Garth Peterson, a former Morgan Stanley executive,?confesses corruption in Chinese business. [File photo]

A former Morgan Stanley executive has admitted to charges of illegally acquiring millions of dollars for himself and a Chinese businessman, which violated the Foreign Corrupt Practices Act and securities laws.

Garth Peterson, managing director in Morgan Stanley's real estate investment and fund advisory business, secretly obtained at least 1.8 million US dollars for himself and Wu Yonghua, former chairman of the Shanghai Yongye Group, which he disguised as finder's fees that Morgan Stanley needed to pay to third parties.

Peterson also secretly gained Wu, an attorney, and himself a valuable Shanghai real estate interest from a Morgan Stanley fund.

Wu, in turn, helped Peterson and Morgan Stanley to obtain business in China while personally benefiting from some of these same investments.

Thus, Morgan Stanley partnered with Yongye on a number of significant Chinese real estate investments. Peterson agreed to a settlement of the charges by the U.S. Securities and Exchange Commission in which he will be permanently barred from the securities industry, pay more than $250,000 in disgorgement, and relinquish his interest in the valuable Shanghai real estate (currently valued at approximately $3.4 million) that he secretly acquired through his misconduct.

Wu continued to keep in contact with Morgan Stanley as a private real estate developer even after he retired from Yongye in September 2006. The contact only ended when Peterson was forced to resign from the bank in 2008.

Peterson still faces related criminal charges by the U.S. Department of Justice and will be tried on July 17. He faces up to five years in prison and a fine of US$250,000.