Over the past couple of months, media has reported that the US government is investigating JP Morgan for possibly giving jobs to the kids of Chinese government officials in exchange for business. Now, emails about these allegations are quoted in the WSJ. (In JP Morgan Emails, a Tale of China and Connections). At this point, this is only an article in the WSJ and who knows what the US government will do about the situation.
But, this brings up one of my favorite topics – the kids, wives, relatives and friends of government officials and employees. I think we can all appreciate that whether it is a Chinese government official; US Federal Government official; Wyoming state employee or DC government employee, giving a job in exchange for a benefit from a government official is a crime – generally. And, many governments, to include the US Federal Government and many US state and local governments, require that businesses represent when they are awarded a contract that they have not in fact traded a job, gifts, money, or favors in exchange for the business. For example, the US Federal Government has a regulation that for the most part states: Federal Government employees cannot solicit or accept, either directly or indirectly, any gratuity, gift, favor, entertainment, loan, or anything of monetary value from anyone who has business with the government, is seeking business with the government, engages in activities regulated by the government, or who has any other interests that may be substantially impacted by the government employee’s official job or duties. (FAR 3.101-2.)
Now that is pretty broad. “Favor” and “anything of monetary value” can certainly mean a great job for a family member or a friend. Of course, there is also the regular old “bribery” statutes that a government can use against a business that makes such an exchange or if it is a foreign government official, the US government can pursue the actors and the business for violating the Foreign Corrupt Practices Act.
That being the case, it is usually ill-advised to give a job in exchange for business and it raises the common question: “Are you are telling me I can never hire a government official’s kid, wife, relative or friend – ever? What if they are the best person in the world for the job?” Good question and no that is not what I am saying at all.
Businesses can hire the kid, wife, relative, or friend of the government official and they can even hire the government official or employee once they decide to leave government. But, they need to make sure it is done in a legal, ethical, transparent manner. That begs of course the next question – “dearest lawyer, what does that mean though and how do we get to this state of perfect hiring?” As with anything in the law, there is no silver bullet that will always protect a business from criminal charges. But an analysis of the JP Morgan situation lends itself to some ideas about how to legally and ethically hire friends and family of government officials.
First, note that the JP Morgan emails suggest that at least some in JP Morgan thought the government official’s kid was not a great hire. For example, one of the emails quoted by the WSJ stated that some in the bank who interviewed the young man thought he was the “worst” candidate they had ever seen and another senior banker described the young man as “immature, irresponsible and unreliable.” WSJ Article
A good idea around hiring practices would be for a business to have some defined written standards for potential hires. So for example, if you are hiring a graphic designer, you may want them to actually have a degree in graphic design or a related field and to have a certain GPA or a certain number of years experience. Or, you may want to have standards that require hires to be responsible.
Second, once you come up with some standards, you ought to stick with them. In other words, don’t ditch the standards for a government employee’s kid. And, document whether the candidate fit the requirements or not and therefore was not hired. If there is an exception to the written requirements, it should be documented and explained.
This brings up the third idea. The JP Morgan emails seem to suggest that the hiring and retaining of the young man was in exchange for something from a government official. According to the WSJ, the Chinese government official was “willing to go extra miles” for JP Morgan if they did can his kid. Generally, if you have hiring standards, ignoring those standards to hire in exchange for a bennie from a government official is not a good idea.
Fourth, to assist executives and employees in knowing that hiring in exchange for a government benefit may be considered illegal, a business should have an anti-corruption policy that says as a business, we do not give favors, jobs, money, gifts, entertainment, anything of value to a government person in exchange for some benefit or business or whatever from that government person. Not only should business have such a policy but they should actually let their employees know they have such a policy. Dearest lawyer – how do we do that? You can train your people and you can send them communications reminding them of the policy and reminding them to follow it.
Fifth, recruiting managers and HR people should be trained to look out for recommendations from others in the business to hire government officials’ friends and family. And, HR and recruiting should feel empowered and more importantly comfortable to go ask the lawyer about the hire and they should not get grief for doing it.
Finally, when a recruiter or HR person brings the issue to the lawyer, the business should have procedures that allow for the lawyer to get to the bottom of the transaction to assure that there are no shenanigans with the hire – to include calling foul and stopping the hire.
Ultimately, an organization needs to reflect on its practices around hiring and based on that reflection needs to develop policies, practices and procedures for protecting itself from accusations of illegal or unethical hiring based on the laws and regulations that impact that business as well as the market where that business operates. But, all businesses should “go the extra mile” to make sure that they do something so they are not exposed to bribery or other criminal charges for trading jobs for government favoritism.
A Haiku Sums It Up
My kid needs a job.
Your biz needs government help.
Lets trade – job for help.