Ex-Head of JPMorgan China Investment Banking Arrested by Hong Kong Anti-Graft Agency

The former head of JPMorgan Chase & Co.'s investment banking operations in China was arrested by Hong Kong's anti-graft agency allegedly over the bank's hiring practices.

Beijing-based news outlet Caixi, citing unidentified sources, reported that Fang Fang was arrested by the Independent Commission Against Corruption (ICAC) in Hong Kong. He was released on bail later, but was restricted from leaving Hong Kong, the magazine said.

The arrest is suspected to have links with the bank's scandalous hiring practices in Asia. The US banking giant is facing a number of investigations over the matter.

The arrest comes after the ICAC searched a JPMorgan office in Hong Kong in March and seized computer records and documents from Fang's office, according to Bloomberg's sources.

In the same month, Fang had resigned from JPMorgan, according to an internal memo.

He joined JPMorgan in August 2001 from Beijing Enterprises Holdings Ltd, where he served as a vice president. He became head of JPMorgan's China investment-banking business in 2007 and was made vice chairman for Asia investment banking in 2009.

In 2013, JPMorgan was accused of hiring the daughter of Wen Jiabao, the former Chinese prime minister.

Wen Ruchun, or "Lily Chang" as she was known, was paid $75,000 a month by JPMorgan through her firm Fullmark Consultants, which only had two employees, according to the New York Times.

US regulators are examining JPMorgan's habit of hiring the children of well-connected politicians in the Asia-Pacific region to allegedly help acquire business. The bank is yet to be charged with any wrongdoing.

The Wall Street Journal earlier reported that the US Securities and Exchange Commission (SEC) had questioned at least five top banks based in the US or Europe, including Goldman Sachs, as the regulator is looking to expand investigation into their hiring practices in Asia.

The SEC sent letters to a group of companies including Credit Suisse Group AG, Goldman Sachs Group, Morgan Stanley, Citigroup Inc and UBS AG, seeking more information about their hiring in Asia, according to the media report.

The SEC is examining whether the banks violated anti-bribery laws by hiring relatives of powerful government officials in Asia.

According to the Foreign Corrupt Practices Act (FCPA), a US law dating back to the 1970s and intended to curb bribes to foreign government officials, companies would be guilty if they hire employees at the direction of an official at a state-run company who is able to grant business to the hiring company.