Posts Tagged ‘US justice department’

Malaysian in 1MDB scandal denies wrongdoing after US charges — “Where did all the billions go?”

November 2, 2018

A Malaysian financier at the centre of a corruption scandal surrounding state fund 1MDB maintained his innocence Friday after the US unveiled criminal charges against him and two ex-Goldman Sachs bankers.

Low Taek Jho, commonly known as Jho Low, and the former bankers were accused by the US Justice Department of conspiring to launder billions of dollars from the fund and bribing officials in Malaysia and Abu Dhabi.

Low allegedly played a central role in plundering 1MDB. He was an associate of Malaysia’s former leader Najib Razak, whose government lost power in May in large part due to allegations that the then premier was involved in the vast fraud.

© AFP/File | Low Taek Jho, commonly known as Jho Low, is accused by the US Justice Department of conspiring to launder billions of dollars from the state fund 1MDB and bribing officials in Malaysia and Abu Dhabi

Since being ousted, Najib has been hit with a barrage of charges linked to the scandal.

A spokesman for 36-year-old Low, who held no official position at the fund but was believed to have huge influence over its workings, said that he “maintains his innocence.

“Mr. Low held no formal position at 1MDB, nor was he ever employed by Goldman Sachs, or the governments of Malaysia or Abu Dhabi.

“The US Department of Justice specifically states that the charges in the indictment are allegations, and that Mr. Low is presumed innocent unless and until proven guilty.

“Mr. Low simply asks that the public keep an open mind regarding this case until all of the evidence comes to light, which he believes will vindicate him.”

Low’s is still at large. His current whereabouts are unknown, although reports have suggested he is in China.

The indictments unsealed Thursday against him, ex-bankers Tim Leissner and Ng Chong Hwa, were the first US criminal charges over the huge fraud, which has spawned investigations around the world.

Charges were filed in Malaysia in August against Low. Ng was arrested in Malaysia on Thursday, according to the DOJ. Leissner has already pleaded guilty and agreed to pay $43.7 million in restitution of ill-gotten gains.

Goldman Sachs underwrote about $6.5 billion in bonds issued by 1Malaysia Development Berhad, a sovereign wealth fund set up to help develop the country, according to the US government.

But more than $2.7 billion went to kickbacks and bribes, according to the charges. Goldman Sachs garnered $600 million in fees and revenues from three 1MDB bond transactions detailed in the indictments.

Low acted as an intermediary for 1MDB but the ex-Goldman bankers concealed his involvement in the bond offerings, and repeatedly circumvented the bank’s oversight tools for countering fraud, according to the charges.

The bank says it is cooperating in the probe.




US task force to probe Hezbollah ‘narcoterror’

January 11, 2018


© AL-MAYADEEN/AFP/File | Hezbollah, whose leader Hassan Nasrallah is pictured here during a recent television interview, is one of the dominant forces in Lebanese politics


The US Justice Department announced Thursday creation of a special task force to investigate what it called “narcoterrorism” by the powerful Lebanese movement Hezbollah.

The unit will comprise specialists on money-laundering, drug trafficking, terrorism and organized crime, targeting Iran ally Hezbollah’s sprawling network, whose reach extends across Africa and into Central and South America, the department said.

“The Justice Department will leave no stone unturned in order to eliminate threats to our citizens from terrorist organizations and to stem the tide of the devastating drug crisis,” said Attorney General Jeff Sessions.

“The team will initiate prosecutions that will restrict the flow of money to foreign terrorist organizations as well as disrupt violent international drug trafficking operations.”

The move comes amid a stepped-up effort to battle Iran’s growing influence in the Middle East and the expanded military capabilities of Hezbollah, a dominant force in Lebanese politics.

But Sessions said the creation of the Hezbollah Financing and Narcoterrorism Team was also a response to criticisms that former president Barack Obama held back from cracking down on Hezbollah’s global networks, investigated under the previous Project Cassandra, in order to achieve the nuclear deal with Iran.

“The HFNT will begin by assessing the evidence in existing investigations, including cases stemming from Project Cassandra, a law enforcement initiative targeting Hezbollah’s drug trafficking and related operations,” the department said.

Officials in Washington and US allies Saudi Arabia and Israel, have increasingly raised the alarm over Hezbollah’s growing power in Lebanon and around the world.

On Wednesday, former top Treasury Department sanctions official Juan Zarate told Congress that Hezbollah’s drug smuggling and money laundering operations are global in scale.

“Recent actions by the Drug Enforcement Administration (DEA) and Treasury to dismantle networks of Hezbollah’s ‘Business Affairs Component’ have exposed financial and trade nodes that the Hezbollah operates and led to arrests and enforcement actions around the world,” he told a hearing of the House Foreign Affairs Committee.

– Obama accused of holding back –

The US has long targeted Hezbollah with sanctions. A 2007 presidential order allowed the seizure of property of “persons undermining the sovereignty of Lebanon,” not naming the group but clearly aimed at it.

In 2011 the Obama administration unleashed a crackdown on the group’s far-flung associates, designating Beirut-based Lebanese Canadian Bank a “primary money laundering concern” for handling the funds of alleged Hezbollah drug kingpin Ayman Joumaa.

The US Treasury and Drug Enforcement Administration later described a massive operation involving Colombia and Panama-based drug traffickers shipping multi-tonne amounts of cocaine to the United States, Europe and elsewhere.

The network laundered billions of dollars of their own money and that of other traffickers through Panama shell companies, various banks in Lebanon and elsewhere, and an operation that exported tens of thousands of used cars from the United States for sale in West Africa.

