe so-called Sons and Daughters Program was nothing more than bribery by another name,\u201d said Assistant Attorney General Leslie Caldwell.\u00a0 \u201cAwarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple.\u00a0 This case demonstrates the Criminal Division\u2019s commitment to uncovering corruption no matter the form of the scheme.\u201d<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\"><strong>Bribery Scheme Began in 2006<\/strong><\/span><\/p>\n<hr \/>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">According to JPMorgan Asia Pacific&#8217;s admissions, beginning in 2006, senior Hong Kong-based investment bankers set up and used a \u201cclient referral program,\u201d also referred to as the \u201cSons and Daughters Program,\u201d to hire candidates referred by clients and government officials.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">The Sons and Daughters Program was used as a means to influence those same officials to award investment deals to JPMorgan Asia Pacific.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-17795 alignright\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/11\/Courtroom-federal-300x223.jpg\" alt=\"Courtroom federal\" width=\"300\" height=\"223\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/11\/Courtroom-federal-300x223.jpg 300w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/11\/Courtroom-federal.jpg 640w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/>By late 2009, JPMorgan Asia Pacific executives and senior bankers revamped the client referral program to improve its efficacy by prioritizing those hires linked to upcoming client transactions.\u00a0 In order to be hired, a referred candidate had to have a \u201cdirectly attributable linkage to business opportunity,\u201d according to officials.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">According to admissions made in connection with the resolution, these quid pro quo arrangements were discussed internally among JPMorgan Asia Pacific bankers.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">For example, in late 2009, a Chinese government official communicated to a senior JPMorgan APAC banker that hiring a referred candidate would significantly influence the role JPMorgan Asia Pacific would receive in an upcoming initial public offering \u00a0for a Chinese state-owned company.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">The banker communicated this message to several senior colleagues, who then spent several months trying to place the referred candidate in an investment banking position in New York.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">Despite learning from personnel in New York that this referred candidate was not qualified for an investment banking position, senior JPMorgan APAC bankers created a new position for the candidate in New York, and JPMorgan APAC thereafter obtained a leading role in the public offering.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">Further, JPMorgan Asia Pacific employees misused compliance questionnaires to justify and paper over corrupt business arrangements.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">Employees also used a template with pre-filled answers, including that there was \u201cno expected benefit\u201d from the hire, and compliance personnel drafted and modified questionnaires that failed to state the true purpose of the hire.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">JPMorgan APAC further admitted that candidates hired during the scheme were typically given the same titles and paid the same amount as entry-level investment bankers, despite the fact that many of these hires performed ancillary work such as proofreading and provided little real value to any deliverable product.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\"><strong>Scheme Netted Profits<\/strong><\/span><\/p>\n<hr \/>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">The corrupt scheme netted JPMorgan Asia Pacific at least $35 million in profits from business mandates with Chinese state-owned companies.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">JPMorgan APAC entered into a non-prosecution agreement and agreed to pay a criminal penalty of $72 million to resolve the matter.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">As part of the agreement, JPMorgan APAC has agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to enhance its compliance program, and to report to the department on the implementation of its enhanced compliance program.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1073 alignleft\" src=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2.jpg\" alt=\"criminal_justice_jurisprudence (2)\" width=\"299\" height=\"188\" srcset=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2.jpg 299w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2-120x76.jpg 120w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2-265x168.jpg 265w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2-284x180.jpg 284w, https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/02\/criminal_justice_jurisprudence-2-274x173.jpg 274w\" sizes=\"auto, (max-width: 299px) 100vw, 299px\" \/>The department reached this resolution based on a number of factors, including that JPMorgan APAC did not voluntarily and timely disclose the conduct at issue.\u00a0 <\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">However, JPMorgan APAC did receive full credit for its and JPMC\u2019s cooperation with the criminal investigation, including conducting a thorough internal investigation, making foreign-based employees available for interviews in the United States and producing documents to the government from foreign countries in ways that did not implicate foreign data privacy laws.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">JPMorgan Asia Pacific also took significant employment action against six employees who participated in the misconduct resulting in their departure from the bank, and it disciplined an additional 23 employees who, although not involved in the misconduct, failed to effectively detect the misconduct or supervise those engaged in it.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">JPMorgan Asia Pacific imposed more than $18.3 million in financial sanctions on former or current employees in connection with the remediation efforts.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">Based on these actions and other considerations, the company received a non-prosecution agreement and an aggregate discount of 25 percent off of the bottom of the U.S. Sentencing Guidelines fine range.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\"><strong>JPMorgan Also Agreed to Pay $130.5 Million in a Related Proceeding<\/strong><\/span><\/p>\n<hr \/>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against JPMorgan. JPMorgan agreed to pay $130.5 million in disgorgement to the SEC, including prejudgment interest.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">The Federal Reserve System\u2019s Board of Governors also issued a consent cease-and-desist order and assessed a $61.9 million civil penalty. Thus, the combined U.S. criminal and regulatory penalties paid by JPMC and its Hong Kong subsidiary are approximately $264.4 million.<\/span><\/p>\n<blockquote><p><span style=\"font-size: 14pt;\">\u201cU.S. businesses cannot lawfully seek to gain a business advantage by corruptly influencing foreign government officials,\u201d said U.S. Attorney Robert L. Capers.\u00a0 \u201cThe common refrain that this is simply how business is done overseas is no defense.&#8221;<\/span><\/p>\n<p><span style=\"font-size: 14pt;\">Adding, &#8220;In this case, JPMorgan employees designed a program to hire otherwise unqualified candidates for prestigious investment banking jobs solely because these candidates were referred to the bank by officials in positions to award business to the bank.\u00a0 In certain instances, referred candidates were hired with the understanding that the hiring was linked to the award of specific business.\u00a0 This is no longer business as usual; it is corruption.\u201d<\/span><\/p><\/blockquote>\n<p style=\"text-align: center;\"><span style=\"font-size: 14pt;\">The FBI\u2019s New York Field Office investigated the case.\u00a0<\/span><\/p>\n<p style=\"text-align: center;\">\n","protected":false},"excerpt":{"rendered":"<p>NEW YORK JP Morgan of Hong Kong will pay $72 million as a penalty for corrupt hiring scheme in China, according to officials. JPMorgan Securities Limited , a Hong Kong-based subsidiary of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":7432,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3],"tags":[307,3161],"class_list":["post-27980","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-main-slider","category-u-s-department-of-justice","tag-bribery","tag-jpmorgan"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>JP Morgan Bank Pays $72 Million for Corrupt Hiring Through Bribery in China<\/title>\n<meta name=\"description\" content=\"JP Morgan of Hong Kong will pay $72 million as a penalty for corrupt hiring scheme in China, according to officials.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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