In a case called “nepotism at its finest,” Credit Suisse Hong Hong (CSHK) has been slapped with a US$47 million fine by the US Justice Department for doling out jobs to friends and family of Chinese officials in return for business.
The “relationship hires,” also known as “referral hires,” saw under-qualified candidates who lacked necessary technical skills and banking experience given work at the international finance giant as part of a “quid pro quo” arrangement.
Between 2007 and 2013, “several senior CSHK managers” in the Asia Pacific region engaged in the “corrupt scheme” by hiring, promoting or retaining candidates referred by, or related to, government officials or executives of Chinese state-owned entities (SOE) doing business with the bank.
The practice brought the bank at least US$46 million in profits, according to a statement by the US Justice Department, which detailed the case.
“In the banking industry, not every undertaking is fair game,” said William F. Sweeney, assistant director-in-charge of the FBI’s New York Field Office, which investigated the case.
“Trading employment opportunities for less-than-qualified individuals in exchange for lucrative business deals is an example of nepotism at its finest.”
The statement cites several specific examples where CSHK bankers hired officials’ close friends and family to win business.
In one, an SOE executive emailed a senior banker at the firm to say Credit Suisse would get a “big surprise in the near future” if it could arrange a position for a well-connected candidate in its Beijing office.
In another acknowledgment of the practice, an employee at the bank emailed colleagues to say that relationship hires “have to translate to $” or “the relationship is worthless to our organization.”
The candidates referred by officials also got preferential treatment.
In one case, CSHK staff were told to go easy on a referred candidate during the interview process because she was a “princess” who was “not used to too many rounds of interviews.”
Bank staff also got “creative” to bolster the resume of an under-qualified hire while.
The company — a subsidiary of the Swiss-based Credit Suisse Group — entered into a “non-prosecution agreement” with the Justice Department, which included paying criminal penalty of US$47,029,916 to “resolve the matter.”
In related proceedings, Credit Suisse Group AG also settled with the U.S. Securities and Exchange Commission by paying a total of US$24,989,843 in disgorgement of profits and US$4,833,961 in prejudgment interest.
In a statement about the matter, Credit Suisse noted that “no criminal charges” were brought and claimed it had improved its compliance, saying it was “committed to upholding the highest standards of integrity and fair business practices in every jurisdiction in which it operates.”
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