According to former DEA official Derek Maltz, Hezbollah most recently used the proceeds to buy weapons for the group’s operations in Syria, and some of the funds have also made their way to Yemen, where Iran-backed rebels are battling Saudi-supported government forces for control of the country.

However, Maltz and others in the law enforcement community have accused Obama of refraining from taking action against certain figures and entities in the Hezbollah network while he sought with five other world powers to complete the 2015 deal with Iran to curb its nuclear program.

China’s ZTE pleads guilty to violating US sanctions on Iran, N.Korea — Fined $1.2 billion — the largest criminal penalty in US history

March 23, 2017


© AFP/File | ZTE has pleaded guilty to conspiring to unlawfully export, obstruction of justice and making a false statement

WASHINGTON (AFP) – Chinese telecom giant ZTE has pleaded guilty in a US court to violating US export controls by selling goods to Iran and North Korea over several years.

The move is the final step in the case’s resolution which the US government announced March 7 in which it slapped $1.2 billion in fines on the company, the largest criminal penalty in US history in an export control case, although there have been larger fines involving financial firms.

ZTE pleaded guilty to conspiring to unlawfully export, obstruction of justice and making a false statement, the US Justice Department said Wednesday.

The company will immediately pay $892 million, while another $300 million in penalties are suspended for seven years.

From January 2010 to March 2016, the company shipped $32 million in US cellular network equipment to Iran, and made 283 shipments of cell phones to North Korea, with the full knowledge of the highest levels of company management, officials said.

© AFP/File

ZTE used third-party companies to hide the export of US components to the sanctioned countries, and then hid the information by “sanitizing databases” with information on the sales; deleting of emails of those employees involved in the scrubbing of records; and requiring employees with information about the illegal exports to sign non-disclosure agreements.

The five-year US government investigation into ZTE’s actions violating restrictions on exports to sanctioned countries was first revealed in March 2016.

Export privileges for ZTE — China’s largest publicly traded telecom company, and the fourth largest in the world — are subject to denial for seven years if any aspect of this deal is not met.


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1MDB Scandal: Talks Between Malaysia, Abu Dhabi Over Missing Money Break Down

January 21, 2017

Malaysia’s 1MDB fund is the subject of investigations in six countries


Updated Jan. 20, 2017 2:53 p.m. ET

Negotiations between government investment funds in Malaysia and Abu Dhabi over who is responsible for billions of dollars in missing money have broken down, according to people familiar with the matter, making it harder for the two funds to put the scandal behind them.

Abu Dhabi sovereign-wealth fund International Petroleum Investment Co. has said 1Malaysia Development Bhd. owes it about $6.5 billion after Malaysia defaulted on…


Negotiations over how to resolve Abu Dhabi’s US$6.5 billion claim against 1MDB have broken down, The Wall Street Journal reported.


The report said Abu Dhabi and Malaysia nearly reached a deal last December in which Putrajaya would need to fork out a US$1.2 billion payment as a first step to the dispute resolution.

“But Malaysia pulled out because advisers to the prime minister were dissatisfied with the agreement,” said the report, citing people familiar with the matter.

The dispute is now expected to go for international arbitration, it said.

According to the US Department of Justice, around US$3.5 billion of 1MDB funds, including those intended for Abu Dhabi’s International Petroleum Investment Company’s subsidiary Aabar Investments PJS, was diverted to several individuals including billionaire Low Taek Jho, better known as Jho Low…

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US sues to seize $US1B in assets tied to Malaysian state fund

Malaysian sovereign wealth fund scandal: MP Tony Pua files suit linking PM Najib Razak to $970m from 1MDB — $US3.5 billion from 1MDB allegedly embezzled

January 19, 2017
 By Lindsay Murdoch
Sydney Morning Herals

A civil lawsuit has been filed against Malaysian Prime Minister Najib Razak and his government over the country’s multibillion-dollar sovereign wealth fund scandal, claiming he wrongly exercised his lawful authority.

The misfeasance in public office claim intensifies pressure on Mr Najib amid speculation he intends to call an early election, capitalising on disarray among opposition parties after a crackdown to silence his government’s critics under draconian laws, including arresting dozens.

International investigators believe associates of Mr Najib siphoned billions of dollars from the 1Malaysia Development Berhad (1MDB) fund that the then deputy prime minister set up in 2009 and oversaw through his chairmanship of an advisory board.

The 110-page claim filed in a Kuala Lumpur court by opposition MP Tony Pua details how $US731 million ($977 million) was transferred into Mr Najib’s personal bank accounts that allegedly originated from 1MDB.


Najib extends powers amid fury over 1MDB scandal

Malaysian PM under the microscope: a timeline

Mr Pua, the national publicity secretary of the Democratic Action Party, told Fairfax Media the claim is a “last legal resort to sue Najib to seek justice on behalf of Malaysians in the hope that the guilty will be punished”.

For more than two years Mr Najib, the British-educated son of a former prime minister, has shrugged off allegations swirling around 1MDB as investigators in six countries attempted to trace huge sums of 1MDB money through foreign banks, funds and shell companies.

The Australian Federal Police are assisting international investigators as they hunt assets linked to the scandal in Australia.

The US Justice Department in July last year filed its largest ever civil forfeiture case, seeking more than  $US1 billion in assets, part of what it said was  $US3.5 billion from 1MDB allegedly embezzled since 2009.

“The Malaysian people were defrauded on an enormous scale in a scheme whose tentacles reached around the world,” FBI Deputy Director Andrew McCabe said at the time.

Assets seized by the Department of Justice include luxury New York property, art and the proceeds of the Hollywood movie The Wolf of Wall Street from the alleged mastermind of the scandal, Malaysian businessman Low Taek Jho, a millionaire playboy known as Jho Low who is reportedly sailing the world in his super-yacht Equanimity.

