J.P. Morgan Chase and its Hong Kong affiliate have agreed to pay a total of more than $200 million in fines to the U.S government to settle charges of nepotism related to its hiring practices in Asia.
Since at least 2006, J.P. Morgan had been allegedly hiring people in China who have personal ties to influential government officials, legislators and, business moguls in hopes of securing favor with the country’s leaders and decision makers. Under the 1977 U.S. Foreign Corrupt Practices Act, companies are prohibited from paying bribes to Foreign countries, but the practice had become so common at J.P. Morgan over the past decade that the bank even had a formalized internal program called “Sons and Daughters” to help keep track of any employees referred to J.P. Morgan by clients, and how often these referred hires would lead to business deals after hire.
In many cases, those hired through the “Sons and Daughters” program were unqualified for the positions that they received, and although some were given prestigious titles, they were often tasked with light clerical duties such as photocopying and proofreading.
This settlement is considered to be one of the first big wins for the Foreign Corrupt Practices Act of 1977. U.S. officials are also said to be investigating the hiring practices of several other large banks that do business in Asia, including Citigroup, Goldman Sachs, Deutsche Bank and UBS.