Putting princelings on the payroll can be proper, despite potential perils. The likes of Morgan Stanley, Citigroup and JPMorgan are under scrutiny for hiring the scions of foreign officials, particularly in China. Making job offers just to gain government business can amount to bribery. But connections should be a virtue, as long as they're combined with experience and other solid qualifications.
In places like China, it's a Hobson's choice: Curry favour with company bosses, who are often party bigwigs as well, or don't do deals. JPMorgan recently raised eyebrows after new business followed its hiring of at least two children of Chinese officials. That prompted the Securities and Exchange Commission to fire off letters asking other financial institutions about their hiring practices in the region.
Some firms have admittedly gone too far. Tyson Foods, Daimler and Siemens recently shelled out big bucks to settle charges of paying the relatives of government honchos for jobs they never performed.
The trick for US watchdogs has been to make the legal case that a company acted with "corrupt intent" and expected officials to perform favours in exchange for employment. That can be a difficult standard to meet, and it's easily rebutted through some reasonable precautions.
The most obvious is to fill jobs that actually exist. Tyson Foods didn't fool anyone by allegedly padding its payroll with the wives of Mexican government veterinarians. Almost as obvious is to hire people qualified for the work. JPMorgan job candidates from prominent Chinese families often lacked the necessary experience and education, according to the New York Times. And no applicant, especially those with conspicuous connections, should get a pass on the normal hiring process.
More generally, companies doing business abroad need compliance programmes to ensure they don't run afoul of the Foreign Corrupt Practices Act. That means accounting for payments and documenting all employment decisions. Records should show precisely how individuals were hired and why.
It's no surprise that privileged candidates will often be the most qualified. Top-notch education and opportunity are reserved for the elite in many countries, with links to the levers of power a natural consequence. Regulators will continue to prowl the border between nepotism and corruption, but a little common sense should help keep them at bay.
