Tuesday, November 05, 2013

J P Morgan hiring in Asia under scrutiny

I read with some astonishment a news item about the US authorities looking into JP Morgan's hiring practices in India, South Korea and Singapore. This follows similar investigations into hiring in China by the anti-bribery unit of the SEC and other federal authorities.

As I understood the report, the allegation seems to be that JP Morgan hires sons and daughters of influential people - and using less rigorous standards than are applicable to other applicants- so that it can win business.

The average person is bound to ask: so what is new? How many companies will the US authorities likewise investigate? And how exactly do you establish a nexus between such hiring and improper winning of business? As the report indicates, JP  Morgan also hires consultants. So do a number of other companies.

I cannot say about  JP Morgan but very often consultants hired by companies are retired government bureaucrats, regulators, ambassadors and others. This practice is rampant in the US itself. And the idea in hiring such people is not just to understand processes in government but to influence outcomes by using the contacts of influential people. The US is notorious for its "revolving door" syndrome- government officials moving into Wall Street and then back into government.

In India, one method used is to give business contracts to children of those in power. The easiest thing to do for politicians' children is to get into the real estate business.The private sector provides the finance; the children provide the clearances through their contacts. It's a terrific arrangement. Nothing unofficial or even illegal about it.

Getting close to influential people- whether by hiring them as consultants or their kith and kin as employees- is an integral part of crony capitalism. How far do the US authorities propose to go in tackling it?


Anonymous said...

Goldman Sachs bullish on Narendra Modi, upgrades India to marketweight


Anonymous said...

dear sir,

just curious to know your take on modi administration. not from the perspective of politics or religion but on the administration and economic front.

IIM-Ahm is located in gujarat and you probaby have a better understanding of what happens in Gujarat than anybody else.

Is NaMo bhajan a media hype or soemthing to think about?


many thanks

Anonymous said...

In fact, just recently I read or heard somewhere that lobbying with Government authorities should be "legalized" - it was perhaps demand from industry.

Is it fair? I think so "No". Can you elude it or ignore it or stop yourself from doing it - I think again the answer is "No". Is it illegal - "No". Is it immoral - "Yes". Should it bite your conscience - "Yes". What do you want to win at end - Money or Conscience - "Money". Is it what we call Crony Capitalism - "Yes". Is there option out - "No".

So should SEC or SEBI be bothered - "No".

Anonymous said...

To make any statement against Modi in Gujarat would be equivalent to calling up on wrath on yourselves...