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How much do APAC’s regulators earn?

Regulators’ salaries across Asia Pacific vary enormously:some supervisors earn fortunes and others hit the pay scale at the average to low end.APAC REGULATORs - SALARIES

Some governments believe that paying politicians and civil servants high salaries should reduce the likelihood of them accepting a bribe, offered in cash or disguised as a gift. Others argue that financial regulators will be less likely to jump ship and work for a bank if they are paid competitively by the government. Some countries pay their banking regulators on the same modest scale as other government employees , pitting them against some of the highest paid people in the country – bankers.

Last April, we found out how much the head of the Hong Kong Monetary Authority brings home; Norman Chan Tak-lam was set to earn HKD$9.41m(USD1.2m), making him the highest paid central bank chief in the world.  As the HKMA is also the banking regulator, this makes Chan Tak-lam the biggest earning regulator in the world. Chan Tak-lam’s counterpart in Beijing, Shang Fulin, the head of China Banking Regulatory Commission, earns an estimated  CNY11,271 (USD1,800) per month.

The accompanying infographic details more of APAC banking regulators’ earnings.

Comparing regulators salaries with those of bankers reveals a stark difference. Since the global financial crisis took hold in 2008, we have seen a distinct change of attitude towards financial institutions. Blatant rule breaking by banks – whether money laundering, sanctions busting or tax evasion – is being punished in high-profile cases as regulators finally start to show their teeth. However, the impact on the individuals responsible have been unremarkable; a move to a less high-profile role in the bank, or early retirement as opposed to job loss or, as some have called for, criminal prosecution.

Rather than going after the bankers who allowed criminality to go unchecked at banks, or those who made good from the financial crisis, there is an element of maintaining the status quo vis a vis bankers’ salaries that is out of step with the movement to make change for the better in the financial sector.

In the post global financial crisis and post public bailout economy, can banks justify paying million dollar bonuses?

In February 2015, Ross McEwen, the head of RBS, went on record to defend bonuses for bankers in spite of government bailouts and losses:

“I need to be fair paying for our people so I can actually keep them onboard.”

Although McEwen has opted to hand back his personal GBP1m (USD1.5m) share award to the bank he will still take home an expected GBP2.7m (USD4m) in 2015. Peter Sands, the outgoing boss of Standard Chartered also waived his bonus in 2015.

Looking at Asia Pacific, four of China’s largest five banks made the Banker’s Almanac list of top ten biggest financial institutions. This includes Industrial and Commercial Bank of China, China Construction Bank Corporation, Agricultural Bank of China Limited and Bank of China. China Development Bank Corporation languished at no. 21 on the list.

“According to the half-year annual reports of the listed commercial banks, the average annual payment before deductions for the chairmen of the five biggest Chinese commercial banks was around 2 million yuan ($325,600).”Source:The Global Times 2014.

Piyush Gupta, CEO of DBS bank, Singapore’s largest, made SGD9.2m (USD 6.6m)
The CEOs of United Overseas Bank and Oversea Chinese Banking Corporation were not far behind.

Chief regulators salaries fall far short of those earned by their peers at regulated entities.
It’s unlikely they will ever be measured on the same scale. Regulators, in an ideal world, would be motivated by doing the right thing for the right reasons. That is certainly the message that some regulators are putting across. But banking is all about money, and the more you earn, the higher your status.

First published on the International Compliance Association blog in March 2015. 


The banking sector is still rewarding poor conduct

Senator Elizabeth Warren tore into Federal Reserve officials this week for not jailing a single banking executive in relation to their role in the collapse of the banking system. Senator Warren is making sure that US society, government and the banking sector does not forget that instead of punishing those who caused and oversaw the collapse, we are rewarding them.

The four biggest financial institutions [in the US] are 40% bigger than they were five years ago and the five biggest banking institutions have more than half of all the banking assets in the US, Warren told Bloomberg in this video. JPMorgan Chase CEO Jamie Dimon received a hefty bonus after negotiating a settlement with the feds over his bank’s involvement in the mortgage crisis, the Washington Times reported.

