In August 2012, Garth Peterson, the former managing director of Morgan Stanley’s real estate investment business in Shanghai, pleaded guilty in the U.S. to one count of violations of the Foreign Corrupt Practices Act. From 2004 to 2007, Peterson obtained millions of dollars worth of real estate investments for the former chairman of a Chinese state-owned enterprise, and for himself, in exchange for business deals for Morgan Stanley. In an interview with CNBC, Peterson talked about the culture of investment banking in China:
No one paid any attention. Zero. And thousands of dollars would get spent on a night, a few people, nobody thought about it. And compliance never worried about that, you know. So, that put– that can easily put somebody in a difficult position, where it’s okay to be taking from deemed officials, but never being able to give something back to them.
And again, this is where it’s a difficult thing, especially in a place like China, where you get the guanxi thing, where you do something for me, I do something back for you, you do something– me. And– yeah, it would be interesting to see how, if at all, the FCPA can be– can take, you know, those kind of factors into consideration.
. . . You see, it’s actually– the details are very complex. You’d have to ask yourself, at this point, why he’s still fine and has no problems. And the reason is that, actually, he didn’t invest as well. He just fronted for me and two other people. So, the Chinese government did its own investigation, and determined I never bribed him. Yeah, I probably shouldn’t have, you know, secretly invested. But– I never bribed him, and that’s what the Chinese government determined. And that’s– the truth, I never bribed anybody.
In the following cartoon, posted to Sina Weibo by Guangdong’s Window on the South magazine, a golden-haired foreign hands a surprised Chinese client a bag labeled “bribe.” The foreigner says: “This is just a small token. A guest must do as the host does.”