JPMorgan Is Being Punished for Not Being Evil Enough

A trove of emails have emerged in JPMorgan Chase's China corruption scandal, and they reveal a deep irony about the case: Essentially, "JPMorgan's mistake was not hiring Chinese princelings fast enough," argues Matt Levine at Bloomberg. The emails reveal that JPMorgan initially had a program preventing it from illegally hiring the scions of wealthy Chinese officials—and that it lost business to less scrupulous competitors as a result. The company thus consciously decided to switch course, the New York Times reports, a decision unfortunately documented over email. "Just added son #2 at SinoTruk to my team," one employee wrote. "I got room for a lot more hires like this (Goldman has 25)."

See the problem? It's only illegal to hire trucking scions if you're doing it to corruptly win business. "Goldman can say, 'these 25 kids were just the most qualified bankers in China,'" Levine observes. All of which creates a fairly perverse incentive structure. It means you want to either toe the line completely, or just be "pure evil." If your employees don't think twice about making a corrupt hire, they won't send hand-wringing emails about it. "They'll just do it. The most effective compliance program of all might just be, 'do whatever you want but never say anything in writing.'" Click for Levine's full column. (More JPMorgan Chase stories.)