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Friday Asia Update: Top Five Stories for the Week of August 30, 2013

by Guest Blogger for Elizabeth C. Economy
August 30, 2013

The JP Morgan sign is pictured at its Beijing office, in this picture taken December 13, 2010. A federal bribery investigation into whether JPMorgan Chase & Co. hired the children of key Chinese officials to help it win business is just the latest in a series of legal and regulatory headaches. (Jason Lee/Courtesy Reuters) The JP Morgan sign is pictured at its Beijing office, in this picture taken December 13, 2010. A federal bribery investigation into whether JPMorgan Chase & Co. hired the children of key Chinese officials to help it win business is just the latest in a series of legal and regulatory headaches. (Jason Lee/Courtesy Reuters)

Will Piekos and Sharone Tobias look at the top stories in Asia this week.

1. The SEC probes JPMorgan amid allegations that it hired Chinese princelings. The U.S. Justice Department and Securities and Exchange Commission (SEC) has begun an investigation into whether JPMorgan Chase hired the children of senior Chinese officials to help secure business in a now-defunct program called “Sons and Daughters.” The scrutiny began in Hong Kong and now has spread through the bank’s Asia offices; the bank has flagged more than 200 hires for review. JPMorgan has not yet been accused of any illegal acts, but they might have violated the U.S. Foreign Corrupt Practices Act, which forbids granting personal favors to government officials in exchange for business. One example included the son of Tang Shuangning, chairman of a state-run financial conglomerate, who was hired and retained even after other employees questioned his financial expertise.

2. Chinese government begins massive campaign against online “rumormongering.” The Chinese government wants citizens to adhere to the “seven base lines” of proper internet conduct and curb “rumormongering” online. After the Beijing Internet Conference last week, the government released “seven base lines“ for proper Internet conduct. State-run media has released a flurry of op-eds and run prime-time TV spots about the issue [links in Chinese]. Multiple people have been arrested for spreading rumors through microblogging accounts, and yesterday, twenty-seven people were arrested for operating 312 microblogging accounts with millions of followers [Chinese]. Xinhua also released an op-ed saying that government officials should not be exempt from anti-rumormongering laws, giving four examples of recent rumors spread by officials.

3. Filipino businesswoman at center of corruption scandal detained. Janet Lim-Napoles, a wealthy Manila businesswoman, was arrested for the “illegal detention” of a witness who claims she diverted billions of pesos from poverty-reduction programs for her personal gain. The money was allegedly diverted to lawmakers and their associates in a corruption scandal that has sparked protests in Manila; more than 700,000 gathered on Monday to demand tougher action.

4. North Korea rescinds invitation to U.S. envoy. Pyongyang cancelled its invitation to U.S. diplomat Robert King, ambassador for North Korean human rights issues, who planned to travel to Pyongyang on Saturday in hopes of securing the release of ailing American missionary Kenneth Bae. Bae has been held in North Korea since November of last year, when he was detained for committing “hostile acts.” It is as yet unclear why Pyongyang cancelled the visit.

5. China opposes Syria strike. Official Chinese media and think tanks are warning strongly against Syrian strikes, insisting no action should be taken until a UN investigation determines the origin of the chemical attacks. China is a signatory to the Organization for the Prohibition of Chemical Weapons but is highly unlikely to support any international military action in Syria. China has quietly funded Bashar al-Assad’s military, supplying $300 million worth of arms between 2007 and 2010. Since the civil war began, the United States imposed sanctions on the China Precision Machinery Import and Export Corporation for allegedly providing arms to the Syrian army. As a veto-holding member of the UN Security Council, any UN action taken in Syria would have to have China’s approval. China’s insistence on “non-interference” in other countries’ affairs, coupled with its previous trade with the Syrian military, means that this is highly unlikely to happen.

Bonus: North Korea on “ice.” A recently released study in the North Korea Review has brought attention to significant phenomenon: the common use of methamphetamine in North Korea. According to one researcher, 40 to 50 percent of the population are “seriously addicted” to “bingdu,” or “ice.” (This estimate is thought to be high, but the DPRK’s drug addiction has been documented before.)

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