China 'Favours' Investigation Demonstrates Other Types Of Corruption

A United States federal investigation into the hiring practices of one the Wall Street banks as to whether it violates anti-bribery laws, is likely to be extended to five other Wall Street banks, according to a report in The Times newspaper on 9 December 2013.

The Times reports that the five other major international banks are understood to be facing an inquiry by the United States Securities and Exchange Commission (SEC), following suggestions that they may have recruited people from prominent Chinese families in order to help them secure contracts.

The first of the banks to be investigated acknowledged in August that it is the subject of an investigation by the SEC into this issue and, according, to the New York Times the Bank recently gave investigators spreadsheets and emails detailing the firms "sons and daughters" hiring program.

The London Times further reports that in one email, which is said to be the most explicit indication of a link between recruitment and business deals, a senior bank executive noted that the father of a job candidate was the chairman of the China Everbright Group, a state controlled conglomerate. The Times goes on to say that hiring the children of powerful people in China had, according to the email that they have seen, "almost a linear relationship" with winning business there.

While the recruitment of the sons and daughters of people in power in China is not in itself illegal, the SEC is examining whether the Bank breached America's Foreign Corrupt Practices Act (FCPA) which bans bribes of favours to foreign officials in order to win business.

Put into a UK context, under the Bribery Act 2010, Section 1 of the Act which deals with bribing another person includes a person "promising or giving a financial or other advantage to another person" (our underlining) and that person intends the advantage to induce a person to perform improperly a relevant function or activity or to reward a person for the improper performance of such a function or activity.

It is clear to us at the BriberyLibrary that...