The chief executive of JP Morgan Chase’s China investment banking arm is leaving, according to an internal memo disclosed on Monday. His departure comes amid a US investigation of the bank’s hiring practices in Asia.
Fang Fang, 48, a Chinese citizen who has been with JP Morgan for more than a decade, is a key figure in an ongoing investigation into the bank’s hiring of the sons and daughters of prominent Chinese officials. He had strong ties to the Chinese government and served a five-year term with the Chinese People's Political Consultative Conference, from 2008 to 2013.
The US Justice Department is investigating JP Morgan under the foreign corrupt practices act (FCPA), which bars American companies from giving money or other valuable items to foreign officials in order to win business.
The bank did not disclose the reason for his decision to leave. “Fang Fang has informed us of his desire to retire,” Therese Esperdy, co-head of Asia-Pacific corporate and investment banking, said in the memo. Fang is expected to leave immediately.
Fang’s deputy, Frank Gong, will be promoted to chairman from vice-chairman, according to the memo, which was obtained by Reuters on Monday. Brian Gu and Jing Zhao will become co-heads of investment banking for China.
US authorities are examining a programme, originally called “sons and daughters”, that was supposed to give the bank key advantages as it built its business in China. The scheme allegedly favoured applicants from prominent Chinese families over other potential hires, which if proved would likely be a violation of the FCPA.
JP Morgan's hiring of the son of China Everbright Group chairman Tang Shuangning was among the problematic hires now being investigated by the US authorities, according to the Wall Street Journal. China Everbright is a state-owned financial services group. According to the Journal, JP Morgan has provided US prosecutors with emails from Fang discussing the hire.
Last November the bank withdrew from underwriting the initial public offering of China Everbright Bank on the Hong Kong stock exchange. It has also pulled out the IPO of a Chinese chemical company and did not seek a role in the sale of a Chinese state-owned train maker, as a result of the sons and daughters investigation.
JP Morgan is not the only bank under investigation over its Asia hiring practices. Other firms under scrutiny include Citigroup, Goldman Sachs and Morgan Stanley and UBS.
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