BEIJING, Aug. 30 (UPI) -- U.S. and Hong Kong authorities are investigating JPMorgan Chase's hiring practices in China, a regulatory document shows.
A letter from the U.S. Securities and Exchange Commission to the bank asks for records concerning the hiring of sons and daughters of well-connected Chinese officials, The New York Times reported Friday. The letter outlines the need for "documents sufficient to identify all persons involved in the decision to hire."
Citing what it called well connected employees and sources close to the bank, the newspaper reported JPMorgan conducted a private investigation that found 250 employees in Asia had been hired under the auspices of a hiring program that could have backfired.
The bank in 2006 began a program called "Sons and Daughters," which was supposed to identify well connected employees to help ensure the bank would not practice nepotism or get involved in any violations of the Foreign Corrupt Practices Act of 1977, the Times said. Somewhere along the way, the program changed, bank employees told the Times and documents suggest.
Sources said the program became a fast track for employment for the sons and daughters of China's ruling class, many of whom were hired despite questionable credentials, the Times reported.
The documents did not show a link between profits and favoritism in hiring but there were indications revenue increased as various enterprises linked to employees gave the bank more business.
For example, the daughter of the Ning Gaoning, chairman of state operated food company Cofco was hired by the bank. Cofco later hired the bank to serve as a consultant on a shares issuance valued at $580 million.
Sources said officials in Hong Kong were also looking into the possibility that hiring practices at JPMorgan constituted bribery, the Times reported.