Multinational banking and company JPMorgan Chase & Co has agreed to pay US authorities $264 million over allegations of nepotism.
The New York-headquartered bank is stumping up the cash in a bid to resolve accusations that it gave relatives of Chinese officials jobs within the company so that it could win deals.
According to US authorities, JPMorgan had put together a program in Asia which it named Sons and Daughters. This allowed its own clients along with leading government figures to put forward potential employees. The people who they recommended were then able to circumnavigate the bank’s usual recruitment processes.
The US Securities and Exchange Commission (SEC) and the Justice Department made the allegations in statements following an investigation.
Both the SEC and the Justice Department have been carrying out a probe over a number of years around whether the hiring efforts of America’s largest bank involved bribes, which would be in direct violation of the US Foreign Corrupt Practices Act.
Now that the investigation is complete, the money is due to be divided up between the two organisations, with the SEC receiving $130 million and the Justice Department getting $72 million. The remaining $61.9 million will be paid to the Federal Reserve “for unsafe and unsound practices”.
The bank, which has reserves of US $2.35 trillion, has not admitted or denied the allegations under the agreement.
However, a Hong Kong unit of JPMorgan Chase has accepted that it did make quid pro quo arrangements with Chinese officials in order to secure investment business.
The bank is the first major financial institution worldwide to settle a case surrounding the hiring of princelings, as the children and relatives of leading Chinese officials are often called.
However, it may not be the last. Over the past few years, a number of other major banking and financial institutions, including the British multinational HSBC and Goldman Sachs, which, like JPMorgan has its headquarters in New York, have revealed that their hiring efforts in Asia are being looked at by authorities in the US.
It is a criminal act under the US Foreign Corrupt Practices Act to bribe officials from overseas in order to win deals, whether the payments are monetary or in the form of gifts or employment.
A spokesperson for JPMorgan Chase acknowledged that the practice, which was stopped three years ago, was “unacceptable”.