Credit Suisse to pay US $77 million to settle Chinese princelings probe

Credit Suisse agreed to pay $77 million to US authorities after admitting it hired the under-qualified relatives of influential Chinese officials in order to win business, the government announced on Thursday.

Credit Suisse to pay US $77 million to settle Chinese princelings probe
Credit Suisse has agreed to settle a corruption case over its hiring practices. Photo: Emmanuel Dunand/AFP

The case emerges from the so-called 'princelings' investigations, in which US authorities accused major financial firms of giving valuable jobs to relatives of Chinese government officials in return for lucrative government business.

JP Morgan Chase in November 2016 agreed to pay $264 million to resolve similar allegations.

“Trading employment opportunities for less-than-qualified individuals in exchange for lucrative business deals is an example of nepotism at its finest,” said William Sweeney, the number two official at the Federal Bureau of Investigation's New York division.

The United States criminalizes transnational bribery under a 1977 anticorruption law since copied by most other industrialized nations. The law prohibits giving “anything of value” to a foreign official in return for government business.


Federal prosecutors say Credit Suisse admitted that between 2007 and 2013, senior managers at Credit Suisse's investment bank in Hong Kong hired, promoted and retained job candidates referred to the bank by government officials at state-owned enterprises. The “relationship hires” were part of a quid-pro-quo that helped the bank win lucrative contracts.

“The criminal penalty imposed today provides explicit insight into the level of corruption that took place at the hands of Credit Suisse Group AG's Hong Kong-based subsidiary,” Sweeney said in a statement.

Internal emails showed bank officials believed the hires were less qualified and that retaining the new employees would be “worthless” if it did not “translate into $”. One senior banker cautioned colleagues not to drag out the hiring process because the candidate in question was “a princess… not used to too many rounds of interview”.

Credit Suisse agreed to pay a $47 million fine to the Justice Department, and about $30 million in ill-gotten gains to the US Securities and Exchange Commission.

READ ALSO: Report: Switzerland is one of world's least corrupt countries

Photo: Jan Geerk/Swiss Tourism

For members


Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.