Credit Suisse has agreed to pay $47m to settle a US Department of Justice probe into hiring practices in Asia that involved the Swiss bank recruiting so-called princelings to win business.
The scandal surrounding the hiring of the sons and daughters of powerful political families in China rocked several US and European banks starting in 2013, when the US Securities and Exchange Commission launched an official investigation into whether the practice violated the US Foreign Corrupt Practices Act.
Banks were found to have brought on well-connected individuals in the hopes of currying favour with powerful families to win business. At the time, it was hoped that princelings would help the banks score lucrative deals but the practice was also in potential breach of the US Foreign Corrupt Practices Act. That law bars companies from paying bribes to overseas officials to win business.
Credit Suisse Hong Kong said on Wednesday that it had reached an agreement with the US Department of Justice. It said the penalty would not affect its second-quarter results because it had already set aside the funds.
The bank declined to comment on the details of the case, and it was unclear to which specific people Wednesday’s settlement was connected.
The SEC investigation into Credit Suisse is ongoing.
Wen Ruchun, the daughter of former Chinese premier Wen Jiabao, once held a position at Credit Suisse, the Financial Times reported in 2013. Ms Wen, who went by the English name Lily, also previously worked for Lehman Brothers.
JPMorgan agreed in 2016 to pay $264m to settle DoJ and SEC probes. The US bank hired several relatives of powerful people under what came to be known internally as the “sons and daughters programme”, and included Gao Jue, the son of a Chinese commerce minister who later went to work for Goldman Sachs. JPMorgan also hired Tang Xiaoning, son of a former bank regulator who went on to chair China’s Everbright Group.
The US assistant attorney-general said at the time: “The so-called sons and daughters programme was nothing more than bribery by another name. Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple.”
Credit Suisse said in statement on Wednesday that it had made changes to its hiring practices since the investigation was launched.
“As cited in the agreement, since 2013 Credit Suisse has implemented numerous enhancements to its compliance and controls function and it remains committed to upholding the highest standards of integrity and fair business practices in every jurisdiction in which it operates,” it said.
This article has been corrected after initial publication to reflect the fact that Wen Ruchun did not serve as China chairman of investment banking at Credit Suisse
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