JP Morgan Chase agrees to pay penalty in Chinese hiring case

Global banking giant JP Morgan Chase has agreed to pay $264m to the US authorities to settle allegations over its hiring program in China.

The authorities alleged that the bank hired relatives and friends of Chinese government officials to secure banking deals, the US Department of Justice said in a statement.

US Assistant Attorney General Caldwell said: “Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple. 

“This case demonstrates the Criminal Division’s commitment to uncovering corruption no matter the form of the scheme.”

Beginning in 2006, senior Hong Kong-based investment bankers set up and used the “Sons and Daughters Program,” to hire candidates referred by clients and government officials.

The US authorities said that the program was used as a means to influence those same officials to award investment deals to JP Morgan APAC. 

By late 2009, JPMorgan executive and senior bankers revamped the program to give priority to the candidates linked to upcoming client transactions.

The Justice Department’s statement said that a referred candidate in the revised program had to have a “directly attributable linkage to business opportunity” to get hired.

Many of those hire performed ancillary work such as proofreading and provided little real value to any deliverable product, it said.

Despite that, the candidates hired during the scheme were typically given the same titles and paid the same amount as entry-level investment bankers.

According to the statement, the corrupt scheme has resulted in at least $35m in profits for JP Morgan.