The offices of JP Morgan in the Canary Wharf district of London, January 28, 2014. Police said they are investigating the "non-suspicious" death of a man who fell onto a ninth floor roof at the European headquarters of investment bank JP Morgan
The offices of JP Morgan in the Canary Wharf district of London, January 28, 2014. Reuters/Simon Newman

A hiring scandal in investment bank JP Morgan involving the son of China's commerce minister has come under the scanner of the U.S. authorities. The minister's son was reportedly hired as a "favour"and was retained despite his worst performance in interview, work and conduct within the office.

Business analyst Gao Jue was appointed at the New York office of the bank in 2007. He is the son of China’s commerce minister Gao Hucheng. Despite his poor performance, the company spared him from job cuts enforced in 2008, after his minister father assured to go “extra miles” to reward the bank for retaining his son in the job. The very recruitment of the minister’s son was perceived by many in the bank as a gesture by the bank's top official to please the minister.

The analyst continued in the job despite being warned for bad conduct by the company for an incident wherein he sent a sexually explicit e-mail to an employee in the human resources department.

Gao Hucheng was China’s vice commerce minister when his son was hired. Later he became China's commerce minister in 2013. The bank disclosed the details about the hiring probe in a 2013 regulatory filing.

Immature Analyst

The Wall Street Journal reports the controversy and also the frustration expressed by many senior bankers at Gao Jue’s selection. Many of them dubbed him as “immature, irresponsible and unreliable”. One recruiter, Danielle Domingue, sent an internal email noting her concerns about his qualifications. “Jue did very very poorly in interviews, some MDs said he was the worst BA candidate they had ever seen and we obviously had to extend him an offer,” she said of his appointment.

Gao left the bank before completing two years in his job and is currently working with Goldman Sachs. Following this episode, the U.S. authorities are investigating the hiring practices in JP Morgan under the Foreign Corrupt Practices Act. The law explicitly forbids U.S. companies from exchanging anything of value for a business advantage.

Official Connivance

The Daily Mail UK reports that JP Morgan's decision to hire Gao Jue was "widely understood" within the company as having the blessings of William Daley, a senior executive of the bank at that time. Daley is a former U.S. commerce secretary, who also served as Chief of Staff to President Barack Obama from January 2011 to January 2012.

In July 2006, Daley reportedly met with Gao Hucheng, then China's vice minister of commerce, while working at JP Morgan. That time, Gao Jue was a final year student at Purdue University. The meeting was reportedly set up by Sherry Liu, a Hong Kong-based J.P. Morgan banker, who advised Daley to pursue a “good in-depth relationship” with China for the benefit of the firm.

No criminal charges are expected to follow the probe. But the investment bank could be fined and ordered to change its hiring practices.

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