No deterrents

There are no deterrents for poor conduct in banking. You can break the whole system, make a tidy profit for yourself and stay employed. Bankers have got it made; governments gave them the keys to the coffers. Bankers are thought to be arrogant, but is that any wonder when you are in a position of great power and impunity?

I left the UK for Asia a few months after Lehman’s collapsed and I am getting back in touch with the banking world in the UK for the first time in five years. Although some of the edges have been worn off, the swaggering arrogance of banking executives is still apparent.

“Banker bashing must stop now,” one offshore banker determined to push the merits of his financial centre to Russian and Chinese clientèle told a packed conference hall. The people who raised the alarm on the extent of the financial crisis are dubbed ideologists who want simple solutions to complex problems by another British business leader. Their comments encapsulated the struggle that banking will face when trying to change its motivation from money to doing the right thing.

Professional standards

Not all in the banking world have the same attitude. Creating professional standards for bankers and playing up the benefits of doing well by doing good are the new battle cries of the financial services sector in the UK.. Although real changes are afoot, it will take half a generation or around 15 years according to representative from one institution, before we see the benefits of compliance universities and courses on ethics for bankers. We could wonder why it will take so long if we know where we need to go, but when you hear hardcore investment bankers talking about compliance and ethics as intrinsic to restoring confidence in the financial sector, you can’t help but think that enormous fines for criminal and regulatory failures have hit the spot.

Many banking insiders do not want change; they are happy with their set up. And that may be why it will take 15 years to see changes in the industry. Meanwhile, new payment products and services, crypto-currencies and other innovations will keep moving forward and gaining more ground, more users, more market share.

Sanctions: most exposed banking systems to Russia

Straight from Zerohedge via Bloomberg Briefs, this chart explains which countries are most exposed to systemic risk in Russia.FCA - Zerohedge

US and European financials faded notably after Europe and then US unveiled new sanctions against Russia today. Most notably, the decision to sanction Russia’s largest banks (and ban trading and capital markets access) has ramifications for the global financial system‘s stability given the increasingly inter-connected nature of the world. For that reason, we thought Bloomberg Briefs’ chart of the most exposed banking systems by nation to any systemic issues in Russia would be useful.


As Maxime Sbaihi reports,

About 74 percent of foreign banks’ claims on Russia originated from Europe in the first quarter, according to the Bank for International Settlements.

French banks had the most claims ($47 billion), followed by the U.S. ($27 billion) and Italy ($26 billion).

Italian banks appeared to be the most exposed in the percentage of the country’s total foreign claims, of those reporting data.

Source: Bloomberg Briefs

*  *  *

With Europe set to wake up to Portugal banking system imploding after BES headlines late today, we are sure Italy’s and France’s banks can handle the additional risk-off…

Reproduced from ZeroHedge

Iraqi banks take aim at money laundering

The Iraqi Private Banks League on Thursday (July 17th) announced new measures to prevent money laundering and terrorist financing attempts.FCA Iraq blast

“The new measures include creating an inter-bank database on suspicious clients, sharing pictures of individuals wanted in connection with financial crimes, and banning dealings with those who do not provide transparent reports on their financial activities and the licenses of their companies approved by security authorities,” said league member Salam al-Khayyat.

The measures may cause banks difficulties, but they are an important step, he told Al-Shorfa.

Source: Al-Shorfa

Bitcoin keeps on turning, AML standards body pays attention

And we’re rolling, rolling, rolling on a river… OK so, it doesn’t scan brilliantly, but any fans of crypto currency and/or Tina Turner will get the joke.

FCA - BitcoinThe Financial Action Task Force (FATF) has produced a study on the financial crime risks associated with crypto or digital currencies, a clear indicator that it is taking the newcomers seriously. The FATF is placing the risks associated with digital currency use and its potential policy responses as a priority for the 2014/15 presidency, expanding on the mention of Bitcoin (BTC) in the 2013 report on financial crime risks in new payments products and services (NPPS) report which grazed the surface of digital currency’s potential.

