To promote its standing in China, JPMorgan Chase turned to a seemingly obscure consulting firm run by a 32-year-old executive named Lily Chang.
Ms. Chang’s firm, which received a $75,000-a-month contract from JPMorgan, appeared to have only two employees. And on the surface, Ms. Chang lacked the influence and public name recognition needed to unlock business for the bank.
But what was known to JPMorgan executives in Hong Kong, and some executives at other major companies, was that “Lily Chang” was not her real name. It was an alias for Wen Ruchun, the only daughter of Wen Jiabao, who at the time was China’s prime minister, with oversight of the economy and its financial institutions.
JPMorgan’s link to Ms. Wen — which came during a time when the bank also invested in companies tied to the Wen family — has not been previously reported. Yet a review by The New York Times of confidential documents, Chinese public records and interviews with people briefed on the contract shows that the relationship pointed to a broader strategy for accumulating influence in China: Put the relatives of the nation’s ruling elite on the payroll.
New York Times reporter Ben Protess, who has been reporting on the story, says it’s common for banks in China to try and gain influence by hiring the children of the ruling elite. But what’s unusual in this case, he says, was that it was the child of the prime minister — and she chose to use an alias, rather than her real name.
So what did Wen do? Protess and his colleague obtained a letter outlining how Wen and her consulting firm helped broker an underwriting deal for the bank in China at a state-owned railway company. She also helped advise the bank on the macro-economic policies in China.
“The idea is, you had on tap, on the payroll, somebody who was able to help you navigate this booming country and that could potentially open the door to big business,” Protess says.
In the US, it’s part of a multi-faceted government investigation into JPMorgan’s hiring practices in China that might involve dozens, or perhaps hundreds, of current and former Chinese government officials and their families.
“This is a major investigation that presents an important threat to the bank,” Protess adds.
