Corruption and corrupt practices are everywhere in the world, and comes off as a problem that is treated as removable with time and effort but turns out to be more an indelible reality of life. The worst thing about it is that the appeal of corruption cuts across everybody indiscriminately. Thus was the unfortunate discovery that a major multinational banking and holding company that has grown and expanded upon setting up shop in China was discovered to have done so by taking on employees that aren’t entirely qualified for their job positions, but have been hired anyway for the simple fact that they have connections.
CNN reports that JP Morgan Chase & Co. has been engaging in the practice of hiring family members and relatives of government officials and executives of various Chinese state-owned companies that it took public in Hong Kong, over a seven-year period from 2004 to 2013. Furthermore, in light of the revelation of their ethically questionable “Sons and Daughters” program, they have been imposed fines amounting to $264 million by the bank’s regulators for “corruptly influencing officials” of China by giving preferential priority towards their children, relatives and friends for their local branches and operations.
This penalty came at the culmination of a federal investigation into JP Morgan, making the firm the first company to feel the full force of the Foreign Corrupt Practices Act, which cracks down on American corporations attempting to generate lucrative business in other countries by offering “anything of value” to foreign governments and local business clients, such as the prospect of easy employment opportunities for their relations especially their children, “princelings” as it were.
In JP Morgan’s case, about 100 of the interns and full-time employees they have taken on were the progeny of Chinese government powerhouses, admitted at their own request. For this turn, the banking giant got over $100 million worth in business within the People’s Republic.
Amazingly, hefty fine aside, no JP Morgan employees or the firm itself will be in hot water anytime soon, thanks perhaps to their own in-house efforts to inquire on what their China offices have been up to, as well as readily turning over documents and records to federal authorities to aid in their investigations.
According to Bloomberg, in breakdown JP Morgan is expected to pay $70 million to the Department of Justice and $130 million more to the Securities and Exchange Commission. For the corporation’s eager assistance, the SEC is willing to slash the severity of penalties and may even waive off any legal action against JP Morgan for their China arm’s “Sons and Daughters” initiative.
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