Ex-MS Banker in China Bribery Case: My Side of Story
Peterson describes an atmopshere of "drinking, smoking [and] womanizing."
Peterson said the go-go atmosphere during the boom often left compliance on the sidelines.
“There was low to zero FCPA consciousness, not only on my part, but on virtually everyone around me,” he said, describing the overall business climate in China — not just at Morgan Stanley — as “out of control.”
“I guess just three words, you know, drinking, smoking, womanizing, all the time,” he said.
“Being in China, the clients could take us out, and there were sometimes three, four nights a week I'd be out and karaoke-ing the whole night, and drinking like crazy, pass out, go home, you know, there's some girl next to me. I didn't even know who she is.”
The money, he said, flowed along with the booze.
“I went out with this client down in Southern China. He was a very wealthy, very, very wealthy man. Just on about five or six of us, he spent $200,000 U.S. on just the alcohol in one night.”
In addition to speaking to CNBC, Peterson has also told his story to a writer friend in Singapore, Jeremy Tarrier, who, operating under the pen name “Robin Fitzooth,” has turned it into a manuscript for a book entitled “The Rise and Fall of an American in China.”
“Here in Asia, the method of doing business is highly relationship based,” Tarrier told CNBC. “So what is a cut and fast rule within say Europe or the U.S.A may not translate directly to what is practical here.”
But Peterson’s former Morgan Stanley colleague disputes the idea that Peterson’s conduct was the norm.
“Garth went off the reservation,” the person said. “He went local.”
As for whether Peterson should have known about the anti-bribery laws, court documents show he received personal training on the FCPA seven times at Morgan Stanley, and was reminded about it 35 times. But Peterson said that, too, does not tell the full story.
“You can have programs and e-mails, but if people just delete them; if people have to do teleconferences but instead of actually listening, all you have to do is say, ‘Garth Peterson's on the phone,’ and they check the box that says, he's complied," he said. "And then you either quietly hang up, or you just put your phone aside and you do your other work. That was the culture. And you know, that's not right, but that's the way it worked.”
A Morgan Stanley spokesman declined to comment on the firm's compliance policies beyond its written statement.
Peterson said he agrees with “the idea behind the FCPA,” but said it should be strengthened to take real world situations into account, including the acceptance of bribes from foreign officials in addition to bribes paid to them. He said it is a particular issue in China, where the business culture revolves around guanxi, or relationships.
“This is where it's a difficult thing, especially in a place like China, where you get the guanxi thing, where you do something for me, I do something back for you,” he said. “It would be interesting to see how, if at all, the FCPA can take, you know, those kinds of factors into consideration.”
—By CNBC's Scott Cohn