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BNY Mellon Bank Settles Corruption Charges Over Hiring Foreign Officials’ Relatives

On August 18, the SEC announced that the Bank of New York Mellon Corporation (BNY Mellon) agreed to pay $14.8 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA), when the bank gave out highly sought-after student internships to the relatives of foreign government officials in exchange for access to an unnamed Middle East sovereign wealth fund.

According to the Securities and Exchange Commission (SEC) website, the SEC brought charges under the anti-bribery and internal controls provisions of the Securities Exchange Act of 1934 after it was known that BNY Mellon was hiring the relatives of the foreign officials for a lucrative internship program without using the criteria the bank was using for other candidates such as grade point average.

While other applicants had to present good grades and sit through multiple interviews to even be considered for the internship program, the well-connected relatives of the foreign officials were hired straight-up, with no substantive evaluation. When it came to internships, BNY Mellon was more interested in who you knew than what you knew.

Under FCPA, bribes are not limited to cash. “Anything of value” can constitute a bribe. While BNY Mellon agreed to pay close to $15 million, the bank never admitted wrongdoing.

The SEC partly blamed a lack of “internal controls” in the hiring process at BNY Mellon for the criminal behavior, but that misses the mark. Wall Street firms have been caught bribing foreign officials for business multiple times and for much the same reason – it works.

Emails from BNY Mellon employees characterized the hiring of the interns as an “expensive favor,” and noted “silly things like this help influence who ends up with more assets/retaining dominant position.” BNY Mellon was not the only Wall Street firm to understand the game.

JPMorgan has been engaging in similar behavior in China, hiring the children of the Communist Party elite to maintain its position in China. BNY Mellon also had a rival for influence-peddling with Middle Eastern sovereign wealth funds, Goldman Sachs. Goldman is currently being sued by Libya’s sovereign wealth fund for using bribes to gain influence.

It seems doubtful that a better HR department is going to solve this problem.

Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.