Published on: 11 Jan 2017
When is a bribe not a bribe?
US bank JP Morgan Chase thought they had the answer to this question. Unfortunately for them (but fortunately for all the hard-working ethical people out there..), the US Securities and Exchange Commission and the Justice Department saw through their plans and found them guilty of violating the US Foreign Corrupt Practices Act.
JP Morgan designed a scheme which they hoped would help them win lucrative contracts in China.
Their plan was to offer highly paid jobs to individuals who were not qualified for those particular jobs.
“Why would you pay excessive amounts of salary to people who weren’t capable of doing their job?” I hear you say.
Well, the answer was that those people they were going to pay the high salaries to were relatives or friends of government officials and those officials were in a position to offer lucrative contracts to JP Morgan.
So, in summary if JP Morgan had offered money directly to the state officials it would clearly have been a bribe. Instead, they thought they could get away with it by paying excess salary to family and friends of the officials. Over a period of 7 years, approximately 100 interns and full-time employees were employed who were connected to foreign government officials.
This enabled JP Morgan to win or retain $100 million in revenue.
A clever plan. Or at least they thought it was.
The Securities and Exchange Commission and the Justice Department thought otherwise though and started investigations back in 2013.
The Department of Justice called the scheme “bribery by any other name” and at the end of the investigation JP Morgan had to pay $264 million to settle the claims.
In the end, a highly unethical and very expensive way to try to win and retain clients.