The report leads with a glossary of terms that the FATF has agreed upon to let readers know what they are referring to and it has adopted ‘virtual currency’ as the common denominator. Financial Crime Asia takes issue with the use of virtual to describe these new currencies that are taking the world by storm. They are, after all as real as a national debt or any fiat currencies governed by central banks; what started off as an algorithm is now worth USD615 per unit. Whether we like it or not, virtual will be the term used by the financial sector when referring to crypto and digital currencies.

The FATF weighs in from the US regulations’ angle, defining convertible and non-convertible ‘virtual currency’; briefly, convertible is something that can be exchanged for fiat currency, such as BTC or Linden Dollars used on the Second Life role playing game. Non-convertible currencies cannot be exchanged – think Q Coins or World of Warcraft Coins. Aligning BTC with currencies used in role playing games is a little confusing, given their increasing use in commerce (Expedia has started accepting BTC and pretty soon Financial Crime Asia will too) and, as pioneered by the States of Jersey last week, in investments. However, the FATF is taking notice and its report will permeate the banking sector nonetheless.

The vast majority of bankers and regulators are interested in BTC at the time of exchange into fiat currency. This is where the FATF sees the potential risks and the opportunity to offer guidance  in terms of anti-money laundering and counter-terrorist financing. That said, the power of BTC lies in its exchange for goods and services and not in whether or not you cash it in for fiat at a favourable exchange rate. Although there are some BTC speculators out there who make money on the exchange rate, the vast majority of users are trading BTC outside of the fiat system. In June, US Marshalls made a sale of USD18m worth of BTC last month and the buyer plans to use them as they are to fund the development of BTC use.

FCA -Emperors new clothesUsefully, the FATF does assess the risks posed decentralised systems of exchange. Although BTC addresses contain the information on every transaction the coin has made, unlike fiat currency, there is some concern that the user’s identifying information is not held on file. This would make monitoring suspicious transactions extremely difficult and would confound law enforcement’s attempts to investigate the malicious use of digital currency. The report looks at Liberty Reserve as an example of this, but let’s face it, LR was practically set up to launder money for crooks. Bitcoin was not. Customers on the Silk Road anonymous market place were restricted to using BTC when buying innumerable goods and services, both legitimate and illegitimate and that is a classic example of how criminals can exploit a financial system, bitcoin is simply the launderer’s new clothes.

The qualities that make BTC brilliant are also those that pose the greatest risks when held up against the fiat monetary systems and AML/CTF. BTC and other Altcoins (Litecoin, Peercoin, Ripple) using the BTC protocol are exchanging without Silk Road. They are transparent, are not bound by central governing body, some are limited by geography – see Auroracoin and Mazacoin – but most are not. We are starting to see some regulators tackle this (Germany has done so, the US is talking about it and a few countries have banned the use of BTC) but more importantly, we are stargting to see more jurisdictions adopting crypto-currency.

The FATF’s report is worth reading as an indicator of where the FATF, OECD and national governments are thinking. In the meantime, BTC keeps on trading.

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Sanctions: talking Turkish banks with the US Fed

A Turkish bank is about to hand over the details of dollar transactions made in the second half of 2012 to the US Federal Reserve.

Ziraat Bank signed an agreement with the Fed in June 2014 to allow an independent consultant to review all US dollar clearing activity carried out between July 1 2012 and December 31 2012. This will give the US a clear view of who the bank was doing business with and for during that period.

US Federal Reserve

US Federal Reserve

The agreement published on the Fed’s website also requires the bank to submit a written compliance plan to enhance anti-money laundering (AML) requirements under the Bank Secrecy Act, an enhanced customer due diligence (CDD) program and a revised suspicious activity monitoring and reporting system.

This is an extremely powerful statement from the Fed, showing the extent of its reach beyond US borders and into the transactions made by a bank in Turkey with only a branch office in the US.

Although the scrutiny is limited to US dollar clearance transactions, this information alone could reveal the identities of any dealings the bank may have had with sanctioned individuals or entities. As suggested by one Turkish politician, the Fed could be looking for information on transfers connected to Iranian businessman Reza Zarrab from Turkey to Iran.

