A former managing director of JPMorgan on trial for allegedly bribing the chairman of a company while it was seeking to go public in Hong Kong has been accused of offering his son a job before he completed vetting procedures, a court heard.
Opening the case on Monday, prosecutors alleged that Catherine Leung Kar-cheung, 52, had a corrupt purpose when she hired Ang Ren-yi, son of Kerry Logistics Network chairman Ang Keng-lam, as an analyst with JPMorgan Securities (Asia Pacific) on January 19, 2010.
Prosecutor Robert Lee Shiu-keung SC said the job was an advantage offered to Ang senior as an inducement or reward for him to become or remain favourably disposed towards JPMorgan in the engagement of investment banks or financial institutions for his company’s initial public offering.
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Leung, who was head of Hong Kong investment banking, denied the allegations and pleaded not guilty to two counts of offering an advantage to an agent.
The District Court heard the hire was part of JPMorgan’s “sons and daughters programme”, also known as the “client referral programme”, which allowed staff to refer the children or relatives of the company’s existing and potential clients for training or employment.
But candidates had to go through a three-step process – from referral to assessment and vetting – before human resources offered a contract.
Ang junior, however, was allegedly given the job before he completed the legal and compliance department’s vetting procedure, which would have examined whether there were any conflicts of interests arising from the hire.
He was given a two-year contract, starting on June 28, 2010, with an annual salary of HK$545,000 (US$69,753) plus housing benefits of HK$180,000. His annual pay was increased to HK$640,000 the following July, until he resigned on October 28, 2011, citing family reasons.
The prosecutor said JPMorgan was aware of the risks associated with the programme as it could easily be regarded as a channel to provide inappropriate advantage, so the company issued a notice in 2006 explaining how it could and cannot be used.
Hence, this hire’s departure from the standard procedures suggested that it had been made with a corrupt purpose to influence Ang senior, and the offence was complete upon the offer being made, the prosecutor argued.
Lee also argued that Leung’s internal email correspondence showed that she was aware of the position and influence held by Ang senior and that his company would launch its IPO within a short time.
One email Lee read in court showed Leung telling her colleague Kerwin Clayton, then head of industrials, that Ang junior was “really keen” on investment banking and that he had applied to other banks but did not make it past the first round of interviews.
“The last thing I want is we go slow and they ask another bank and I am sure someone will give him a full-time offer given the mandate up for grasp here,” she wrote on January 10. “We can give him an offer.”
But the email also suggested he had a GPA of 3.2, which Lee said was below the company standard of 3.4.
Nine days later, Leung emailed another colleague, asking: “Can I call Ren Yi Ang to give him an offer?”
Other correspondence suggested that Ang’s compliance checks were conducted after he signed the contract on February 2, as junior resources management staff were seen emailing Leung on February 23 for more information on his family’s relationship with JPMorgan and whether the company was working or pitching for any deals or transactions.
A subsequent exchange within the legal and compliance department showed staff making inquiries about the timing of the company’s pitch for Kerry Logistics’ IPO while considering Ang’s application.
Kerry Logistics eventually listed on December 19, 2013.
It did not engage JPMorgan.
Prosecutors will call their first witness as the nine-day trial continues before deputy district judge Emily Cheung Sau-kwan on Tuesday.