U.S. News

Chinese official made job plea to JPMorgan Chase chief

Jessica Silver-Greenberg and Ben Protess

The executive suites of JPMorgan Chase in Midtown Manhattan may seem a world away from the politically connected Chinese job applicants who landed on the bank's payroll.

But a confidential email has emerged that shows a top Chinese regulator directly asked Jamie Dimon, the bank's chief executive, for a"favor" to hire a young job applicant. The applicant, a family friend of the regulator, now works at JPMorgan.

Photographer | CNBC

Mr. Dimon met the applicant in June 2012, according to interviews and the previously unreported email, one of several documents that JPMorgan recently turned over to federal authorities as part of an investigation into hiring at the bank. At the meeting with Mr. Dimon in New York, the applicant acted as an interpreter for the Chinese insurance regulator. JPMorgan bankers in Hong Kong, hoping to help her job prospects, knew in advance that she would attend.

JPMorgan said Mr. Dimon had nothing to do with the decision to hire the young woman, described within the bank as well qualified. And like the C.E.O. of any large company, Mr. Dimon can be expected to meet with many people in a given day. According to a person briefed on the investigation, he is not suspected of any wrong doing.

Still, the episode underscores the dual forces driving JPMorgan and other Wall Street banks to hire the family and friends of China's ruling elite. The banks sought to build good will with Chinese officials, who, in turn, expected favors from the banks.

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Federal authorities are now investigating whether the hiring at JPMorgan — and at least six other big banks — was done explicitly to win business from Chinese companies. The authorities could decide to bring charges against individuals or a bank if they find such activity to be in violation of anti-bribery laws.

At the time of Mr. Dimon's June 2012 meeting with the Chinese insurance regulator, Xiang Junbo, JPMorgan was seeking lucrative work from Chinese insurance companies. Mr. Xiang, a former banker who had been trying to secure a JPMorgan job for his young family friend a month before the meeting, would have a good deal of sway over those companies.

As the meeting with Mr. Dimon was wrapping up, interviews and the confidential email show, Mr. Xiang changed the subject to his young interpreter. He introduced her to Mr. Dimon and portrayed her as the daughter of a close friend and a potential JPMorgan employee. In an awkward moment for the applicant, she translated as Mr. Xiang extolled the benefits of hiring her.

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Mr. Dimon, according to interviews with people briefed on the meeting, was not expecting the young applicant to attend. In response to the request, Mr. Dimon told Mr. Xiang that the bank would "do what we can."

In the confidential email sent after the meeting, a JPMorgan banker in Hong Kong recounted how Mr. Xiang asked Mr. Dimon "for favor to retain her in US team." The banker, who worked on deals with Chinese-based insurance companies, emphasized "the importance of this relationship and specialty in the insurance area," adding that "we will be expected to find a solution for her quickly."

With the approval of the bank's compliance department, and after vetting the applicant through multiple interviews, JPMorgan created a special internship to accommodate the applicant, according to the people briefed on the situation. In early 2013, the people said, JPMorgan assigned her to a group within the bank's New York headquarters that is focused on the insurance business. She later landed a full-time job at the bank.

"Our C.E.O. played no role in the hiring decision, did not weigh in, and did not follow up," a bank spokesman, Joseph Evangelisti, said in a statement. "It is his normal practice to pass on referrals without advice to those involved in hiring."

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The timing of the internship may have had no connection to JPMorgan's business with the Chinese insurance industry, some of which JPMorgan secured before the meeting. The applicant played no role in those deals, the people briefed on the meeting said, and the bank had ties that long predated her meeting with Mr. Dimon.

Even so, the meeting came at an advantageous time. One JPMorgan banker in Asia, the people briefed on the meeting said, privately described Mr. Dimon's meeting with Mr. Xiang as "strategically important," given a string of business deals the bank was seeking with Chinese insurance companies.

And in the months after the meeting, JPMorgan worked on at least four business deals with Chinese insurance companies that Mr. Xiang oversaw, public filings show. In recent months, according to the filings, five top insurance companies with headquarters in mainland China or Hong Kong have become JPMorgan clients.

Until now, it was unclear whether any well-connected job applicants ever met JPMorgan executives in New York. Earlier documents that JPMorgan produced to federal authorities focused on hiring practices in Hong Kong and mainland China.

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But the latest ones show how the hires also touched the New York headquarters, where the bank awarded at least two internships to well-connected applicants, including Mr. Xiang's translator. She is one of several dozen well-connected hires cited in the documents JPMorgan has produced for investigators.

Together, the documents — copies of which were reviewed by The New York Times — paint the most detailed portrait yet of the bank's hiring. JPMorgan, the documents show, employed not only applicants tied to China's regulators and state-owned companies, but also candidates linked to private business leaders in China.

The revelations come as authorities are intensifying their investigation. While the hiring of employees connected to private enterprises would not typically violate the Foreign Corrupt Practices Act, which requires the involvement of a government official in a bribe, authorities are exploring whether state-owned Chinese companies indirectly owned some of the private enterprises, according to people briefed on the case. If the private companies are effectively arms of the government, then the federal law could apply.

On Friday, JPMorgan lawyers met with federal authorities in Washington, according to a person who attended that meeting. The Justice Department, federal prosecutors in Brooklyn and the Securities and Exchange Commission are handling the investigation.

