'JP Morgan under probe for ties with firm run by Wen's daughter’
US banking giant JP Morgan Chase' association with a small-time consulting firm in China run by the only daughter of former premier Wen Jiabao is being scrutinised by authorities here as part of a wider bribery probe, a media report has said.
New York: US banking giant JP Morgan Chase' association with a small-time consulting firm in China run by the only daughter of former premier Wen Jiabao is being scrutinised by authorities here as part of a wider bribery probe, a media report has said.
"To promote its standing in China," JP Morgan Chase turned to a "seemingly obscure" consulting firm Fullmark Consultants run by a 32-year-old executive named Lily Chang,a New York Times report said yesterday.
Chang's firm received a USD 75,000 dollar contract from the American banking company.
However, Chang's firm appeared to have only two employees and "on the surface" lacked the influence and public name recognition needed to bring business for the bank.
"But what was known to JP Morgan executives in Hong Kong, and some executives at other major companies, was that 'Lily Chang' was not her real name. It was an alias for Wen Ruchun, the only daughter of Wen Jiabao, who at the time was China's prime minister, with oversight of the economy and its financial institutions," the Times report said.
The business relationship pointed to a broader strategy by the bank to accumulate influence in China by putting "relatives of the nation's ruling elite on the payroll", the report said.
The US authorities are scrutinising JPMorgan's ties to Wen as part of a wider bribery investigation into whether the bank swapped contracts and jobs for business deals with state-owned Chinese companies, the paper said.
Under the probe, federal authorities are believed to be scrutinising the hiring practices of JP Morgan in India, South Korea and Singapore following an investigation into the bank's activities in China regarding hiring children of powerful officials to win lucrative business deals.
In a filing with Securities and Exchange Commission, the bank had disclosed that the federal regulator and the Justice Department were now looking into "its business relationships with certain related clients in the Asia Pacific region and its engagement of consultants in the Asia Pacific region", the report said.
While JP Morgan Chase did not specify the countries where the inquiries were directed, an earlier Times report quoted people briefed on the matter as saying that government authorities are examining JP Morgan's hiring practices throughout Asia, focusing on South Korea, Singapore and India.
JP Morgan reportedly paid Wen's firm USD 900,000 annually from 2006 to 2008 for a total of USD 1.8 million.
"JP Morgan appeared to benefit from the relationship as well. Fullmark claimed in a confidential letter to the bank that it 'introduced and secured' business for JP Morgan from the state-run China Railway Group, a construction company that builds railways for the Chinese government," the report said.
The bank was an underwriter in the company's 2007 initial public offering, which raised about USD 5 billion.
However, it is not known whether Wen's father, Wen Jiabao, played any role in that deal.
Meanwhile, China today kept mum on the New York Times report.
Asked about the report alleging that?JP Morgan Chase paid the firm of then premier Wen's daughter USD 1.8 million over two years for consulting services, Chinese Foreign Ministry spokesman Qin Gang said he has no comment to offer.
JP Morgan has not been accused of wrongdoing, but the Times report said the bank's Hong Kong executives were aware of her true identity and appears to have benefited from her many connections.
Officials with JP Morgan declined to comment on the report.
It has been known for years that multinational corporations regularly hire China's "princelings," the children of Communist Party officials, who can provide unique business opportunities and information.
Wen Ruchun appears to have had particularly useful credentials.
After graduating from the University of Delaware with a MBA, the ‘Times’ report said she went on to work at several well-known banks, including the now-collapsed Lehman Brothers global investment company.
This is the second investigative report of the New York Times on Wen.
Its investigative report last year alleged that Wen's family accumulated USD 2.5 billion assets. Wen's family denied the allegation and threatened to sue the paper, but never acted on it.
The assets were accumulated by his family through diamonds and insurance businesses.
Wen's wife Zhang Peili, who like her husband is a geologist, ran lucrative diamond business.
Wen, 71, is known for his humble roots in China. But his image suffered a serious setback after the report, which the Chinese Foreign Ministry at the time termed it as smear campaign.
During the last November's 18th Congress which oversaw the transition of once-in-a-decade leadership, Wen reportedly sought an inquiry into the allegations but nothing was heard after that.
After his retirement early this year, the former Premier resurfaced when he hosted banquet for Prime Minister Manmohan Singh here last month.
The two leaders together met many times at different platforms to bring about steady development of India-China relations.