Jim Armitage: Questions need to be asked of Witty as China corruption crisis deepens

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The Independent Online

Outlook: Poor Sir Andrew Witty. Here is a man who, by all accounts, has spent much of his five years on the bridge at GlaxoSmithKline doing sterling work cleaning up the scandals left by the regimes of previous captains, rebuilding trust with investors and reviving morale among its embattled staff. Then, out of the blue, a bunch of his managers in China turn out to be alleged crooks, winning sales through bribery and arranging sexual services.

What rotten luck.

In his first public comments on the affair yesterday, he repeatedly made clear that headquarters were unaware of this alleged activity. That this was a small group of senior managers acting outside the company's "systems and controls". That these were isolated incidents involving a few alleged rotten apples. In other words: this was not my fault.

Really, though?

China is well known to have a corruption problem that has grown as rapidly as its economy since Deng Xiaoping's liberalising regime. Its healthcare market is widely seen as one of the most corrupt of all: bribes by medical reps to doctors and officials have been commonplace. Indeed, Chinese bribes – more palatably known as "gifts" – had become a major sales segment for the luxury goods industry.

Figures yesterday showed that Glaxo's revenues in China surged 14 per cent in the past three months to £212m. OK, that's small fry when set against global sales of £6.62bn, but still, it is a significant amount of money, and serious growth when set beside the group's sluggish global revenue rise of just 2 per cent.

Given the coming together of such rapid sales growth in a country with endemic corruption, serious questions need to be asked of whether Glaxo – for which read Sir Andrew Witty – threw enough money at the issue of compliance or was blinded by the lure of big profits in a fast-growing market.

It's not as if China's new President, Xi Jinping, did not make it abundantly clear last year that a corruption clampdown was going to be one of his key campaigns. Nor as if questions had not already been raised about compliance levels at Glaxo's research operations in China.

In fairness to him, Sir Andrew came across rather well in yesterday's conference call to journalists. He took repeated awkward questions on China with good grace and gravity.

But as a leader, he should have made it clear he would personally take the consequences if his employees are found guilty in the trials likely to go ahead soon.

The clearest way to do that? Promise to forgo some, if not all, of his bonus in the event of guilty verdicts.

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