Suddenly there's lots of buzz about China's princelings -- the children of top officials who enjoy vast privileges in education, work, and business.
In August, JP Morgan Chase disclosed an investigation into a hiring program that targeted kids of top Chinese officials. More than 200 hires are under scrutiny in an FCPA probe now joined by the SEC and DOJ.
In September, Bo Xilai, once a member of the all-powerful Communist Party Politburo standing committee, was given a suspended death sentence after his conviction for graft and abuse of power. Bo is a princeling -- his father was close to Mao Zedong and one of the ‘immortals’ of the Cultural Revolution.
In the South China Morning Post, Minxin Pei, a professor of government at Claremont McKenna College, said
China's princelings have been hot commodities for Western companies seeking to capitalize on their guanxi (connections) in order to secure multibillion-dollar transactions. The list of financial institutions that have engaged in such hiring practices reads like a who's who of investment banking.
Princelings are wooed not only by businesses but also by Western universities, he said, ‘for the purpose of advancing their parochial interests in the burgeoning Chinese market.’
During Bo Xilai's trial, for example, the world learned his son has been to Harrow, Oxford, and Harvard's Kennedy School, and is now a student at Columbia Law School.
Pei said the ‘unseemly race to recruit princelings starts at the world's leading colleges and universities. Because China has no universities that rival the Ivy League or Oxford and Cambridge, senior Chinese officials prefer to send their children to these schools.’
President Xi Jinping's daughter is studying at Harvard under an assumed name, Pei said.
Why isn't the practice of pursuing the China princelings ‘the moral equivalent of American-style nepotism?’
Because, Pei said, in China the government is mostly opaque and there's no free press to expose and constrain ‘rent-seeking by children of government officials.’
His full commentary is here.
Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.