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September 4, 2013

JPMorgan Case Tests U.S. Law on Buying Influence Abroad

Reports that JPMorgan Chase hired scores of children of powerful government officials throughout Asia have put the bank squarely in the sights of the United States government for violating the Foreign Corrupt Practices Act. An investigation will test how broadly the law applies to almost commonplace conduct by firms seeking any small advantage over rivals to win business from foreign governments.

DealBook reported last week that JPMorgan adopted a program called Sons and Daughters that initially sought to avoid the appearance of favoritism for the offspring of officials but morphed into a means to lower the hiring requirements. According to Bloomberg, an internal spreadsheet even connects certain hires to deals being pursued by the bank, the kind of link that raises questions about whether there were any explicit benefits provided in exchange for receiving business.

JPMorgan has not been accused of any violations, and the bank is cooperating in the government investigation. No one is surprised that those with powerful connections often have an inside track to coveted jobs. In family-run businesses, it is a cliché that the underachieving offspring receive favored positions despite a lack of obvious qualifications, as any fan of the movie “Tommy Boy” can attest.”

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Read full New York Times article here

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