How JP Morgan Bribed the Chinese Prime Minister’s Daughter Using a Fake Name

Allegations of JP Morgan’s use of clever tactics to bribe Chinese officials recently received mainstream attention when Salon journalist Alex Pareene mentioned it in a comical and classic interview on CNBC (you need to watch the video before reading this) with presstitute Maria Bartiromo. When Mr.Pareene mentioned these claims against the TBTF bank, CNBC mocked him for the fact that his information had come from the New York Times. Well it appears the paper has now given CNBC a taste of its own medicine; with some actual real reporting, something the clownish financial-tv channel drowning in a zero ratings death spiral doesn’t seem all that interested in doing.

This article from the New York Times details how JP Morgan paid $75,000 a month to an obscure consulting firm called Fullmark Consultants, which had only two employees. The firm was run by a woman named Lily Chang, which in reality was the alias used by Wen Jiabao’s only daughter Wen Ruchun. Wen Jiabao was the Prime Minister of China at the time.

Unsurprisingly, many lucrative deals followed for the JP Morgan in China. How about we #AskJPM about that.

More from the NY Times:

To promote its standing in China, JPMorgan Chase turned to a seemingly obscure consulting firm run by a 32-year-old executive named Lily Chang.

Ms. Chang’s firm, which received a $75,000-a-month contract from JPMorgan, appeared to have only two employees. And on the surface, Ms. Chang lacked the influence and public name recognition needed to unlock business for the bank.

But what was known to JPMorgan 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.

JPMorgan’s link to Ms. Wen — which came during a time when the bank also invested in companies tied to the Wen family — has not been previously reported. Yet a review by The New York Times of confidential documents, Chinese public records and interviews with people briefed on the contract shows that the relationship pointed to a broader strategy for accumulating influence in China: Put the relatives of the nation’s ruling elite on the payroll.

Now, United States authorities are scrutinizing JPMorgan’s ties to Ms. Wen, whose alias was government approved, as part of a wider bribery investigation into whether the bank swapped contracts and jobs for business deals with state-owned Chinese companies, according to the documents and interviews. The bank, which is cooperating with the inquiries and conducting its own internal review, has not been accused of any wrongdoing.

Of course not, don’t be ridiculous!

For Ms. Wen’s consulting firm, Fullmark Consultants, the JPMorgan deal was lucrative. While many Hong Kong investment bankers were earning as much as $250,000 a year, JPMorgan paid Ms. Wen’s firm $900,000 annually from 2006 to 2008, records show, for a total of $1.8 million.

A spokesman for JPMorgan declined to comment. In a previous regulatory filing, the bank disclosed that authorities were examining “its business relationships with certain related clients in the Asia Pacific region and its engagement of consultants.”

The children of China’s ruling elite, according to experts, have occasionally used government-approved aliases to protect their privacy while studying or traveling abroad. Ms. Wen used her alias for both schooling and business. According to government records, Ms. Wen holds two national identity cards with matching birth dates, one issued in Beijing under the name Wen Ruchun and a second issued in the northeastern city of Dalian, as Chang Lily.

JPMorgan’s contract with Fullmark called for the consultant to “to promote the activities and standing” of the bank in China. According to Fullmark’s letter to JPMorgan, the consulting firm had three main tasks. One, it helped JPMorgan secure the underwriting job on the China Railway deal. It also advised JPMorgan about forming a joint venture with a Chinese securities firm and provided counsel on the “macroeconomics policy in mainland China.”

The letter, sent around the time of the financial crisis, struck an optimistic tone. “We hope JPMorgan Chase will grasp the opportunities and become to be the winner in the financial crisis,” it read.

Well we all know how that turned out…

Full article here.

In Liberty,
Mike

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5 Comments

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  1. Judge Rakoff Blasts Breuer, Prosecution of Companies Rather than Individuals in Bar Speech

    Absent sitting on the Supreme Court, it is difficult for a single judge to effect much change. Yet Jed Rakoff, in sending the SEC back to the woodshed in two separate cases over its failure to get factual admissions, meaning admissions of misconduct, on civil settlements of SEC cases, singlehandedly embarrassed the SEC and the Department of Justice into seeking these statements (for instance, numerous media reports indicate that the Administration wants that sort of confession as part of its pending settlement with JP Morgan).

