Former JPMorgan Exec Hit With Bribery Charges in Hong Kong
Catherine Leung Kar-cheung, ex-vice chairwoman of JPMorgan Securities' Asia-Pacific investment banking business, faces two counts of offering an advantage to an agent. Her legal woes stem from an alleged bribery scheme involving the chairman of an unnamed logistics company and his son.
May 16, 2019 at 04:10 PM
3 minute read
JPMorgan Chase & Co. sign. Photo by lentamart/Shutterstock.com
An executive who once headed JPMorgan & Chase Co.'s investment banking business in Asia now faces bribery charges in connection with the bank's problematic “Sons and Daughters” client referral program.
Hong Kong's Independent Commission Against Corruption, or ICAC, announced Thursday that Catherine Leung Kar-cheung had been charged with two counts of offering an advantage to an agent. Her legal woes stem from an alleged bribery scheme involving the chairman of an unnamed logistics company and his son.
Leung allegedly offered to hire the chairman's son ahead of the company's initial public offering, but only if the company “showed favor to [JPMorgan] in the engagement or employment of investment banks or institutions for the IPO of the company,” according to the ICAC. The activity in question occurred in 2010 and 2011.
Leung, 51, served as the Hong Kong-based vice chairwoman of JPMorgan Securities' Asia-Pacific investment banking arm from 2002 to 2015, according to her LinkedIn profile. In that role, she advised clients in high-profile IPOs, among other things.
She has been released on bail and is slated to appear in court on May 20. It was not immediately known if she had an attorney.
Her legal troubles stem from JPMorgan's “Sons and Daughters” program, which launched in 2006 and involved the hiring of so-called princelings, or children and other relatives of prominent Chinese officials.
Under the program, JPMorgan's senior staff at or above the rank of executive director or managing director, which included Leung, could refer candidates to the bank for the junior post of analyst or associate, according to the ICAC.
The program also caught the eye of U.S. authorities, which resulted in JPMorgan agreeing in 2016 to pay $264.4 million in a settlement with the U.S. Department of Justice, U.S. Securities and Exchange Commission and Federal Reserve System's Board of Governors.
While the program was supposed to include safeguards to ensure compliance with the Foreign Corrupt Practices Act, bank employees submitted bogus information on the compliance questionnaires that “failed to state the true purpose of the hire,” according to the DOJ.
JPMorgan's Hong Kong-based subsidiary allegedly leveraged the nepotism program to net at least $35 million in profits from business deals with Chinese state-owned companies.
In announcing the settlement with JPMorgan, Assistant Attorney General Leslie Caldwell of the Eastern District of New York called the bank's “Sons and Daughters” program “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,” she added.
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