Zarrab was named in a report from Reuters in April, connecting him to a criminal organisation that allegedly allowed Turkey to bust US sanctions in Iran.

EU sanctions on Iran and the cost of sanctions to the US

Turkey has a history of supporting Iran. A Turkish bank was used as an intermediary for oil payments from India to Iran up to February 2013, when EU sanctions prevented Euro transactions with Iran. Several nations forged an agreement in November 2013, to ease sanctions on Iran. This gives some leeway to India who is seeking to resume using the payment channel as soon as sanctions are lifted.

Man looks at Iranian Oil Tanker

Man looks at Iranian Oil Tanker – Nat Geo image

Meanwhile, a court in Luxembourg has annulled sanctions placed on the Iranian National Iranian Tanker Company (NITC). The firm contested the EU’s 2012 sanctions, claiming the firm is privately owned by Iranian pension funds. In July, a court in Luxembourg decided there was no evidence that NITC was owned by the Iranian government and that the sanctions on NITC represented a ‘manifest error of assessment‘ by the EU. This is a great boost for NITC, who now has to wait another two months for an appeals to come forward before it can resume trading with Europe.

Sanctions on Iran have cost the US government USD$175bn, according to a study made by the National Iranian-American Council published in Time. The losses since the US started sanctioning Iran in the mid 1990s are apparent in US employment rates, particularly in California and Texas. The report comes at a time when western nations are working on a deal with Iran to scale back nuclear operations in return for reduced sanctions.

Source: Today’s Zaman

GSK scandal triggers debate on high drug prices in China

The bribery scandal involving British pharmaceutical giant GlaxoSmithKline’s Chinese subsidiary GlaxoSmithKline (China) Investment (GKSCI) first came to light 11 months ago.

GSK China's office building in Shanghai. (Photo/Xinhua)

GSK China’s office building in Shanghai. (Photo/Xinhua)

The police found that the British drugmaker offered bribes to boost sales and inflated drug prices to make up for the bribery expenses and help the firm earn huge profits.

Among the irregularities cited was the domestic price of Heptodin — a drug used to fight hepatitis — being quoted as seven times higher than what was being charged in some countries.

Heptodin was being sold for 142 yuan (US$22.76) in China, compared with only 18 yuan (US$2.87) in South Korea, less than 26 yuan (US$4.17) in Canada and less than 30 yuan (US$4.8) in the United Kingdom.

The news agency added that this meant that Chinese patients had to pay much more to buy a box of Heptodin and that “the price of the drug sold in China could be seven times higher than in other countries.”

But the price gap was not valid, as this comparison involved comparing the price of a box of Heptodin in China with a tablet overseas.

Although the error was quickly pointed out by the media and other websites, GSK made no further clarifications on the price differences. But the controversy surrounding the case has triggered a hot debate about the prohibitive high prices enjoyed by the original drugs of the multinational pharmaceutical companies.

“Although the basis for calculation in GSK’s case was wrong, it is a fact that the British company has violated the law,” an insider from the Pharmaceutical Industry Association stated, adding that “maybe we could use the case to solve the long-stalled issue of allowing original drugs to set their own prices.”

The original drugs refer to imported drugs that have passed the patent protection period, but still enjoy the unique treatment of setting their own prices so that price differentials between the original drugs can be more than 10 times that of domestic generic drugs.

“There is no such a thing as original drugs in the international community; there are only patent drugs and generic drugs. Patent drugs enjoy high prices and market status for a short period of time, but after that period, there will be generic drugs. Only in China, these multinational companies continue to set high prices after the patent protection period and enjoy higher than national treatment,” Yu Mingde, president of the China Pharmaceutical Enterprises Association, pointed out.

Yu has been dedicated to the scrapping of such treatment for years. Some are also of the view that this is one of the major factors for high drug prices in China.

