A scandal over the way major banks recruit employees in China is growing.
Sources tell the New York Times that the Securities and Exchange Commission (SEC) is now looking at the hiring practices of six major banks in China, including JPMorgan Chase (JPM), Morgan Stanley (MS), Citigroup (C), Goldman Sachs (GS), Credit Suisse (CS) and Deutsche Bank (DB). The investigation remains in the preliminary stage, but U.S. regulators have reportedly found documents detailing how JPMorgan offered jobs to the children of high-ranking Chinese officials in order to secure more business in the country.
Copies of emails — purportedly from senior JPM executives — seen by the Times indicate that the practice will well-known at its Hong Kong offices. JPM is said to be cooperating with the probe and there is no evidence so far that the bank’s top management in the U.S. knew about the hiring practices, which were dubbed the “Sons and Daughters” program.
The Times noted that JPM may have been attempting to respond to the Chinese hiring practices of rival banks. At least one of the consulting firms hired by JPM to boost its Chinese business had previously worked with Credit Suisse.
While none of the banks have yet been accused of wrongdoing, hiring the relatives of foreign officials in exchange of business opportunities would run afoul of the Foreign Corrupt Practices Act.