(Reuters) - Internal JPMorgan Chase & Co (JPM) emails and computer files being examined by U.S. authorities show that the bank favored hiring people from prominent Chinese families in order to win investment banking business, the New York Times reported on Saturday.
The documents show that a JPMorgan program designed to prevent questionable hiring practices was ultimately viewed inside the company as "a gateway to doing business with state-owned companies in China," the Times said, adding that it had reviewed copies of the emails and computer spreadsheets.
In one email, an executive said that hiring sons and daughters of powerful people in China "almost has a linear relationship" with winning assignments, the Times said.
A JPMorgan spokesman declined to comment on the report, as did representatives of the U.S. Securities and Exchange Commission and the office of the federal prosecutor in Brooklyn, New York, which are investigating the matter.
The Times said there "is no indication that executives at JPMorgan's headquarters in New York were aware of the hiring practices described in the documents."
JPMorgan first disclosed in August that the U.S. Securities and Exchange Commission was investigating its employment of certain people and its relationships with certain clients.
Since then, the SEC and the U.S. Department of Justice and have stepped up an industry-wide probe that has been a cause of alarm for global banks. Morgan Stanley (MS), Goldman Sachs Group Inc (GS) and Citigroup Inc (NYS:C) are among the banks that have received requests for information from the SEC.
It had become a common practice for investment banks to hire people with government connections. This is especially prevalent in China because of the role the ruling Communist Party plays in the country's business.
The law enforcers are examining whether hiring practices violated the Foreign Corrupt Practices Act, a U.S. law that bars bribes or special favors to foreign government officials in exchange for business. At issue is whether the banks hired unqualified applicants as a favor to a government official who was in a position to award them business.
One person familiar with the SEC inquiry has likened the probe to a previous investigation U.S. authorities conducted into whether oil and gas companies paid bribes to circumvent import regulations in Africa and elsewhere.
(Reporting by David Henry in New York; editing by Gunna Dickson)
- USA News