Attempts to contact Mr Low have been unsuccessful.

The department’s case refers to a high-ranking official in the Malaysian government who received hundreds of millions of dollars from 1MDB, a reported reference to Mr Najib, a close ally of successive Australian governments.

Mr Najib has denied any wrongdoing, claiming some of the money that turned up in his bank accounts was a donation from an unnamed Saudi prince.

He has claimed some of the money was returned but left unexplained what happened to millions of dollars.

Mr Pua is seeking general, aggravated and exemplary damages in the claim, a copy of which has been obtained by Fairfax Media.

The claim, which is set for mention in court on February 16, cites transfers to Mr Najib’s accounts in 2011, 2012 and 2013.

It alleges that  $US681 million was transferred to Mr Najib’s account in March 2013, just before the country’s general election in which his long-ruling United Malays National Organisation (UMNO) lost the popular vote but was returned to power through a gerrymandered electoral system that favours  Malays in rural constituencies.

The claim alleges that Mr Najib recklessly used his influence and position to procure guarantees for 1MDB bonds and that he maliciously approved associated companies to enter into various transactions and agreements.

It alleges that Mr Najib led the unlawful misappropriation of 1MDB funds and provided misleading replies to questions in parliament about the fund.

Mr Pua said the claim is probably the most complete set of allegations, evidence and documentation of misfeasance allegedly committed by Mr Najib, who has maintained the support of UMNO powerbrokers through an entrenched system of  patronage where party largesse is spread among the country’s Malay majority.

“The attorney-general and other investigating agencies – the police and the Malaysian Anti-Corruption Commission – have failed the people of Malaysia by refusing to take criminal action against parties involved in the multibillion-dollar scandal, including Najib,” Mr Pua said.

Mr Najib’s government shut down investigations into 1MDB in 2015 which, according to The Wall Street Journal, had called for criminal charges against Mr Najib.

In early 2016 Malaysia’s attorney-general – Mohamed Apandi Ali, a freshly-appointed party ally of Mr Najib’s – cleared the prime minister of any wrongdoing.

Last November, opposition MP Rafizi Ramli was convicted of violating Malaysia’s Official Secrets Act by revealing details of a 1MDB audit from an agency whose findings are normally public.

He was sentenced to 18 months’ jail but denies the charges and is appealing.

Last week the former branch manager of Falcon Private Bank in Singapore was jailed for 28 weeks on charges under the city-state’s money laundering rules in relation to 1MDB.

Meanwhile, Mr Najib has told Malaysian civil servants in a speech that they should not take what “belongs to the people” after the arrest of several government officials on corruption charges.

Former Malaysian prime minister Mahathir Mohamad, a fierce critic of Mr Najib, was last year party to a separate civil claim of misfeasance against Mr Najib.


US sues to seize $US1B in assets tied to Malaysian state fund

PM Najib destroying Malaysia, stoking racial tensions: Mahathir

December 7, 2016


© AFP / by M JEGATHESAN | Malaysia’s former prime minister Mahathir Mohamad says he will work to topple the ruling coalition amid graft allegations

PUTRAJAYA (MALAYSIA) (AFP) – Malaysian ruling party icon Mahathir Mohamad has accused current leader Najib Razak of “destroying” the country by clinging to power despite a corruption scandal, and vowed to campaign vigorously for the opposition in coming elections.

In an interview with AFP, the 91-year-old former prime minister excoriated Najib over the sensational graft allegations swirling around the 1MDB sovereign wealth fund.

The man who strove to subdue Malaysia’s opposition parties during his time in office from 1981-2003 said he could now work with them to topple Najib, including the party of his jailed former deputy Anwar Ibrahim.

“He (Najib) is destroying this country… he is bringing in racism… very, very serious crime has been committed,” Mahathir said Tuesday at his office at Putrajaya south of the capital Kuala Lumpur.

In a July lawsuit the US Justice Department detailed how an unnamed “Malaysian Official No. 1” — later identified as Najib — and his family members and close associates diverted billions from 1MDB, which Najib founded.

Under mounting pressure over the allegations, the prime minister last year abruptly shut down Malaysian investigations, fired the attorney general and purged ruling party critics including his deputy Muhyiddin Yassin.

Najib, 63, and 1MDB have denied any wrongdoing.

– ‘Overthrowing Najib’ –

Mahathir was once Najib’s mentor but has since come out of political retirement to attack him over the debt-laden 1MDB. He has formed a political party in hopes of toppling the ruling United Malays National Organisation (UMNO).

“For me overthrowing Najib is far more important than any personal feeling I have about anything else,” Mahathir said, in reference to patching up ties with Anwar and working with the opposition.

Anwar was heir apparent to Mahathir until he was sacked in 1998 over their political differences. Anwar was subsequently charged and jailed for sodomy, but the pair appear to see eye-to-eye over the 1MDB scandal.

Last month tens of thousands of Malaysians flooded Kuala Lumpur to express anger over the graft allegations.

At the rally Mahathir said Malaysia was “controlled by thieves” and called for a sustained push to topple the prime minister. Critics accuse Mahathir of hypocrisy, saying he also tolerated corruption and repressed dissent in his day.

Mahathir, who helped propel decades of economic growth for Malaysia, warned that if Najib were not ousted Malaysians were in for tough times amid rising prices of goods and a slowing economy on the back of mounting national debt.

“If he is not replaced, things will get worse,” he said.

– Race card –

Looking healthy and cheerful, Mahathir predicted Najib would play the race card to win support in the Malay-majority multiracial nation before the next election due by 2018.

“He is going to be very Malay and very Islamic. He is moving away from that liberal attitude towards a more rigid and racist approach to the administration of this country,” Mahathir said.

