Andrew Ross Sorkin would've fit in well in the Roman Empire: He knows a scribe's job is to glorify elite privileges: http://t.co/HcwmUkhd05
— billmon (@billmon1) August 20, 2013
Shorter Sorkin: How can it be a ‘corrupt practice’ when everybody does it?
… Over the weekend, The New York Times reported that the Securities and Exchange Commission had opened an investigation into whether JPMorgan Chase had hired the children of powerful Chinese officials to help the bank win business.
The investigation is sending shudders through Wall Street. If JPMorgan Chase is found to have violated the Foreign Corrupt Practices Act by hiring the children of the elite, then the entire financial services industry is probably in a heap of trouble. Virtually every firm has sought to hire the best-connected executives in China and, more often than not, they are the “princelings,” the offspring of the ruling elite.
Under the Foreign Corrupt Practices Act, a company is not allowed to provide a personal benefit to a decision maker in return for business. But hiring the sons and daughters of powerful executives and politicians is hardly just the province of banks doing business in China: it has been a time-tested practice here in the United States…
But by and large, financial firms in particular commonly hire people who have certain connections, whether through family or a business relationship. The thinking is that the new hire — and his or her last name — might “help open doors,” Mr. Driscoll said. But, like many people I interviewed on this topic, he did not see a legal issue with such hires. “I don’t think there is a quid pro quo,” such that the hiring of children is explicitly generating business from the parent. At best, he said, “It gets you in the room.”…
The same goes for the prime example of this issue in the United States: Chelsea Clinton. Ms. Clinton worked at the consulting firm McKinsey & Company after college and later at Avenue Capital, a hedge fund founded by a big Clinton fund-raiser, Marc Lasry. But Ms. Clinton, a Stanford graduate who is considered intelligent by virtually everyone who has spent time with her, had as genuine a claim on those jobs as anyone else graduating the year she did.
Did it matter who her parents were? Of course it helped. She’s since gone on to become a director of IAC/InterActiveCorp, Barry Diller’s Internet company, and a contributor to NBC News, roles that critics have also complained about. (Full disclosure: I host CNBC’s Squawk Box, which is part of NBC News.)
And then there is Robert Rubin’s son Jamie, who worked at the Federal Communications Commission and at Allen & Company, the boutique bank, while his father was part of the Clinton administration. I’ve known Jamie for years and he, too, probably would have landed prominent posts even without his name. In some cases, some of these children will tell you that they try to work harder than others at their jobs, just to prove that they earned the position….
Expect a hard-hitting investigative expose from Luke Russert, any day now.