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Mr. Dimon is not a subject of the investigation and he is not suspected of knowing about any questionable hiring practices at the bank. But JPMorgan bankers in Hong Kong were involved in those practices — and were instrumental in the internship awarded to Mr. Xiang's young family friend.

By the time of the 2012 meeting, Mr. Xiang was already pushing the JPMorgan bankers in Hong Kong to secure work for his family friend, according to the interviews with people briefed on the meeting who were not authorized to speak publicly. The JPMorgan bankers recommended that she attend the meeting with Mr. Dimon, the people said, and knew in advance that she agreed to do so.

While the confidential email mentioned the applicant by name, The Times could not reach her for comment and decided to withhold her identity because she is not suspected of wrongdoing and is not a public figure.

A spokesman for the China Insurance Regulatory Commission, where Mr. Xiang is chairman, could not be reached for comment on Friday. Mr. Xiang has not been accused of any wrongdoing.

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Since the authorities opened the investigation into JPMorgan last spring, the inquiry has entangled other Wall Street giants. Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, UBS and other banks have received requests for information, according to people briefed on the investigations.

The banks declined to comment on the investigations, which are at an early stage.

S.E.C. officials and the prosecutors also declined to comment.

Banks are not prohibited from hiring the family and friends of Chinese officials. A hiring would be a violation of the Foreign Corrupt Practices Act only if it can be shown that a bank explicitly swapped job offers for business deals with Chinese government officials. Such a bank must also have operated with the "corrupt intent" to influence a Chinese official, a blurry line that might be crossed if unqualified employees were hired.

The applicant who met Mr. Dimon is well educated. She had a graduate degree from New York University. At JPMorgan, she received strong performance reviews.

Mr. Evangelisti, the bank spokesman, said that the applicant had "prior experience serving as an interpreter" before the meeting with Mr. Dimon and Mr. Xiang.

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Even if federal authorities decline to pursue a case against the bank, JPMorgan's hiring practices could also raise concerns with the authorities in Britain and Hong Kong, where anti-bribery laws are stricter than the Foreign Corrupt Practices Act in the United States. The authorities could focus on the bank's "Sons and Daughters" hiring program, in which well-connected applicants routinely face fewer interviews and special treatment.

The daughter of a top executive at Tianhe, a private Chinese chemical company, received some extra attention after her father called JPMorgan to complain that her contract did not stack up to other JPMorgan employees, according to a previously unreported email reviewed by The Times. Her contract, he said, was not permanent and lacked a housing allowance.

The complaint arrived soon after the young woman joined JPMorgan in 2011. At that time, the bank was seeking an advisory role on Tianhe's initial public offering of stock.

"It sounds to me like the deal is large enough, we are pregnant enough with this person, that we'd be crazy not to accommodate her father's wants," a JPMorgan executive in Hong Kong wrote in the email.

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Recently, JPMorgan withdrew from the potential $1billion I.P.O. of Tianhe. A spokeswoman at a Hong Kong public relations agency representing Tianhe declined to provide a statement from the company.

Asked recently on CNBC about abandoning the deal, Mr. Dimon said, "I don't know the circumstance exactly, but I think we're trying to make decisions that try to make us as pure as possible, that we're trying to do the right thing."

Mr. Dimon played down the significance of hiring well-connected applicants. In the interview with CNBC, he said "it's been a norm of business for years that people hire, you know, ex-government officials,they hire sons and daughters of companies, and give them proper jobs and don't violate, you know, American Foreign Corrupt Practices Act."

JPMorgan started its Sons and Daughters program in2006, somewhat early in Mr. Dimon's tenure at the bank. Six years later, when hemet with Mr. Xiang, the nation's top insurance regulator, some of China's biggest insurance companies were planning to go public. Around that time, JPMorgan was vying for roles on these deals — some of which it secured.

Since Mr. Dimon's June 2012 meeting with Mr. Xiang, JPMorgan advised the AIA Group on three separate deals, according to Thomson Reuters and Standard & Poor's Capital IQ, a research service. It is unclear whether the assignments were in the works before the meeting. AIA, a Hong Kong-based insurance company, had worked with JPMorgan on at least three deals before the meeting. During some of those deals, AIA was owned by the American International Group, the giant New York-based insurer.

The People's Insurance Company of China, a state-owned insurer, also hired JPMorgan as one of 17 banks for its November 2012 I.P.O. That same month, JPMorgan was the co-lead underwriter on China Taiping Capital Ltd.'s $297 million debt offering, according to Capital IQ. The holding company of China Taiping again picked JPMorgan as an adviser when the insurer acquired stakes in a number of subsidiaries last May.

For Wall Street, one of the most coveted insurance deals was the I.P.O. of Taikang, often listed as the fifth-largest insurer in China. In a 2011 email reviewed by The Times, a JPMorgan banker referred to the"juicy size" of the deal.

For now, it is unclear whether JPMorgan secured arole on the I.P.O., which has not been publicly announced. But to bolster its chances with Taikang, JPMorgan had a plan: hire the "direct niece of chairman."

"Link to ipo," another banker said in a separate 2011 email, "is very direct."

By Jessica Silver-Greenberg and Ben Protess of The New York Times