“He wants the election to be between Malays against Chinese or Chinese against Malays.”

The ruling UMNO-dominated Barisan Nasional coalition which Najib heads has been in power since independence in 1957 and in recent months has adopted increasingly repressive actions against dissent, including jail terms.

Najib and UMNO no longer have popular support in Malaysia, Mahathir said, predicting the opposition could win the elections. “Wherever I go, people actually curse Najib,” he said.

“All over the country, you ask anyone, you ask a hawker, you ask a taxi driver, you ask anybody, they all don’t want Najib.”

Yet just last week the prime minister told an UMNO gathering that he would “fight until the death” and showed no sign of succumbing to calls to quit.

Najib also labelled Mahathir as a traitor and warned of “nightmares” if UMNO lost and the Chinese-based Democratic Action Party came to power.

“Unless he cheats in the election, he (Najib) is not going to win,” Mahathir said. “Most of our (new party) members are actually from UMNO. Among Malays the hatred for UMNO is unbelievable.”

Chong Ja Ian, a political analyst from the National University of Singapore, said the opposition could do well but it faces hurdles.

?They don?t have the resources that UMNO can bring to bear,” he said.

Najib’s position so far appears unassailable, with support from most of the 191 powerful UMNO division chiefs.

Mahathir said he considered it a national duty to topple Najib, even though the campaign is taking a toll on him.

“I know very soon I have to go the way other people go. I will die. But if I am alive and still capable, just to be selfish and think of my own comfort I think is wrong. I want to do something for this country.

“The main thing is they (the opposition) and I agree Najib is the destroyer of this country and Najib should be removed.”



Malaysia: After Anti-Corruption Rally in Kuala Lumpur Demanding PM Najib’s Resignation, The Government Crackdown Makes Citizens Even More Angry

November 21, 2016


© AFP / by Dan Martin | A protester holds a poster depicting Najib Razak during a mass rally in Kuala Lumpur on November 19, 2016

KUALA LUMPUR (AFP) – Rights groups condemned Malaysia’s government on Monday for a crackdown on organisers of a weekend anti-government rally, including the arrest of the protest leader under a tough law aimed at terrorism.

Tens of thousands of people flooded Kuala Lumpur with the yellow colours of the reformist movement Saturday to demand Prime Minister Najib Razak resign and face justice over a massive corruption scandal.

Authorities arrested more than a dozen people before, during and after the demonstration including Maria Chin Abdullah, the leader of the “Bersih” civil society alliance that staged the rally.

Most detainees have since been released but Chin remains in solitary confinement under a national security law that allows detention without charge for 28 days and can bring a lengthy prison sentence.

Six Asian human rights organisations in a joint statement called the crackdown a grave breach of basic rights.

“These arrests violate international human rights standards,” it said, calling for all those arrested to be freed and all charges dropped.

The statement was released by the Asian Forum for Human Rights and Development, the Asia Pacific Forum on Women, Law and Development, Fortify Rights, Human Rights Watch, the International Commission of Jurists and the Southeast Asian Press Alliance.

The groups said they were especially “alarmed” at Chin’s detention under a national security law introduced in 2012 by Najib’s government with a promise it would not be used against political opponents.

“However, the authorities are instead using it to prevent the exercise of fundamental human rights, constituting an abuse of law,” the statement said.

– ‘Horrific abuse of power’ –

The protest was the second in 15 months by Bersih to highlight allegations that billions of dollars were plundered from sovereign fund 1MDB, Najib’s pet investment project.

Najib, 63, and 1MDB deny wrongdoing. But the US Justice Department earlier this year detailed an audacious campaign of fraud and money-laundering by his family, associates and an unnamed “Malaysian Official 1” — an apparent thinly-veiled reference to Najib.

Najib last year abruptly fired the attorney general and shut down domestic investigations. His government has increasingly throttled the media and whistle-blowers to contain the scandal.

Bersih, in a statement Monday, said Chin was being held in a tiny windowless cell with no mattress.

Bersih is “shocked and outraged that the authorities have gone to such extreme lengths to silence their critics”, it said.

It called for international pressure on authorities and said nightly vigils would be held on her behalf at central Kuala Lumpur’s Independence Square.

Deputy Prime Minister Zahid Hamidi has threatened still more people could be detained.

Critics accuse Najib’s government of trampling rights following a 2013 election in which his ruling coalition lost the popular vote.

Since the 1MDB scandal exploded last year, opponents accuse him of an outright lurch toward autocracy to suppress it.

Last week a leading opposition politician was convicted of releasing confidential documents on the scandal, and the chief editor of the country’s leading independent news website was charged over a 1MDB-related news video.

by Dan Martin

Thousands march in protests calling for Malaysian PM Najib Razak to step down amid scandal

November 19, 2016


Anti-government protesters occupy a street during a rally in Kuala Lumpur, Malaysia.
Anti-government protesters occupy a street during a rally in Kuala Lumpur, Malaysia. AP photo by Vincent Thian

Thousands of protesters have gathered in Malaysia’s capital to demand the resignation of Prime Minister Najib Razak over his alleged involvement in a multi-billion-dollar misappropriation scandal.

Clad in yellow shirts, protesters marched from various spots towards the heart of Kuala Lumpur amid tight security.

The mood among those gathered was festive, with drums and vuvuzelas heard along with speeches, songs and chants by participants calling for a “clean Malaysia” and “people power”.

The protest came a day after the head of pro-democracy group Bersih, the organisers of Saturday’s rally, was arrested along with several other supporters of the demonstration, including opposition leaders and student activists.

“We are not here to bring down the country. We love this country. We are not here to tear down the government, we’re here to strengthen it,” Bersih deputy chair Shahrul Aman Shaari told the crowds gathered at the National Mosque.