    Rakoff threw down another gauntlet in a New York Bar Association speech on Tuesday. I’m taking the liberty of quoting it at length because his rebuke is a breath of fresh air and roused the Department of Justice to issue a “we really are doing our job” response.

    But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years.

    Rakoff then pointed to the fact that the FCIC and numerous government officials had discussed fraud in connection with the crisis and went further:

    While officials of the Department of Justice have been more circumspect in describing the roots of the financial crisis than have the various commissions of inquiry and other government agencies, I have seen nothing to indicate their disagreement with the widespread conclusion that fraud at every level permeated the bubble in mortgage-backed securities.

    He then goes through their litany of excuses (his word). Ooh, it’s hard to pin fraud on top executives in big complex companies! Poppycock, says Rakoff:

    Who, for example, were generating the so-called “suspicious activity” reports of mortgage fraud that, as

    mentioned, increased so hugely in the years leading up to the crisis? Why, the banks themselves. A top level banker, one might argue, confronted with increasing evidence from his own and other banks that mortgage fraud was increasing, might have inquired as to why his bank’s mortgage-based securities continued to receive triple-A ratings? And if, despite these and other reports of suspicious activity, the executive failed to make such inquiries, might it be because he did not want to know what such inquiries would reveal?

    This, of course, is what is known in the law as “willful blindness” or “conscious disregard.” It is a well-established basis on which federal prosecutors have asked juries to infer intent, in cases involving complexities, such as accounting treatments, at least as esoteric as those involved in the events leading up to the financial crisis. And while some federal courts have occasionally expressed qualifications about the use of the willful blindness approach to prove intent, the Supreme Court has consistently approved it.

    The second, “weaker” excuse came out of Lanny Breuer’s mouth in his notorious Frontline interview: that the investors in mortgage-backed securities were sophisticated; it would be hard to prove they relied on ratings and fraudulent misrepresentation. Rakoff basically says that Breuer is a crappy lawyer:

    Read more at http://www.nakedcapitalism.com/2013/11/judge-rakoff-blasts-breuer-prosecution-of-companies-rather-than-individuals-in-bar-speech.html#JdL1O87KjKjclG32.99

  2. I despise JPMorgan.

    But I thought it was unfortunate that this was the example of their shady dealings that popped into Pareene’s head, when there are so many others.

    This is just how business is done in many parts of the world. Doesn’t mean I like it. But that’s the reality–pay to play.

    See John McAfee’s interviews with Alex Jones and with Art Bell, about his experience in Belize. See Jacob Osterreicher’s case in Bolivia.

    I live in a developing country, and because I didn’t know how to bribe cops, I now have a false crime on my record. The systems are set up this way, and if you fight it you’re F’d.

    One of the things that makes me so angry about the 3rd-world-ization of the US, and the passivity with which 98% of Americans are accepting it.

  3. By the way, Mike, you really ought to post a link to McAfee’s interview with Alex Jones. Art Bell is a better interviewer, as he doesn’t constantly interrupt, but McAfee got into more depth on Obamacare with Jones.

    It’s the most interesting commentary I’ve heard on the whole website fiasco.

  4. This is how business works all over the planet. Including the USA. The difference is in the USA they teach you in school that your not supposed to do this. But in the real world of USA business you either get with the program or you don’t get anything and you don’t move up. It’s “complete and total hypocrisy” the USA has a lock-solid monopoly on. The rest of the world doesn’t care about hiding bribes and payoffs because that’s how the game is played and everyone living there knows it.

  5. What’s the law? Foreign corrupt practices act? Something like that. Add conspiracy and I’m sure a half-decent prosecutor could get 5-10 before lunch. Ain’t gonna happen, of course. Because F you, that’s why.

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