Source: WantChinaTimes

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Planned changes to UAE regulations

The days of transactional financial advice with a one-size-fits-all approach will soon be consigned to history

James Thomas, ACUMA — Independent Financial Advice

Regulation — hardly the most emotive word, but one that should be FCA - UAE tea pot housewelcomed with open arms as it thankfully increases its presence in the finance world here in the UAE. Whether you are a client, an adviser or just believe in fairness, transparency and accountability for all, there are imminent regulatory enhancements to the financial services industry in the UAE looming large on the horizon.

Previously there has been a number of separate regulatory bodies working independently of each other, but this situation is about to change, with new rules, vastly increased capital adequacy levels, and new requirements for minimum qualification levels.

Appropriate, tailored, transparent and easy-to-understand financial advice is of paramount importance to everyone. With this in mind, the fast-approaching regulatory changes and enhancements will be a massive step towards ensuring that you sleep comfortably at night knowing the financial security you crave for you and your loved ones is in safe, professional and supervised hands.

My simple view is that if I ever required some form of surgical procedure, I would ensure that the person operating on me was fully qualified and had the resources to do so effectively. I see no difference in the requirements for ensuring the appropriate and effective management of someone’s personal finances.

As this country continues to grow, emerge and increasingly embrace a pivotal role in the financial services industry, the days of transactional financial advice with a one-size-fits-all approach will soon be consigned to history.

Bank guarantee

As part of this process, the UAE insurance authority notified financial advisory firms late last year that to remain in business in the UAE they would need a paid-up capital of Dh3 million instead of Dh1 million by November, and they would also need to have a further Dh3 million lodged as a bank guarantee. An additional Dh1 million must also be put down for every additional branch they have, while the company that your financial consultant represents will have to adhere to strict regulatory requirements, as well as a robust internal infrastructure via independent, qualified and non-income-generating employees.

The good news for you, the reader and investor, is that no longer will you be just another individual who was promised the earth but found out all too soon that congruency is a rare commodity. Within months rather than years, regular reviews, transparency of remuneration, compulsory licences and qualifications across the board will be essential.

Much like other regulated jurisdictions such as the USA and the UK, the UAE has realised that it needs to update its regulatory framework to offer better levels of consumer protection. However, a word of warning: even with this change of regulation, you should not forget about your own due diligence when choosing a company or financial adviser.

Proof of qualifications

You still need be on your toes when it comes to deciding who will help you achieve the financial independence and security that you desire. Ask for proof of qualifications, testimonials from current clients, number of years in the industry, details of licences; and whether the person sitting opposite you works for an independent company that will work on your behalf to find the most appropriate solution, or is a tied agent and can offer only limited and potentially restricted advice.

While none of these changes will necessarily guarantee that clients get better advice, it should work towards a much more professional environment with a lot less unregulated, unqualified sales people offering poor ill-thought out advice, with their interests first rather than that of the client. Going forwards clients should receive advice from a qualified advisor, who works for a regulated company, with due recourse should this be necessary. A huge step forward, I’m sure you would agree.



Source: gulfnews

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Credit Suisse pleads guilty to criminal charges in US tax evasion settlement

Bank is first in more than a decade to admit to a crime in US and will pay more than $2.5bn in penalties


  • subverted disclosure requirements,
  • destroyed bank records, and
  • concealed transactions involving undeclared accounts


Credit Suisse Group has pleaded guilty to criminal charges that it helped Americans evade taxes, becoming the first bank in more than a decade to admit to a crime in the US. It will now pay a long-expected fine of $2.5bn (£1.5bn).

“This case shows that no financial institution no matter its size or global reach is above the law,” said the attorney general, Eric Holder. He said the years-long investigation had uncovered evidence of an “extensive and wide-ranging” conspiracy to hide taxes from the Internal Revenue Service (IRS) and the bank’s involvement in it.

“The bank went to elaborate lengths to shield itself, its employees, and the tax cheats it served from accountability for their criminal actions. They subverted disclosure requirements, destroyed bank records, and concealed transactions involving undeclared accounts by limiting withdrawal amounts and using offshore credit and debit cards to repatriate funds. They failed to take even the most basic steps to ensure compliance with tax laws,” said Holder.