Another Bersih leader Hishamuddin Rais was arrested on Saturday at the rally, with police also issuing warnings to other participants.

A pro-government group called Red Shirts also rallied on Saturday, marching from the headquarters of the ruling United Malays National Organisation (UMNO) party towards Independence Square.

Police have said both rallies are illegal. State news agency Bernama said about 7,000 police officers would be on duty near the protest area.

Najib condemns ‘deceitful’ movement

Mr Najib, who is in Peru for the APEC Summit, said the protesters were “a tool of the opposition”.

“Their movement is deceitful,” he said in a speech uploaded on his website on Friday.

“It is clear that these street protests are in fact the opposition disguised as an independent NGO working to unseat a democratically elected government.”

Malaysia's Prime Minister Najib Razak.

A six-week campaign by Bersih ahead of the rally was marred by several violent confrontations with the Red Shirts, while anonymous death threats have been sent to Bersih chairwoman Maria Chin Abdullah.

Mr Najib’s administration has cracked down on the media and civil society in an attempt to silence criticism over his involvement in a financial scandal at state fund 1MDB.

Lawsuits filed by the US Justice Department in July say more than $US700 million ($954 million) of misappropriated funds from 1MDB flowed into the accounts of “Malaysian Official 1”, whom US and Malaysian officials have identified as Mr Najib.

Mr Najib has denied wrongdoing, but has taken steps critics say aim to limit discussion of the scandal, such as sacking a deputy prime minister and a former attorney-general, besides suspending newspapers and blocking websites.




JPMorgan settles bribery case for US$264 million after probe into Chinese hires

November 18, 2016

The US investment bank ran a programme known internally as ‘Sons & Daughters’ that hired 100 children and relatives of influential Chinese officials and businesspeople over a seven-year period

By Alun John and Nectar Gan
South China Morning Post

Friday, November 18, 2016, 12:39 p.m.

JPMorgan Chase & Co will pay US$264 million to the US government to settle allegations that it had hired the children and relatives of influential Chinese policymakers or officials in the hope of winning their business, the US Securities & Exchange Commission said in a statement on Thursday.

The settlement ends a three-year investigation into whether the hiring practice at the New York-based bank had breached US anti-bribery laws. At issue was whether JPMorgan was systematically targeting to hire the relatives of China’s most influential officials, policymakers and business leaders to curry favour with the country’s decision makers.

JPMorgan will pay the SEC US$130 million. It is also expected to pay US$72 million to the Justice Department and US$61.9 million to the Federal Reserve Board of Governors, according to the SEC statement.

“JPMorgan engaged in a systematic bribery scheme by hiring children of government officials and other favoured referrals who were typically unqualified for the positions on their own merit,” Andrew Ceresney, director of the SEC Enforcement Division said in the statement. “JPMorgan employees knew the firm was potentially violating the Foreign Corrupt Practices Act (FCPA), yet persisted with the improper hiring programme because the business rewards and new deals were deemed too lucrative.”

A pedestrian walks past the Shanghai office of J.P. Morgan Chase in China.
A pedestrian walks past the Shanghai office of J.P. Morgan Chase in China.PHOTO: ZUMA PRESS

The regulator said JPMorgan’s Asia unit created a hiring programme that allowed clients and influential government officials to recommend potential job candidates. Those referred under the programme bypassed the firm’s normal hiring practises and received “well-paying, career-building JPMorgan employment,” the SEC said.

About 100 interns and full-time employees were hired over a seven-year period. JPMorgan won or retained business resulting in more than US$100 million in revenues because of the programme, the SEC said.

“We’re pleased that our cooperation was acknowledged in resolving these investigations,” JPMorgan’s spokesman Brian Marchiony said in an emailed statement. “The conduct was unacceptable. We stopped the hiring program in 2013 and took action against the individuals involved. We have also made improvements to our hiring procedures, and reinforced the high standards of conduct expected of our people.”

JPMorgan hired the friends and family members of executives at three-quarters of the major Chinese companies that it took public in Hong Kong, The Wall Street Journalreported in December 2015, citing the bank’s document compiled as part of the US government investigation.

The programme lasted from 2004 to 2013 and was known internally as “Sons & Daughters”, according to the Journal report.

US investigations into JPMorgan have claimed the jobs of at least two senior bankers. Todd Marin, vice chairman of Asia-Pacific investment banking, and Catherine Leung, vice chairwoman of Asia investment banking, left the bank in February 2015, Dow Jones Newswires reported.

No individual JP Morgan employees were named in the SEC statement, nor did the US authorities announce any criminal charges against either the bank or its employees.

The Chinese officials whose children or relatives are tied to JPMorgan’s hiring programme read like a Who’s Who of China’s policymaking and businesses.

Gao Jue, son of commerce minister Gao Hucheng, got a job at the bank. Tang Xiaoning, son of the China Everbright Group’s president Tang Shuangning, also worked at the bank, in addition to also having worked at Goldman Sachs and Citigroup.

Some officials also referred relatives or their friends’ children to intern at the bank.

Peter Pang, deputy chief executive of the Hong Kong Monetary Authority, referred his son to JPMorgan for an internship in 2006.

Charles Li, current chief executive of the Hong Kong Stock Exchange, referred the daughter of former China Securities Regulatory Commission’s official Huang Hongyuan to an internship while he was chairman of the bank’s China business from 2003 to 2009.

JPMorgan wasn’t the sole bank to be investigated. HSBC, Goldman Sachs & Co., Credit Suisse, Deutsche Bank and UBS have all been queried about their hiring practices.

