As highlighted in prior posts here and here, in 2016 JP Morgan resolved a $202.6 million Foreign Corrupt Practices Act enforcement action against J.P. Morgan (and a related entity) based on its alleged improper hiring and internship practices that the U.S. government labeled bribery and corruption.
According to the DOJ, “the so-called Sons and Daughters Program was nothing more than bribery by another name. Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple.”
Like nearly all modern corporate FCPA enforcement actions, the JP Morgan matter was not subjected to any meaningful judicial scrutiny.
In connection with the “Sons and Daughters” program and based on similar allegations found in the FCPA enforcement, Hong Kong’s Independent Commission Against Corruption (ICAC) brought criminal charges against Catherine Leung Kar-cheung (a former vice chairwoman of JPMorgan’s Asia-Pacific investment banking business) for bribing a businessman to win a mandate for an initial public offering.
However, as reported here, a judge ruled that Leung was not guilty. As stated in the article:
“The ICAC’s case hinged on emails sent by Ms. Leung to colleagues, including one about the IPO which said: “We are a strong contender. Blink Blink nod nod, can we find a place for his son…” Another email that said while the young man “does not interview well,” he was likely to get a job offer from somewhere given an IPO mandate was up for grabs.
However, Judge Cheung said it wasn’t certain if Ms. Leung intended to win an IPO mandate via a job offer to Ang Ren-yi, the son of Kerry Logistics’s then-chairman Ang Keng-lam, or whether she just wanted to maintain and build a good relationship with the Kerry Group and its companies, including Kerry Logistics.
The judge said Ms. Leung didn’t make the final hiring decision. In addition, she said Ms. Leung’s discussions of the potential IPO in email exchanges could just be a way to brag about her performance at the bank.”
According to this article, the prosecution relied on Leung’s e-mails to show that she had a corrupt intent.
“The last thing I want is we go slow and they ask another bank and I am sure someone will give him a full-time offer given the mandate up for grasp here,” she wrote to Kerwin Clayton, then head of industrials, who would go on to interview Ang Ren-yi. “We can give him an offer.”
Leung was also said to have expedited the application and offered Ang Ren-yi a job before he had completed legal and compliance checks, which would have examined whether there were any conflicts of interests arising from the hire.
That was said to be a departure from standard hiring procedures under the programme, which involved a three-step process – from referral to assessment and vetting – before human resources offered a contract.”
However, as noted in the article:
“[The] judge could not be sure Leung had a corrupt intent when she could have made the offer with the aim of maintaining a good client relationship with Kerry Logistics, and mentioned the prospect of listing in her emails on the referral to show off her knowledge to her colleagues.
Cheung also found it possible that Leung was not familiar with the hiring process, but she had followed procedure in referring the candidate to the relevant decision makers, and could not be blamed when her colleagues obviously made a mistake and did not fulfil their gatekeeping duties to vet her referral.”
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