Holder said the bank helped account holders deceive the IRS by concealing assets and income in illegal, undeclared bank accounts. “These secret offshore accounts were held in the names of sham entities and foundations. This conspiracy spanned decades. In the case of at least one wholly owned subsidiary, the practice of using sham entities to conceal funds began more than a century ago,” said Holder.

He said hundreds of Credit Suisse employees, including at the manager level, “conspired to help tax cheats dodge US taxes”.

Brady Dougan, Credit Suisse’s chief executive officer, said: “We deeply regret the past misconduct that led to this settlement. The US cross-border matter represented the most significant and longstanding regulatory and litigation issue for Credit Suisse. Having this matter fully resolved is an important step forward for us.

He said there had been “no material impact” on the bank’s business resulting from the heightened public attention and the bank would “now focus on the future and give our full attention to executing our strategy”.

The bank will pay a total of $1.8bn in the form of a fine of over $1.13bn and nearly $670m in restitution to the IRS. It will also pay the New York State department of financial services a record $715m and another $100m to the Federal Reserve.

The deal comes after a Senate panel in February concluded Credit Suisse recruited for over 22,000 US customers with assets of $10bn-$12bn, the vast majority of which were hidden from US authorities.

Pressure has been mounting on the Swiss banks in recent months. In March, Andreas Bachmann, one of six former Credit Suisse bankers indicted on charges of helping US clients hide $4bn in assets, pleaded guilty and agreed to cooperate with prosecutors.

In April, Josef Dorig, founder of a Swiss fund, pleaded guilty in the same case and implicated several other Credit Suisse bankers.

Criminal convictions against major financial institutions are rare. The financial services industry has worried that charging a bank with a crime could shut down its entire business. The last global bank to plead guilty in the US was Crédit Lyonnais, which in 2004 admitted making false statements to the Federal Reserve.

In 2002, the accounting firm Arthur Andersen was convicted of obstruction of justice related to its auditing of Enron, the energy firm that imploded in a massive accounting scandal in 2001. That ruling was reversed on appeal but was enough to destroy the company.

Regulators have subsequently been wary of criminal convictions of holding companies and have instead reached plea agreements with banks including HSBC, JPMorgan Chase and UBS or have extracted guilty pleas from subsidiaries.

Holder said the agreement had been struck “in close coordination with the bank’s financial regulators” because “criminal charges involving a financial institution have the potential to trigger serious follow-on actions by regulatory agencies.” He said the bank would now “move forward” although he said there were other ongoing investigations.

The case has led to calls for the resignation of Dougan and the chairman of Credit Suisse, Urs Rohner. Dougan, 54, is the first American to serve as sole CEO of Credit Suisse and was appointed to the top job in 2007 after leading the investment bank. He is one of the few global bank bosses to have survived the financial crisis and the scandals that followed.

On Sunday, Christoph Blocher, billionaire industrialist and vice-president of the rightwing Swiss People’s party (SVP), told Swiss newspaper Schweiz am Sonntag that Dougan and Rohner should step down. “In my opinion, the CEO as well as the chairman of the board must go in order to save the bank,” Blocher told the Schweiz am Sonntag. His comments come after calls for Dougan’s resignation from Switzerland’s left-wing Social Democrats.

While Credit Suisse is close to finalizing a deal, the Justice Department is still pushing for an admission of criminal wrongdoing from Italy’s BNP Paribas, which is accused of having violated US sanctions against Cuba, Iran and Sudan between 2002 and 2009.


Source: The Guardian

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HK arrests ex-JP Morgan head in corruption probe

Hong Kong is stepping up its game in the fight against corruption. This week, the Independent Commission Against Corruption reportedly went for the scalp of another foreign firm head and arrested the former head of JP Morgan ‘s China unit. Fang Fang has reportedly been released but is prevented from leaving Hong Kong.

Former Chief of JPMorgan’s China Unit Is Arrested

Updated, 7:52 p.m. | The former head of investment banking in China at JPMorgan Chase has been arrested by Hong Kong’s anticorruption agency, a Chinese news report and a person briefed on the matter said on Wednesday, possibly opening a significant front in what has become a global investigation into JPMorgan’s hiring practices in China.