“In financial services, if you have relationships and you can use those to get business, that’s part and parcel of investment banking, particularly in the current difficult business environment,” said John Mullally, director of Hong Kong & Shenzhen financial services at Robert Walters. “China is not particularly different from what happens elsewhere in the world.”

Earlier this year, Libya’s sovereign wealth fund alleged that Goldman Sachs tried to influence the fund’s then-deputy chief into purchasing some derivatives from the bank by granting an internship to his younger brother. However, a London judge ruled in October that the offer did not have a material impact on the Libyan Investment Authority’s decision to enter into the trades.

China’s Communist Party, which has been cracking down on corruption since President Xi Jinping took the reins of power, doesn’t bar cadres’ children from seeking jobs in foreign banks.

“These children are not public servants themselves, and can have full freedom when it comes to employment,” said Zhuang Deshui, an anti-corruption expert at Peking University. “But the officials are required to fill in where their spouses and children work in the reports about their personal information that they hand to the party.”

Related on Peace and Freedom:

Former Chinese Premier Wen Jiabao’s extended family has controlled assets worth at least $2.7 billion, the New York Times reported, citing corporate and regulatory records and unidentified people familiar with the family’s investments.


Xi Jinping “Furious” with China’s Internet Media Bosses After Embarrassing Mistakes Go Global on the Internet — Expect Harsher Censorship in China

The Associated Press
August 19, 2016

BEIJING (AP) — The Chinese government is holding chief editors of news websites personally liable for content, months after several portals posted material that was seen as embarrassing to President Xi Jinping.

State media reported Thursday that the new rules placed responsibility squarely on head editors, saying news sites must monitor their content 24 hours a day to ensure “correct orientation, factual accuracy and appropriate sourcing.” The new rules were discussed at a meeting in Beijing this week convened by the government’s Cyberspace Administration of China (CAC) and involving 60 media executives and industry scholars, according to the official Xinhua News Agency.

The rules reflect the Xi administration’s efforts to ratchet up control over Chinese media and cyberspace, which has touched both traditional state propaganda outlets and private sector media companies.

In this April 29, 2015 photo, a woman uses her smartphone near a booth for the Chinese Internet company Tencent at the Global Mobile Internet Conference in B...

In this April 29, 2015 photo, a woman uses her smartphone near a booth for the Chinese Internet company Tencent at the Global Mobile Internet Conference in Beijing. Chinese state media reported Thursday, Aug. 18, 2016, that new rules hold chief editors of news websites personally liable for content, months after several portals posted material that was seen as embarrassing to President Xi Jinping. Tencent, one of China’s most popular websites, fired its top editor after a July headline mistakenly said Xi delivered a “furious” – instead of “important” – speech commemorating a Communist Party anniversary. (AP Photo/Mark Schiefelbein)


Although efforts by Chinese internet censors to purge sensational rumors, unwanted political content and pornography are nothing new, a series of high-profile gaffes in recent months have intensified scrutiny of news portals, which are seen by the majority of the 700 million Chinese internet users.

Tencent, one of China’s most popular websites, fired its top editor after a July headline mistakenly said Xi delivered a “furious” — instead of “important” — speech commemorating a Communist Party anniversary. The two words are similar in the Chinese spelling system.

In March, an online portal called Wujie published — inadvertently apparently — a letter calling for Xi’s resignation and warning of dangers to his personal safety. The post garnered widespread attention among Chinese political observers and led to the detention of several writers and editors.

The Chinese leader made a high-profile tour of state media outlets in February to demand closer adherence to the Communist Party line, while the CAC, the country’s internet censor, investigated the editorial operations of eight web companies several months later.

Chinese web companies are permitted only to republish content produced by closely regulated traditional media outlets under longstanding, though loosely enforced, media laws. But many private digital firms, including Tencent and Sina — internet companies publicly listed on the Shenzhen Stock Exchange and the Nasdaq, respectively — have formed teams of journalists that pursue original reporting and operate with a degree of relative freedom.

Participants at this week’s meeting with regulators were told to avoid publishing to “attract eyeballs” and operate their portals with “responsibility and restraint” to avoid spreading disorder and potentially endangering national security, according to Xinhua.

Regulators also directed the company executives to study Xi’s recent remarks calling for closer online information management.


Peace and Freedom Comment: By tightly controlling the media, China tries to hide its poor performance on rule of law, torture, human rights, public safety, government corruption and the freedoms now enjoyed by much of the rest of the world. By constantly demanding closer adherence to the Communist Party line, more people have taken an interest in what is really going on in China. Xi Jinping, as powerful as he may be, is encouraging free thought which will likely eventually destroy him.


President Xi Jinping of China, center, was applauded when he visited the newsroom of People’s Daily in Beijing. Credit Lan Hongguang/Xinhua, via Associated Press


Britain’s Queen Elizabeth speaks to Commander Lucy D’Orsi during a garden party at Buckingham Palace in London on May 10, 2016. PHOTO by REUTERS

China’s state run media seems to be attacking other nations with renewed energy lately….


Bookseller Lam Wing-kee (C) takes part in a protest march with pro-democracy lawmakers and supporters in Hong Kong, China June 18, 2016.

China blocks VPN services that let users get round its ‘Great Firewall’ during big political gatherings in Beijing

 (Contains many  links to articles on the Chinese human rights lawyers)

JP Morgan Chase to pay $374m to settle China bribe scandal — Much More Is Known About China, The Practice of Hiring ‘Princelings,’ Global Systemically Important Banks (GSIBs)

November 18, 2016


J.P. Morgan Settlement Lays Bare the Practice of Hiring ‘Princelings’

So-called Sons and Daughters program in Asia sought to hire well-connected offspring to win business

A pedestrian walks past the Shanghai office of J.P. Morgan Chase in China.
A pedestrian walks past the Shanghai office of J.P. Morgan Chase in China. PHOTO: ZUMA PRESS

A decade ago, a J.P. Morgan Chase & Co. managing director in Asia sent an email to the investment-banking team: “As you know, the firm does not condone the hiring of the children or other relatives of clients or potential clients…In fact, the firm’s policies expressly forbid this,” the director wrote.

