JP Morgan Chase, the FCPA and Corruption of America

The Justice Department has just revealed documents that suggest JPMorgan Chase, Wall Street’s largest bank, has been employing the children of China’s ruling elite to gain business opportunities from Chinese state-run companies. An email from one JP Morgan executive reads, “You all know I have always been a big believer of the Sons and Daughters program,” as it appears to have a direct correlation to winning assignments. The documents even include spreadsheets that list the bank’s success in converting hires into business deals. 

This is a serious offense, but it raises the question of how different this is from Wall Street’s practice of hiring former U.S. Treasury officials to gain influence in Washington. For example, Timothy Geithner, Obama’s first Treasury Secretary, is now the president of Warburg Pincus, while Obama’s budget director Peter Orszag is a top executive at Citigroup. Similarly, JP Morgan’s actions in China are not dissimilar to Wall Street’s habit of hiring the children of powerful American politicians, such as Chelsea Clinton’s employment at Avenue Capital LLC from 2006 to 2009. Lastly, JP Morgan and other major Wall Street banks are contributing heavily to the campaign funds of both Democrats and Republicans, making Wall Street a major backer of both parties.

The Foreign Corrupt Practices Act is a strict law that prohibits American companies from offering anything of value to foreign officials for the purpose of gaining an improper advantage. JP Morgan could be indicted for hiring the children of Chinese officials, even if it did not receive any direct benefit. This is in stark contrast to the leniency with which American officials are treated. Consider Countrywide Financial’s “Friends of Angelo” program, which gave discounted mortgages to influential members of Congress and their staffs before the housing bubble burst, and resulted in no criminal or civil charges. The Supreme Court’s 2010 “Citizens United” decision has further weakened anti-bribery laws, and the Securities and Exchange Commission has yet to propose a rule to require corporations to disclose their political spending, despite receiving a record number of favorable comments from the public. 

It is clear that corruption is corruption, and bribery is bribery, regardless of the country or language it is conducted in. The Foreign Corrupt Practices Act is an essential tool to protect against such practices, and JP Morgan should be held accountable for its actions in China. It is equally important, however, that domestic anti-bribery laws are enforced, and that the public is made aware of the money flowing into our nation’s capital.

 

Leave a Comment

Your email address will not be published. Required fields are marked *