The U.S. Justice Department has just obtained documents showing that JPMorgan Chase, Wall Street’s biggest bank, has been hiring the children of China’s ruling elite in order to secure “existing and potential business opportunities” from Chinese government-run companies.
“You all know I have always been a big believer of the Sons and Daughters program,” says one JPMorgan executive in an email, because “it almost has a linear relationship” to winning assignments to advise Chinese companies. The data even include spreadsheets listing the bank’s “track record” for converting hires into business deals.
It’s a serious offense. But let’s get real. How different is bribing China’s “princelings,” as they’re called, from Wall Street’s ongoing program of hiring departing U.S. Treasury officials, presumably to grease the wheels of official Washington? Timothy Geithner, Obama’s first Treasury secretary, is now president of the private-equity firm Warburg Pincus; Obama’s budget director Peter Orszag is now a top executive at Citigroup.
Or, for that matter, how different is what JPMorgan did in China from Wall Street’s habit of hiring the children of powerful American politicians?
And how much worse is JPMorgan’s putative offense in China than the torrent of money JPMorgan and every other major Wall Street bank is pouring into the campaign coffers of American politicians — making the Street one of the major backers of Democrats as well as Republicans?
The Foreign Corrupt Practices Act, under which JPMorgan could be indicted for the favors in China, is quite strict. It prohibits American companies from paying money or offering anything of value to foreign officials for the purpose of “securing any improper advantage.” Hiring one of their children can certainly qualify as a gift, even without any direct benefit to the official.
Compared to this, corruption of American officials is a breeze. Consider Countrywide Financial’s generous “Friends of Angelo” lending program — named after its chief executive, Angelo Mozilo — that gave discounted mortgages to influential members of Congress and their staffs before the housing bubble burst. No criminal or civil charges have ever been filed related to these loans.
Even before the Supreme Court’s shameful 2010 “Citizens United” decision, equating corporations with people under the First Amendment, shielding much corporate political spending, Republican appointees to the court had done everything they could to blunt anti-bribery laws in the U.S. In 1999, in “United States v. Sun-Diamond Growers,” Justice Antonin Scalia, writing for the court, interpreted an anti-bribery law so loosely as to allow corporations to give gifts to public officials unless the gifts are linked to specific policies.
We don’t even require that American corporations disclose to their own shareholders the largesse they bestow on our politicians. Last year when the Securities and Exchange Commission released its 2013 to-do list, it signaled that it might formally propose a rule to require corporations to disclose their political spending. The idea had attracted more than 600,000 mostly favorable comments from the public, a record response.
But the idea mysteriously slipped off the 2014 agenda released last week. Could it have anything to do with the fact that, soon after becoming SEC chair in April, Mary Jo White was pressed by Republican lawmakers to abandon the idea, which was fiercely opposed by business groups?
The Foreign Corrupt Practices Act is important, and JPMorgan should be nailed for bribing Chinese officials. But why isn’t there a Domestic Corrupt Practices Act?
Never before has so much U.S. corporate and Wall Street money poured into Washington, as well as state capitals. Never before have so many federal officials taken jobs in corporations, lobbying firms, trade associations and on the Street immediately after leaving office. Our democracy is drowning in big money.
Corruption is corruption, and bribery is bribery, in whatever country or language it’s transacted in.