Within two years, however, the team had begun orchestrating the hiring of dozens of relatives of powerful government officials in Asia with the express purpose of winning business, U.S. authorities said Thursday. The bank had created a separate channel to get unqualified applicants through the hiring process, and it later began tracking profits from any subsequent business awarded because of the hires, they said.

One candidate was described in an email as “the worst [business analyst] candidate they had ever see[n].” Another had a “napping habit” that would be an “eye-opening experience” for New York colleagues. In both instances, the candidates were hired, according to criminal and civil settlements the bank reached with the Justice Department, the Securities and Exchange Commission and the Federal Reserve.

All told, the bank hired around 100 applicants referred by government officials at Chinese state-owned firms, and earned at least $35 million as the result of a “corrupt scheme,” according to the settlement documents. The agreement ends a multiyear, high-profile investigation that had called into question whether the U.S. government was threatening to criminalize standard business practices in some countries.

J.P. Morgan agreed to pay $264 million and admitted it violated the Foreign Corrupt Practices Act—which bars U.S. firms from paying bribes to officials of foreign government in an effort to win business—through its hiring of so-called princelings. The Wall Street Journal had reported the outlines of the settlement in July. The 75 pages of settlement documents released on Thursday lay bare how the bank had set up a formal structure—dubbed the Sons and Daughters program—to leverage internships and win hundreds of millions of dollars in deals.

Between December 2010 and March 2011, one Asia-based employee maintained a spreadsheet that linked hires to specific clients, and tracked revenue attributable to those hires, the documents show.

“Some have argued that employment of a child, friend or relative could not possibly induce a foreign official to take action. Today’s action demonstrates the falsity of that assertion,” SEC enforcement director Andrew Ceresney told reporters.

“The so-called Sons and Daughters Program was nothing more than bribery by another name,” said Leslie Caldwell, the head of the Justice Department’s criminal division.

J.P. Morgan spokesman Brian Marchiony said in a statement the bank is “pleased that our cooperation was acknowledged in resolving these investigations” and that the conduct was “unacceptable.” Mr. Marchiony said the bank stopped the hiring program in 2013 and “took action against the individuals involved.” He added that the bank is still committed to the Asia-Pacific region. The agreement said more than two dozen employees had been let go or disciplined in connection with the investigation.

Several other banks are also under investigation for similar hiring practices, including Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc.,HSBC Holdings PLC, Morgan Stanley and UBS Group AG, according to regulatory filings. The banks declined to comment. Mr. Ceresney said he expected additional cases to follow the J.P. Morgan settlement.

The settlement documents cite emails in which J.P. Morgan officials discuss similar tactics they believed other banks were using.

In 2011, one employee asked for a hire to be switched into a permanent job, despite the person’s “undeniable underperformance” because the “deal is large enough [and] we are pregnant enough with this person, that we’d be crazy not to accommodate her father’s wants,” according to an email cited in the agreement.

Also in 2011, one employee asked whether one hire did substantive work. “We get real [investment banking] productivity from [the referral hire] or is she a photocopier[?]” “Photocopier,” was the response.

The agreements also show executives questioning why the bank wasn’t doing a better job of leveraging hires.

“We have more [lines of business] in China therefore in theory we can accommodate more ‘powerful’ sons and daughters that could benefit the entire platform,” one of the bank’s managing directors in Asia said in 2009.

In a 2008 exchange, one executive responded when asked about a prospective hire related to a potential client preparing for an IPO: “A couple of points…to discuss and agree prior to any offer being made to her: how do you get the best quid pro quo from the relationship upon confirmation of the offer?”

Write to Aruna Viswanatha at


JP Morgan Chase has agreed to pay US$264 million (S$374 million) to settle a foreign bribery case dubbed the “princelings case”

“JPMorgan executives belong in jail, but instead shareholders will foot the bill for what one government official described as ‘systemic bribery'”


WASHINGTON (AFP) – JP Morgan Chase has agreed to pay US$264 million (S$374 million) to settle a foreign bribery case dubbed the “princelings case” in which the bank gave prized jobs to friends and relatives of Chinese officials, US officials announced on Thursday.

The multinational bank, now the world’s largest by market capitalisation, admitted to taking in more than US$100 million after hiring candidates referred by clients, including by senior Chinese officials in positions to steer business to the bank.

Despite the announcement, shares in the JP Morgan were trading higher on Thursday afternoon, up 0.6 per cent shortly after 2000 GMT (4am Singapore time) in New York

“Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple,” Mr Leslie Caldwell, chief of the US Justice Department’s criminal division, said in a statement.

The case drew attention for its focus on the use of hiring as a form of bribery.

Over a seven-year period, between 2006 and 2013, JP Morgan Chase hired nearly 100 employees and interns referred by government officials at 20 different state-owned businesses in China, officials said.

Despite the large settlement, Mr Bart Naylor of policy watchdog group Public Citizen, complained that the bank “has escaped true accountability”.

“JPMorgan executives belong in jail, but instead shareholders will foot the bill for what one government official described as ‘systemic bribery’,” he said in a statement.

Officials at a regional subsidiary in Hong Kong created a client job referral programme sometimes known internally as the ‘Sons and Daughters Program’ to hire candidates of strategic value to the bank, according to the Justice Department.

