In context

Foreign firms doing business in China: local vs compliant international practices

November 11, 2013
In context

The SEC is conducting a bribery investigation into whether JP Morgan’s employment practices in China violated the Foreign Corrupt Practices Act (“FCPA“).

The FCPA prohibits the giving, offering or authorising payment of anything of value to a foreign official for the purpose of obtaining or retaining business, or gaining any improper business advantage. Hiring a family member of a government official is not always an FCPA violation. But if the family member is used to make an illegal payment of “anything of value” indirectly to a foreign government official, then a violation would probably result.


But for foreign firms doing business in China, local practices may be different from what they are accustomed to. These local practices may sometimes conflict with the legal and ethical rules under which they are required to operate. Human resources departments, as well as hiring practices, must be transparent and, in effect, be in compliance with US and local laws.


According to a Bloomberg report, an internal spreadsheet is now part of an SEC investigation into JP Morgan’s hiring practices in China. The spreadsheet demonstrates that some hiring decisions may be linked to specific bank transactions. These may be examined by regulators as evidence that JPMorgan added people to its payroll in exchange for business.

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