HONG KONG â€" UBS has suspended two staff members, including its top capital markets banker in Asia, as the Swiss bank investigates its hiring the daughter of the chairman of a Chinese chemicals company that is considering a $1 billion share sale the bank has sought a role in.
UBS has placed Joseph Chee, head of global capital markets for Asia, and Sharlyn Wu, a junior member of the capital markets team, on a leave of absence while it conducts an internal investigation into whether the proper protocols were followed regarding the bank’s employment of Joyce Wei, a person with knowledge of the investigation, who was not authorized to speak publicly about the matter, said Tuesday.
Ms. Wei is the daughter of Wei Qi, the chairman of Tianhe Chemicals â€" a privately owned Chinese company that is considering a potential $1 billion initial public offering in Hong Kong this year. UBS is one of the banks positioned to secure a role in the deal.
Ms. Wei joined UBS in October as a member of the bank’s equity and capital markets team, according to Hong Kong regulatory filings and the person familiar with the matter. Previously she worked at JPMorgan Chase, which recently removed itself from a potentially lucrative underwriting role on Tianhe’s planned I.P.O. as a United States investigation into the American bank’s hiring practices in China moves forward.
Ms. Wei, Mr. Chee, Ms. Wu and Tianhe did not immediately respond to requests for comment on Tuesday.
The Securities and Exchange Commission and federal prosecutors in Brooklyn opened an investigation last spring into whether JPMorgan’s “Sons and Daughters†program of hiring the children of executives at government-owned Chinese companies was directly linked to winning business from those companies. The inquiry has broadened since then, and UBS is among at least six other banks, including Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley, which have received requests for information.
Mr. Chee and Ms. Wu were placed on leave last week while UBS investigates the circumstances of Ms. Wei’s employment, the person familiar with the matter said.
“It’s not a ‘princeling’ issue, because Joyce Wei is not a princeling,†the person said, referring to the children of senior Chinese government officials.  â€Tianhe is not a state-owned company,†the person added. Instead, the investigation is focused on “whether internal processes were adhered to or not.â€
News of the staff suspensions at UBS was first reported on Monday by International Financing Review.
Authorities in the United States are exploring whether JPMorgan and other Wall Street banks may have violated the Foreign Corrupt Practices Act. The United States law bans bribery of foreign officials, but would apply only if it could be shown that a bank explicitly swapped job offers for business deals with Chinese government officials. Such a bank must also have operated with the “corrupt intent†to influence a Chinese official, a blurry line that might be crossed if unqualified employees were hired.
Even if federal authorities decline to pursue a case against the bank, JPMorgan’s hiring practices could also raise concerns with the authorities in Britain and Hong Kong, where anti-bribery laws are stricter than those of the United States and apply to dealings with private businesses as well as government officials.