By 2009, senior executives had refined the programme to seek candidates with “directly attributable linkage to business opportunity”, federal prosecutors said, citing internal JP Morgan Chase records.

In one example, JP Morgan won a leading role in the initial public offering for an unnamed state-owned Chinese company after hiring a candidate who bank executives knew was unqualified, for a job in New York.

The candidate had been referred in 2009 by a senior Chinese official who promised the business in return for the hire.

Candidates hired in this programme typically received salaries equivalent to entry-level investment bankers despite performing mainly minor tasks such as proof-reading, according to the Justice Department.

Authorities brought no criminal charges against the bank as part of the settlement and took no enforcement action against individuals. However, a JP Morgan Chase subsidiary in Hong Kong fired six employees and disciplined 23 others for their roles in the misconduct, the Justice Department said.

In the settlement, JP Morgan Chase agreed to pay US$134 million in fines to the Justice Department and Federal Reserve, as well as another US$130 million in to the Securities and Exchange Commission.

Since 1977, the United States has criminalised the practice bribing foreign officials to win business under a Watergate-era statute known as the Foreign Corrupt Practices Act.

Other countries have adopted similar laws but none enforces it as aggressively as the United States.

US enforcement of the law has broadened in recent years, with authorities in Washington extending their reach to more industries and scrutinising a greater range of business practices for corruption.


JPMorgan fined for hiring kids of China’s elite to win business


The Simple Reason JPMorgan Chase Could Soon Make a Lot More Money

If the incoming Trump administration follows through on its promise to “dismantle” the Dodd-Frank Act, it could translate into substantially higher profits for JPMorgan Chase.

Nov 16, 2016 at 2:44PM


It’s still too early to know exactly what the incoming Trump administration will mean for the nation’s biggest banks, but if it follows through on its designs to deregulate the financial industry, then JPMorgan Chase (NYSE:JPM) could be on the verge of making a lot more money. There are a number of reasons for this, but the biggest all of could come from changes to bank capital requirements.

The regulatory pendulum

In the wake of the financial crisis, regulators scaled up the type and amount of capital that banks have to hold against the assets on their balance sheets. It was believed that by doing so, banks could survive the next crisis without needing to be bailed out by the government.

Not only would banks have to hold more capital than they did previously, but the quality of the capital would need to be better. No longer would debt instruments and even certain types of preferred stock count as loss-absorbing capital. That role could now only be filled by common equity.

The impact was particularly severe for the nation’s biggest banks — those like JPMorgan Chase, Bank of America, and Citigroup. Because these banks are now designated as global systemically important banks, or GSIBs, they’re obligated to hold even more capital than their smaller, simpler peers in the regional banking space.

JPMorgan Chase must maintain a so-called GSIB surcharge of an added 3.5 percentage points’ worth of high-quality capital relative to its risk-weighted assets. Bank of America and Citigroup’s surcharges come out to 3.0 percentage points above non-systematically important banks.

The net result is that capital requirements have more than doubled for large banks. Going into the crisis, JPMorgan Chase faced a Tier 1 capital ratio of 4%. Now, after all the current rules are phased in, that figure is 10.5%.


JPMorgan Chase alone holds so much capital now that it could absorb the combined losses of America’s 31 largest banks under the most extreme version of the Federal Reserve’s latest stress test. As CNN noted earlier this year:

The Federal Reserve’s stress tests estimate that JPMorgan alone would lose $55 billion in a worst-case economic situation. But the government has forced big banks to stock up on lots of capital. JPMorgan now has $350 billion of loss-absorbing resources. That means the banking giant actually has enough capital to swallow the losses of the next 30 banks, which is estimated at $167 billion.

Because this reduces the amount of leverage banks like JPMorgan Chase, Bank of America, and Citigroup can use, it weighs directly on their bottom lines. It’s one of the main reasons that banks are struggling nowadays to earn their costs of capital by generating returns on equity above 10%.

Higher liquidity requirements, too

To make matters worse, regulators also now require banks to keep a larger share of their assets in high-quality liquid assets than they did before the 2008 crisis. The thought process is that these assets can be readily converted to cash in the event of a bank run, similar to what brought down Bear Stearns and Washington Mutual in 2008.

At the end of the third quarter, JPMorgan Chase had $539 billion worth of high-quality liquid assets. To put that in perspective, that’s only slightly less than the $587 billion market cap of Apple, the largest company by market cap in the United States.

The problem is that highly liquid assets yield less than loans. The $409 billion that JPMorgan Chase kept as an average balance in deposits at other banks last quarter yielded only 0.44% on an annualized basis. Meanwhile, its average loan yielded 4.23%.

This means that for every $100 billion that JPMorgan Chase allocates to highly liquid assets as opposed to loans, it forgoes almost $1 billion worth of interest income each quarter. That’s a lot of money when you consider that the New York-based bank tends to earn around $6 billion on a quarterly basis.

Dismantling Dodd-Frank

The good news for JPMorgan Chase is that all of this could change under a Trump administration, which has promised to “dismantle” the provisions of the Dodd-Frank Act that empowered regulators to raise both capital and liquidity requirements.

Trump’s camp has been notoriously scant with details about possible changes to financial regulations (or, for that matter, anything), but we can get a sense for their thinking by looking at the Financial CHOICE Act proposed by Republican Representative Jeb Hensarling, who’s purportedly being considered for Treasury Secretary in the incoming administration.

The central component of the proposed legislation would be to exempt banks from many of the heightened capital and liquidity requirements so long as they maintain a base level of capital. One could argue that this would reduce the soundness of the banking sector, as it almost certainly would, but there’s little doubt that it’d serve as a potent stimulant to banks’ bottom lines, and few more so than JPMorgan Chase.

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