By Ned Levin 

HONG KONG--A top official at a Hong Kong regulator investigating J.P. Morgan Chase & Co.'s Asian hiring program is listed in an internal J.P. Morgan document as having referred his son for an internship there.

Peter Pang, one of three deputy chief executives at the Hong Kong Monetary Authority, made the recommendation to the bank in 2006, according to the document, which was prepared by J.P. Morgan to be submitted to U.S. investigators in April. Mr. Pang was appointed to his position, where he handles monetary management, financial infrastructure and research, in 2004. Mr. Pang has no role in his agency's probe.

Several senior Chinese regulators are named in the document as having referred candidates to J.P. Morgan, including mainland Chinese banking, insurance and securities regulators. But Mr. Pang is the only official named in the document who works at an agency which is investigating J.P. Morgan for the hires. A spokeswoman for J.P. Morgan declined to comment on the document, Mr. Pang, or the investigations.

J.P. Morgan hired 222 candidates referred by a broad spectrum of China's business and political elite under a program known internally as "Sons and Daughters," the document indicates. U.S. authorities have been investigating the program for the past two years to determine whether the bank's hires might have constituted bribery under the U.S. Foreign Corrupt Practices Act, according to bank filings, internal documents and people familiar with the matter. The FCPA makes it illegal for companies or their agents to give anything of value to foreign officials, including employees of state-owned companies, with the intention of improperly influencing them.

The HKMA holds a wide range of powers as both Hong Kong's banking regulator and its de facto central bank. It oversees the city's foreign exchange reserves, which were worth $406 billion at the end of last year.

Mr. Pang said via a spokeswoman that he sent his son's CV to a friend at J.P. Morgan in 2006, and that his son, at the time an economics student at the University of Chicago, was subsequently offered a summer internship with the bank. Mr. Pang's duties at the HKMA didn't involve supervising or having business dealings with the bank, and his son went through a selection process for the internship, he said.

"I had not done anything to influence J.P. Morgan's recruitment decision other than just sending over the CV," Mr. Pang said.

The HKMA spokeswoman said the HKMA was working with other authorities in looking into J.P. Morgan's hiring practices.

"HKMA requires banks to maintain proper employment systems as well as adequate internal controls on potential conflict of interests," the spokeswoman said, declining to comment further on J.P. Morgan.

The HKMA has been looking into other banks in addition to J.P. Morgan for their hiring practices, people familiar with the investigations said. It has been interviewing current and former J.P. Morgan staff as well as requesting summaries and emails related to hires referred by executives at both state-owned and private companies, the people said.

The HKMA doesn't have the power to issue fines, but it can require banks to take remedial actions such as changing their procedures or disciplining employees, according to a person familiar with the HKMA. In extreme cases, the HKMA can remove top executives or limit business operations. It also provides its investigation findings to Hong Kong's securities regulator, the Securities and Futures Commission, which can issue fines.

The bulk of J.P. Morgan's hires under the "Sons and Daughters" program were referred by government officials and executives in mainland China, according to the document. Some came from corporate executives in Hong Kong, including several of the city's top conglomerates. Small numbers of referrals came from executives in other parts of Asia including Mongolia, India, Vietnam and Thailand.

Write to Ned Levin at ned.levin@wsj.com

 

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(END) Dow Jones Newswires

December 01, 2015 21:58 ET (02:58 GMT)

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