JPMorgan Chase & Co. (NYSE:JPM)’s hiring practices in China have been under scrutiny after allegations that the bank hires the children of wealthy families and business leaders in order to secure their business. Bloomberg’s Dawn Kopecki reports that the investigation has been expanded throughout Asia after an internal spreadsheet was uncovered.
The SEC’s smoking gun against JPMorgan?
That spreadsheet reportedly correlates the names of the children of China’s wealthiest families along with some “specific deals pursued by the bank.” Sources told Bloomberg that the spreadsheet linking hiring decisions with deals being pursued by the bank could violate bribery laws.
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JPMorgan Chase & Co. (NYSE:JPM) has reportedly opened an internal investigation into hundreds of its hires, and the bank is sharing the results of that investigation with regulators. The investigation started in Hong Kong and now covers multiple countries in Asia.
Business as usual in China?
One of the things regulators will be looking for evidence of in their investigation is indication that the bank created fake positions for children of powerful and wealthy families. They will also be considering whether the children of these families only have their jobs because their parents requested that the bank hire them.
At this point the government hasn’t accused JPMorgan Chase & Co. (NYSE:JPM) of doing anything wrong. Bloomberg’s Adam Minter points out that these types of hiring practices are fairly common in China. Also corruption is very common among Chinese officials, and he suggests that if JPMorgan handed out jobs to well-connected families as a way to gain access to people in power, then Wall Street is likely filled with other firms that should be investigated as well.
What will really matter to regulators is whether a bribe was involved in the hiring of the workers. There’s a thin line between being bribed to hire someone and hiring someone so as to get into the good graces of a well-connected family. Investigators and regulators will have their work cut out for them trying to determine which is the case with JPMorgan.