JPMorgan Chase will pay more than $130 million to settle charges that it corruptly influenced government officials in China by hiring on their relatives to win business, the US Securities and Exchange Commission announced on Nov. 17.
A three-year investigation found that not only had JPMorgan engaged in a “systemic bribery scheme,” by hiring children of government officials who were typically unqualified for the job, but they knew they were violating the law, the SEC says.
The bank also kept meticulous track of the business the bribery scheme brought in over seven years. As Kara Brockmeyer, head of the SEC’s Foreign Corrupt Practices Act enforcement division explained:
The misconduct was so blatant that JPMorgan investment bankers created ‘Referral Hires vs Revenue’ spreadsheets to track the money flow from clients whose referrals were rewarded with jobs. The firm’s internal controls were so weak that not a single referral hire request was denied.
The bank’s “Sons and Daughters” program started after it hired Fang Fang, a Chinese banker with powerful ties to the Communist Party, who quickly became the co-head of investment banking in China. Overall, it hired about 100 interns and full-time employees at the request of government officials, the SEC said, and earned over $100 million in revenues from the business they brought in.
The bank’s revenues from the program have been vastly overshadowed by the fines it will pay because of it. Including the latest fine, JPMorgan will have paid out more than $264 million in sanctions related to the program. Overall, JPMorgan has spent $27 billion over the past five years related to lawsuits and settlements for charges ranging from market manipulation to mortgage mis-selling.