Blood Money

Prime Minister Wen Jiabao: “That’s my girl!”

When it comes to the New York Times’ and the US SEC’s investigation into JP Morgan’s relationships with China’s princelings (first blogged here in August 2013), the digging goes on. The emerging details are impressive, as set out in this New York Times updated article and, from last year, this New York Times chart of the Wen family and its dealings. The article focuses on Wen Ruchun (aka Lily Chang), daughter of ex-Prime Minister Wen Jiabao, her advisory firm Fullmark Consultants and the myriad business deals that she did with JP Morgan in the years leading to and around the 2008 global financial crisis. The names of individuals and entities directly involved (including China Railways Group, Ping An Insurance, the China Banking Regulatory Commission) is elite, and the likely sums that went around this network of influence peddling and pocket-lining is staggering. The full amount of money involved in the various schemes may never be publicly known.

As eye-popping as this one case in isolation may be (together with the fact that the Wen family made several billion dollars on their Ping An dealings alone), it sheds light on the fact that the hiring of princelings and other insiders by large banks and corporations has been “business as usual” for decades. Anyone claiming to be ignorant of this practice must have been doing business on Mars. In some respects, it’s not dissimilar to Lance Armstrong crying out that he doped because everyone else did. How could he be competitive otherwise? The differences between Lance and the banks are many, of course, not the least of which is that cycling’s practice was conducted behind a dark shroud of secrecy, rather than merely a thin veil.