Former Chief of JPMorgan’s China Unit Is Arrested

Updated, 7:52 p.m. | The former head of investment banking in China at JPMorgan Chase has been arrested by Hong Kong’s anticorruption agency, a Chinese news report and a person briefed on the matter said on Wednesday, possibly opening a significant front in what has become a global investigation into JPMorgan’s hiring practices in China.

Fang Fang, the former JPMorgan executive, has been released but is prohibited from leaving Hong Kong, according to a report in Caixin, a respected Chinese-language financial news outlet based in Beijing. He was arrested recently by the city’s Independent Commission Against Corruption, or I.C.A.C., the report said. The contents of the report were confirmed by a person who had been briefed on the matter.

Mr. Fang, 48, who left JPMorgan in March, has been a focus of a federal bribery investigation in the United States into whether the bank’s “Sons and Daughters” hiring program violated the Foreign Corrupt Practices Act. Since last year, the United States authorities have been scrutinizing connections between the bank’s roles in specific deals and its employment of the children of senior Chinese officials and business leaders.

The person briefed on the matter confirmed on Wednesday that Mr. Fang had been arrested and said the contents of the Caixin report were accurate but declined to be identified, citing a lack of authorization to speak publicly.

When Mr. Fang was arrested and how long he was held were unclear. Reached on his cellphone on Wednesday, he asked whether the call was to see “if I’m alive.” He said he could not discuss his situation. The I.C.A.C. and JPMorgan declined to comment.

Mr. Fang’s license as a broker was canceled or surrendered on March 21, according to a database maintained by Hong Kong’s securities regulator. On March 24, JPMorgan announced in an internal memo that Mr. Fang had recently expressed “his desire to retire.”

Two days later, more than 10 officials from the I.C.A.C. searched JPMorgan’s local headquarters in the city’s central business district, confiscating documents from Mr. Fang’s office, according to an article in late March in The Hong Kong Economic Journal, a Chinese-language newspaper.

The scope of the scrutiny of JPMorgan’s hiring practices may expand. The United States investigation into the practices has focused on links between the bank and Chinese government officials or state-controlled enterprises. But Hong Kong’s Prevention of Bribery Ordinance, which the anticorruption agency helps enforce, is significantly broader and covers graft in all forms, not just practices that involve government officials or state entities.

Mr. Fang was one of several JPMorgan executives whose emails on hiring practices were given to the United States authorities by the bank. In one of them, he wrote, “You all know I have always been a big believer of the Sons and Daughters program — it almost has a linear relationship” with winning jobs to advise Chinese companies.

Neither Mr. Fang nor any JPMorgan executives have been accused of wrongdoing as a result of the investigations. Although the I.C.A.C. may question and arrest individuals as part of its investigations, the decision to bring formal charges rests with Hong Kong’s public prosecutor, who relies on the evidence the anticorruption agency gathers.

Mr. Fang had been considered one of JPMorgan’s top rainmakers in China, an executive whose extensive network of contacts in Chinese government and business helped introduce a flow of lucrative underwriting and advisory business to the bank.

Those included deals with the China Everbright Group, a state-owned financial services and banking group. Its relationship with JPMorgan is a subject of the investigation by the United States Securities and Exchange Commission and federal prosecutors in Brooklyn.

China Everbright’s chairman, Tang Shuangning, approached Mr. Fang in March 2010 about a job for his son at the bank, a report in The New York Times said. Mr. Fang jumped at the chance, suggesting in an email to colleagues that they discuss “how we can leverage more on this account going forward.”

After the son, Tang Xiaoning — a former employee of Goldman Sachs and Citigroup — began working at JPMorgan, the bank received several assignments from his father’s company, including an advisory role on a $162 million share sale in 2012 by China Everbright International, a subsidiary focused on alternative energy.

JPMorgan recently distanced itself from several deals in which its current or former employees were related to executives at the companies involved. In November, it withdrew as an underwriter on a share sale by China Everbright Bank, a subsidiary of the state-run group. In December, China Everbright Bank raised $3 billion in Hong Kong’s biggest initial public offering of 2013.

In January, concerns about the investigation prompted JPMorgan to remove itself from a second deal, a planned $1 billion Hong Kong I.P.O. by Tianhe Chemicals, which is not owned by the state. JPMorgan had employed the daughter of Tianhe’s chairman.