Fang Fang, the former JPMorgan executive, has been released but is prohibited from leaving Hong Kong, according to a report in Caixin, a respected Chinese-language financial news outlet based in Beijing. He was arrested recently by the city’s Independent Commission Against Corruption, or I.C.A.C., the report said. The contents of the report were confirmed by a person who had been briefed on the matter.

Mr. Fang, 48, who left JPMorgan in March, has been a focus of a federal bribery investigation in the United States into whether the bank’s “Sons and Daughters” hiring program violated the Foreign Corrupt Practices Act. Since last year, the United States authorities have been scrutinizing connections between the bank’s roles in specific deals and its employment of the children of senior Chinese officials and business leaders.

The person briefed on the matter confirmed on Wednesday that Mr. Fang had been arrested and said the contents of the Caixin report were accurate but declined to be identified, citing a lack of authorization to speak publicly.

When Mr. Fang was arrested and how long he was held were unclear. Reached on his cellphone on Wednesday, he asked whether the call was to see “if I’m alive.” He said he could not discuss his situation. The I.C.A.C. and JPMorgan declined to comment.

Mr. Fang’s license as a broker was canceled or surrendered on March 21, according to a database maintained by Hong Kong’s securities regulator. On March 24, JPMorgan announced in an internal memo that Mr. Fang had recently expressed “his desire to retire.”

Two days later, more than 10 officials from the I.C.A.C. searched JPMorgan’s local headquarters in the city’s central business district, confiscating documents from Mr. Fang’s office, according to an article in late March in The Hong Kong Economic Journal, a Chinese-language newspaper.

The scope of the scrutiny of JPMorgan’s hiring practices may expand. The United States investigation into the practices has focused on links between the bank and Chinese government officials or state-controlled enterprises. But Hong Kong’s Prevention of Bribery Ordinance, which the anticorruption agency helps enforce, is significantly broader and covers graft in all forms, not just practices that involve government officials or state entities.

Mr. Fang was one of several JPMorgan executives whose emails on hiring practices were given to the United States authorities by the bank. In one of them, he wrote, “You all know I have always been a big believer of the Sons and Daughters program — it almost has a linear relationship” with winning jobs to advise Chinese companies.

Neither Mr. Fang nor any JPMorgan executives have been accused of wrongdoing as a result of the investigations. Although the I.C.A.C. may question and arrest individuals as part of its investigations, the decision to bring formal charges rests with Hong Kong’s public prosecutor, who relies on the evidence the anticorruption agency gathers.

Mr. Fang had been considered one of JPMorgan’s top rainmakers in China, an executive whose extensive network of contacts in Chinese government and business helped introduce a flow of lucrative underwriting and advisory business to the bank.

Those included deals with the China Everbright Group, a state-owned financial services and banking group. Its relationship with JPMorgan is a subject of the investigation by the United States Securities and Exchange Commission and federal prosecutors in Brooklyn.

China Everbright’s chairman, Tang Shuangning, approached Mr. Fang in March 2010 about a job for his son at the bank, a report in The New York Times said. Mr. Fang jumped at the chance, suggesting in an email to colleagues that they discuss “how we can leverage more on this account going forward.”

After the son, Tang Xiaoning — a former employee of Goldman Sachs and Citigroup — began working at JPMorgan, the bank received several assignments from his father’s company, including an advisory role on a $162 million share sale in 2012 by China Everbright International, a subsidiary focused on alternative energy.

JPMorgan recently distanced itself from several deals in which its current or former employees were related to executives at the companies involved. In November, it withdrew as an underwriter on a share sale by China Everbright Bank, a subsidiary of the state-run group. In December, China Everbright Bank raised $3 billion in Hong Kong’s biggest initial public offering of 2013.

In January, concerns about the investigation prompted JPMorgan to remove itself from a second deal, a planned $1 billion Hong Kong I.P.O. by Tianhe Chemicals, which is not owned by the state. JPMorgan had employed the daughter of Tianhe’s chairman.


Source: The New York Times DealBook

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