US authorities have opened an investigation into whether JP Morgan Chase & Co hired the children of powerful Chinese officials to help it win business in China, according to the New York Times.
Investment banks have a long history of employing the children of China's politically connected. While close ties to top government officials is a boon to any banking franchise across the world, it is especially beneficial in China, where relationships and personal connections play a critical role in business decisions.
The approval process for a stock offering in China, for example, is one area that has come under criticism inside and outside the country for being opaque and prone to cronyism.
A report posted in the Times' online Saturday edition cited a confidential US government document as its source for the story on the China hiring probe. The Times said the inquiry is a civil investigation by the securities and exchange commission's anti-bribery unit.
A spokesmen for the SEC could not be reached immediately for comment.
JP Morgan made reference in its 10-Q quarterly filing this month to the inquiry by the SEC. "We publicly disclosed this matter in our 10-Q filing last week and are fully co-operating with regulators," Marie Cheung, a Hong Kong-based spokeswoman for the bank, said yesterday.
The newspaper report stressed that the government document did not definitively link JP Morgan's hiring practices to its ability to win business.