Fired Morgan Stanley Executive Charged In China Bribery

A former Morgan Stanley executive has been charged in a U.S. civil complaint with bribery.

A former Morgan Stanley executive was charged with bribery Wednesday in a Securities and Exchange Commission civil complaint that says he steered nearly $2 million to himself, a lawyer and a Chinese official.

Garth R. Peterson, a managing director in the firm's real estate investment and fund advisory business until he was fired in 2008, was charged with violating the Foreign Corrupt Practices Act and securities laws for investment advisors.

Peterson disguised payments of at least $1.8 million as finder's fees owned by Morgan Stanley funds in China, the SEC said. The money actually went into his own pocket and to the unnamed chairman of a state-owned Chinese company called Yongye Enterprise Co., according to the SEC. Peterson also arranged for a Morgan Stanley fund to sell a valuable piece of Shangai real estate to himself, the unnamed Yongye official and an unnamed Canadian attorney, the SEC said, without telling Morgan Stanley he was on both the buyer and seller side of the deal.

Peterson joined Morgan in 2002, according to the complaint, filed in U.S. District Court in the Eastern District of New York, and is alleged to have engaged in the bribery from around 2004 to 2007. Morgan Stanley wasn't implicated in Peterson's alleged scheme, the SEC said. The SEC said it sent Peterson 35 "compliance reminders," which he ignored. Morgan Stanley fired Peterson for Foreign Corrupt Practices Act violations in 2008, according to the SEC.

Morgan Stanley did not immediately return a request for comment.

Peterson has already settled the SEC charges, agreeing to pay $250,000 and to relinquish his financial interest in the Shanghai real estate. The Department of Justice has also filed a criminal case against Peterson, according to the SEC.

The bribery charge comes as Walmart battles allegations that its own company executives engaged in widespread bribery of local officials in Mexico. On Wednesday, a Walmart shareholder sued the company's board of directors and several officers over the bribery allegations. At the same time, two U.S. congressman reportedly investigating the Walmart scandal have said that they plan to probe the extent to which the retail giant lobbied for changes to the Foreign Corrupt Practices Act.

Comments

[SooBoogle]

01:57 AM on 04/27/2012

I wonder if he'll be tried in China.

[smo1111]

12:10 AM on 04/27/2012

The SEC had sent Peterson "35 compliance reminders"???? Isn't that 34 too many????

[MBinNYC]

09:43 PM on 04/26/2012

without giving details, I can tell you that all Morgan Stanley employees have to complete a video tutorial on ethics, avoiding bribery and any impropriety when dealing with gov't officials.

But really it's a CYA for senior management so they can say "we did our do diligence, we told them the rules" when someone gets caught

[laura r]

02:28 PM on 04/26/2012

Today’s Repubs have misquoted many of Adam Smith’s Wealth of the Nations.

Paul A. Samuelson and William D. Nordhaus on quotes from Adam Smith

“Every individual endeavors to employ his capital so that its produce may be of
greatest value. He generally neither intends to promote the public interest, nor
knows how much he is promoting it. He intends only his own security, only his own
gain. And he is in this led by an invisible hand to promote an end which was no
part of his intention. “ He saw the interests of large capitalists as conflicting with
those of the public: capitalists seek high profits, which corrupt and impoverish
society. In another example the famous division of labor increases factory output but
erodes the intelligence, enterprise, and character of workers.”

[itolduso]

01:49 PM on 04/26/2012

Ahhhh...the 'hidden costs' of 'Free Trade'

[drkazmd65]

01:41 PM on 04/26/2012

Just the cost of doing business in a corrupt, unregulated, crony-capitalist oligarchy,...

[keepyourheaddown*]

01:41 PM on 04/26/2012

Corruption reins supreme now, money is god...

[Eagleman]

01:35 PM on 04/26/2012

That's the way of life in third world countries. Nothing moves without bribe

Here we legalize it by calling it Lobbying or Campaign contribution

[MightyBee]

01:24 PM on 04/26/2012

Wow. This is shocking!! LOL...

[Ralph Perman]

01:10 PM on 04/26/2012

The "Invisible Hand" of the Free-Market is a puppet!
And it controlled by the ones with the most Money!!!

[Roelvdwegen]

12:28 PM on 04/26/2012

Quote:
Captain Renault: "I'm shocked, shocked to find that gambling is going on in here." Emile: "Your winnings, sir." Captain Renault: "Thank you very much."

[nypapajoe]

12:22 PM on 04/26/2012

What about the rest of the Organized Crime Family?

[luckyone77]

12:17 PM on 04/26/2012

What exactly is corporate lobbying if not bribery? Money is speech....?

[disgustedcitizen]

12:11 PM on 04/26/2012

I am shocked, shocked I tell you! Who would have thought that Corporation in America would bribe anyone.

Why didn't they call it "campaign contributions" then no one would have been the wiser?

[harveyr2]

12:08 PM on 04/26/2012

There is absolutely nothing wrong with bribery. That's how those countries work. They put bureaucrats in charge of huge decisions, pay them meager wages, and then expect what?

Take a look at Singapore. They pay their bureaucrats huge 6/7 figure salaries and there is NO bribery.