by: Neil Gough
A former high-ranking Chinese railroad official whose daughter’s employment at JPMorgan Chase is a focus of an antibribery investigation in the United States has been indicted on bribery charges in a Beijing court.
Zhang Shuguang, former deputy chief engineer at the Ministry of Railways, was indicted on charges related to 13 incidents of bribery from 2000 to 2011, Chinese news reports said on Tuesday.
State prosecutors have accused Mr. Zhang, who has been under investigation for more than two years, of accepting graft payments of around 47 million renminbi, or nearly $8 million at current exchange rates, according to the reports, including one by China Central Television, the state broadcaster. Officials at the court, the Beijing No. 2 Intermediate People’s Court, could not be reached on Tuesday to confirm the reports.
The Securities and Exchange Commission in the United States is conducting an antibribery investigation into whether JPMorgan hired the children of powerful Chinese officials to help the bank win lucrative business in China, The New York Times reported last month.
Among the instances under United States scrutiny is the bank’s employment of Mr. Zhang’s daughter, Zhang Xixi. Ms. Zhang joined JPMorgan’s Hong Kong office around 2007. She worked at the bank for about four years. During that time, the bank won business from companies closely linked to the railroad industry in China.
In 2006, JPMorgan started a program, originally called “Sons and Daughters,” to keep track of its business practices in China.
JPMorgan has declined to comment on the matter and has not been accused of any wrongdoing. No one has indicated that the children of Chinese officials helped the bank secure business deals.
In Ms. Zhang’s case, the ministry where her father worked never hired JPMorgan directly, securities filings and news reports suggest. But JPMorgan did win business from the operator of a high-speed Chinese railway and a construction company whose largest customer is thought to be the Chinese government, records show.
It was unclear on Tuesday what effect, if any, the Chinese court’s indictment of Mr. Zhang, 56, would have on the American investigation.
China began investigating Mr. Zhang on suspicion of graft in early 2011, and he was promptly stripped of his post. That action was part of a broader crackdown on corruption within China’s then tremendously powerful Ministry of Railways, which led to the toppling of the head of the agency, Liu Zhijun, in February 2011.
In July, Mr. Liu received a suspended death sentence, which in China is usually commuted to life in prison, for accepting bribes and kickbacks worth millions of renminbi during his eight years as rail minister.
The charges against Mr. Zhang, detailed on Tuesday, involve graft proceeds significantly below the amounts that were suggested during the more than two years he was under investigation. News reports in 2011 said Mr. Zhang had as much as $2.8 billion hidden in overseas accounts.
Since Mr. Liu was sentenced, Chinese prosecutors appear to be moving forward quickly with the rest of their cases related to corruption within the once sprawling railroad ministry, which the government broke up this year.
On Monday, Su Shunhu, a former deputy chief of the ministry’s transport bureau, was indicted in the same Beijing court on charges of accepting bribes worth more than 24 million renminbi.
The railroad cases are moving through the Chinese courts at a time when a newer government campaign against graft appears to be sharpening its focus on the country’s huge oil and natural gas industry.
On Monday, a billionaire Chinese petrochemical entrepreneur became the fifth senior industry person in a week to become enmeshed in that corruption investigation.
Analysts and people close to senior government officials have described the targeting of increasingly senior figures with ties to the oil and gas sector as the boldest efforts yet by China’s top leader, Xi Jinping, to follow through on pledges to stamp out widespread graft at all levels of the Communist Party.
This article was written by Neil Gough and originally published on dealbook
