J.P. Morgan and the Princelings of China

“Sons and Daughters” Program

“Sons and Daughters” Program

“You know I have always been a big believer in the Sons and Daughters program – it almost has a linear relationship” with winning assignments to advise Chinese companies. Fang Fang, Former JP Morgan CEO, China Investment Banking

Does this break the law?

What are the elements of the FCPA?

“giving or offering to give”

“anything of value”

“to a foreign government official”

“to obtain or retain a business advantage”

“with corrupt intent”

Again: does this break the law???

D.O.J. Opinion Releases

1982: OK to hire a brother as long as no value passes to the official; 1984: OK to hire a close relative as long as no value passes to the official; 1995: OK to form joint venture with close relative as long as official duties not related to JV

DOJ Opinion Release 82-04

DOJ Opinion Release 84-01

DOJ Opinion Release 95-03

Summary: A job given to a relative is not a “thing of value” to the government official

Compare donations to charity (Schering-Plough Case)

In the Matter of Schering-Plough Corporation

Joint DOJ & SEC guidance - gifts can be indirect influence

Is a job to a relative an indirect influence?

2012: joint DOJ & SEC guidance to FCPA says “yes”

Always? Sometimes? Never?

Factual question - “it depends...”

J.P. Morgan and the Princelings of China

Source Acknowledgements:

This presentation was strongly inspired by the debate between Professors Matthew Stephenson and Andy Spalding chronicled on their blogs at:

• The Global Anticorruption Bloghttp://globalanticorruptionblog.com/?s=princeling&submit=Search

• The FCPA Bloghttp://www.fcpablog.com/blog/tag/princelings

Other Source Acknowledgements:

• Slide 3 & 4 - New York Times Dealbookhttp://dealbook.nytimes.com/2014/05/21/former-top-china-jpmorgan-banker-said-to-be-arrested-in-hong-kong/?_r=0

• Slide 15 - DOJ Opinion Release 82-04 http://www.justice.gov/criminal/fraud/fcpa/review/

• Slide 16 - DOJ Opinion Release 84-01 http://www.justice.gov/criminal/fraud/fcpa/review/

• Slide 17 - DOJ Opinion Release 95-03 http://www.justice.gov/criminal/fraud/fcpa/opinion/

• Slide 20 – In the Matter of Schering-Plough Corporationhttps://www.sec.gov/litigation/admin/34-49838.htm

• Slide 22 – DOJ Guidancehttp://www.justice.gov/criminal/fraud/fcpa/guidance/

Image Acknowledgements:

The images and fan art used in this presentation are based on Harry Potter created by J.K. Rowling and owned by Rowling, her publishers, and Time Warner, the owner of the rights to the Harry Potter films. American copyright law allows for the production, display, and distribution of derivative works if they fall under a fair use exemption, 17 U.S.C. § 107.

• Slide 1 - Eat Slugs by Niniduhttp://ninidu.deviantart.com/art/Eat-Slugs-175365149

• Slide 2 - Sepia_harusame, Harry Potter, Fred Weasley, Angelina Johnson, George Weasley, Lee Jordan by Overdoorhttp://www.zerochan.net/991755#full

• Slide 5 - Voldemort Remake by Brosahttp://brosa.deviantart.com/art/Voldemort-Remake-306475153

• Slide 6 - Voldemort by Brosahttp://brosa.deviantart.com/art/Voldemort-200780027

• Slide 7 - Uncredited Harry Potter Fan Arthttp://potterart.tumblr.com/

• Slide 8 - Golden Snitch in Harry Potter's hand, Screenshot of filmhttp://harrypotter.wikia.com/wiki/File:Snitch_2.png

• Slide 9 -Albus Dumbledore by smthcrim89http://smthcrim89.deviantart.com/art/Albus-Dumbledore-191047591

• Slide 10 - Ginny Weasley Harry Potter Hogwarts Quidditch Fan,http://wall4all.me/wallpaper/1151459-Ginny-Weasley-Harry-Potter-Hogwarts-Quidditch-fan-art

• Slide 11 - Voldemort by Nicolasammarcohttp://brosa.deviantart.com/art/Voldemort-274703732

• Slide 12 - Voldemort by Brosahttp://brosa.deviantart.com/art/Voldemort-200780027

Image Acknowledgements (continued):

The images and fan art used in this presentation are based on Harry Potter created by J.K. Rowling and owned by Rowling, her publishers, and Time Warner, the owner of the rights to the Harry Potter films. American copyright law allows for the production, display, and distribution of derivative works if they fall under a fair use exemption, 17 U.S.C. § 107.

• Slide 13 - Hogwarts Castle by Seguraofhogwars2013http://harrypotter.wikia.com/wiki/File:Hogwarts-castle-harry-potter-166431.jpg

• Slide 14 –- Harry Potter Anime by Kaileyrox,http://kaileyrox.deviantart.com/art/Harry-Potter-Anime-254647509

• Slide 18 - Harry Potter Anime by Kaileyroxhttp://kaileyrox.deviantart.com/art/Harry-Potter-Anime-254647509

• Slide 19 - Gift wrapping by Lexic Alleyhttps://www.etsy.com/listing/74624772/gift-wrapping

• Slide 21 - Harry Potter Acceptance Letterhttps://www.etsy.com/sg-en/listing/234706310/classic-harry-potter-acceptance-letter

• Professor Severus Snape by LeksaArthttp://brosa.deviantart.com/art/Professor-Severus-Snape-281983243

• Slide 23- Minerva McGonagall, Screenshot of filmhttp://www.jaepix.de/fandom/hp/McG/McGonagall.html

• Slide 24 - First Year Hermione by KR0NPR1NZhttp://kr0npr1nz.deviantart.com/art/First-Year-Hermione-506319432

• Slide 25 - Harry Potter Mischief by Kanaehttp://kanae.deviantart.com/art/Harry-Potter-Mischief-251770829

• Slide 26 - Eat Slugs by Niniduhttp://ninidu.deviantart.com/art/Eat-Slugs-175365149