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Hong Kong charges ex-JPMorgan banker in ‘princeling’ bribery case

Catherine Leung Kar-cheung (image courtesy of MizMaa Ventures)Hong Kong’s anti-corruption agency said Thursday it has charged JPMorgan’s former Asia investment banking vice chair with two counts of bribery for trying to hire the son of an IPO client.

Catherine Leung Kar-cheung faces two counts of bribery, according to the Independent Commission Against Corruption or ICAC.

Leung, 51, allegedly offered a job to the son of the chairman of a logistics company in 2010 and 2011. The job offer was a reward for the chairman “showing favor” to JPMorgan for his company’s IPO, according to the ICAC.

Leung was released on bail. She’s scheduled to appear in court on May 20, the ICAC said.

According to the ICAC release, JPMorgan’s “client referral program” dates back to at least 2007.

“Senior staff at or above the rank of executive director or managing director, such as the defendant, could refer candidates to [JPMorgan] for the junior post of analyst or associate,” the ICAC said.

In the United States in 2016, the DOJ charged JPMorgan Chase with violating the Foreign Corrupt Practices Act for awarding jobs to relatives and friends of Chinese government officials to win banking deals. The bank paid $264 million in penalties to resolve the enforcement action.

Last year Credit Suisse Group AG and its Hong Kong unit paid the DOJ and SEC $76.7 million for a referral hiring scheme that violated the FCPA.

In 2015, BNY Mellon paid $14.8 million to the SEC to resolve FCPA offenses for providing internships to family members of officials connected to a Middle Eastern sovereign wealth fund.

In 2016, mobile chipmaker Qualcomm Inc. paid the SEC $7.5 million to settle FCPA offenses for hiring relatives of Chinese government officials. The officials were deciding whether to select the company’s mobile technology products, the SEC said.

Other banks that have disclosed ongoing FCPA-related investigations based on hiring practices include Citigroup Inc., Barclays PLC, Deutsche Bank, HSBC Holdings plc, and Goldman Sachs Group, Inc., according to data provided by FCPA Tracker.

In Hong Kong Thursday, the ICAC said Leung was responsible for sourcing business for J.P. Morgan Securities (Asia Pacific) and its parent JPMorgan Chase & Co. when the alleged bribery offenses happened.

She now works at MizMaa Ventures, a venture capital firm focused on Israeli-U.S. technology. The firm’s website describes Leung as a “founder and general partner.”

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Here’s the ICAC’s full May 16, 2019 release:

Ex-managing director of investment bank charged with bribery over IPO of logistics company

2019-5-16

A former managing director of an investment bank has been charged by the ICAC today (May 16) with bribing the chairman of a logistics company with an employment of the chairman’s son with the bank for the chairman showing favour to the bank in the engagement of investment banks or institutions for the initial public offering (IPO) of the company.

Catherine Leung Kar-cheung, 51, former managing director of J.P. Morgan Securities (Asia Pacific) Limited (JPMS), faces two charges of offering an advantage to an agent, contrary to Section 9(2)(b) of the Prevention of Bribery Ordinance.

The defendant will appear at the Eastern Magistracy next Monday (May 20) for mention.

At the material time, the defendant was a managing director employed by JPMS, a subsidiary of JPMorgan Chase & Co. (JPM). She was responsible for sourcing business for JPMS, JPM and its affiliates.

In around 2007, JPMS began to hire candidates referred by its clients or potential clients under the client referral programme. Senior staff at or above the rank of executive director or managing director, such as the defendant, could refer candidates to JPM or JPMS for the junior post of analyst or associate.

One of the charges alleges that on January 19, 2010, the defendant offered to the chairman of the logistics company an advantage, namely a contract of employment of the chairman’s son with JPMS, as a reward for the chairman showing favour to JPMS in the engagement or employment of investment banks or institutions for the IPO of the company.

The other charge alleges that between June 28, 2010 and October 28, 2011, the defendant offered to the chairman of the logistics company an advantage, namely the employment of the chairman’s son with JPMS, for the same purpose.

The defendant has been released on ICAC bail, pending her court appearance next Monday.

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Richard L. Cassin is editor at large of the FCPA Blog.

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