Posted on 03/02/2009 8:15:49 AM PST by TigerLikesRooster
Morgan Stanley’s Chinese Land Scandal
By DAVID BARBOZA
SHANGHAI — Since the height of China’s property boom, Morgan Stanley’s huge real estate deals here have been the envy of the industry. Then, scandal hit.
Last month, with property prices here and elsewhere in free fall, the bank dropped a bombshell: in a Securities and Exchange Commission filing, it said it had fired an executive in its China real estate division after uncovering evidence that he might have violated the United States Foreign Corrupt Practices Act, which bars American business people from bribing foreign officials.
That executive, Garth Peterson, was a star deal maker who had become a powerful figure on the Shanghai investment scene, people knowledgeable about the investigation said. His supervisor, the head of global real estate investing, was placed on administrative leave.
In China, which is struggling to deal with corruption and bribery, the revelation is the latest bit of sobering news after a wild real estate boom suddenly went bust late last year, leaving some of the world’s biggest financial institutions with potentially huge losses.
For Morgan Stanley, which runs one of the world’s biggest real estate funds, it is a black mark on an otherwise sterling reputation. People knowledgeable about the case say that Morgan Stanley has sent both United States and Chinese officials documents indicating that Mr. Peterson, the bank’s highest-ranking real estate executive in China, may have secured some transactions by offering cash or gifts to Chinese officials. His partners in some deals were Chinese government investment funds.
(Excerpt) Read more at nytimes.com ...
Ping!
just when you think things couldn’t get worse...
. . and little Toto continues to pull the curtain back...
There aren’t any big deals in China with govt companies without payoffs. Those are usually covered by hiring “agents and consultants” who pass paper for a commission.
The US company just doesn’t know what actually these people do with the commission. It is also a source of embezzlement by Chinese employees who handle some of the arrangements.
It is a very difficult situation for US Company managers who have to sign and swear each year that they didn’t bribe anyone.
“which bars American business people from bribing foreign officials. “
Which is one of these “wink wink” kind of laws. In many countries (just like NJ and Louisiana), you can’t get anything done without greasing the palms of some government official.
It’s only when something goes wrong do these laws get enforced (as much to create a scapegoat as anything else.) “Our project went under, but it wasn’t because of our mismanagement, it was because this guy that works for us was bribing a govt. official (which of course, we knew nothing about.) Yeah right. The project probably would have never gotten off the ground in the first place without some well place bribes to move things along.
It only became a problem because it went under, and PO’ed important people in China and Morgan Stanley. If value of those properties are still high-flying, we would never have heard about this.
Stock shares sale buy one get 3 free.
In retrospect, I went temporarily insane.:-)
So, what is the penalty for breaking this law and getting caught?
Public wrist-slapping?
Should be Tar & Feathers, and all the humiliation that comes along with it.
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