Former GlaxoSmithKline executive accused of running bribery network in China

An executive at the British drugs company GlaxoSmithKline has been accused of running a “massive bribery network” in China in which hospital staff were paid to use the firm’s medical products and boost sales.

Mark Reilly has been charged with bribery and fraud for allegedly instructing his subordinates to pay off health officials, forcing up drug prices and generating illegal sales for Glaxo worth more than £89 million.

Police claim secret payments were made to doctors, hospital staff and government officials. The scale of the charges, following a 10-month investigation, will come as a blow to David Cameron who lobbied on behalf of Glaxo when he visited China in December.

The Prime Minister mounted a staunch defence of the company’s record, saying at the time: “They are a very important, very decent and strong British business that is a long-term investor in China.”

Mr Reilly stepped down as head of China for Glaxo last July and briefly left the country but returned there late last year. It is not clear if he has been detained since, but British embassy officials said they were in regular contact with him.

Two Chinese executives, Zhang Guowei and Zhao Hongyan, were also accused of bribing officials in the industry and commerce departments of Beijing and Shanghai, the official Xinhua news agency reported, quoting police in Hunan province.

At a news conference in Beijing, police said the cost of the drugs sold by GSK in China was far higher than that of similar drugs sold by the company in other countries.

“The more drugs they sold, the more bribes they gave,” said Gao Feng, head of the economic crimes investigations unit at the Public Security Ministry. “The more bribes they gave, the higher the drug price was. GlaxoSmithKline’s behaviour demonstrates a complete chain of bribery.”

Police added that the company’s headquarters had been “very responsible” and had given them its “full support”, but claimed that its Chinese operation had tried to organise another round of bribes to obstruct their investigation.

The charges – which carry a maximum sentence of life in prison in the case of bribery – were seen as harsher than many industry insiders and China-based foreign executives had expected.

Glaxo said it had seen an official at the Chinese Ministry of Public Security yesterday. A spokesman said: “We take the allegations that have been raised very seriously. They are deeply concerning to us and contrary to the values of GlaxoSmithKline. We will continue to fully co-operate with the authorities in this matter.

“We want to reach a resolution that will enable the company to continue to make an important contribution to the health and welfare of China and its citizens.”

Chinese officials said 46 people were implicated in the case which was launched last June.

Kenneth Jarrett, president of the American Chamber of Commerce in Shanghai, said he was surprised at the “strong response” from the police.

“I would agree that it’s not what I would have expected because it seemed like Glaxo were co-operating very closely with the authorities,” he said. “I don’t think that anyone had been lulled back into complacency, but if anybody had this will wake them up.”

Under Mr Reilly, Glaxo’s revenues in China have soared from 3.9 billion yuan in 2009 to 6.9 billion, according to Xinhua.

Glaxo’s could face prosecution in both the UK under the Bribery Act and the US under the Foreign Corrupt Practices Act if the allegations are proved. It is illegal for companies based in either country to bribe government employees abroad.

The case is the biggest bribery affair involving a foreign company in China since Rio Tinto saw four executives, including an Australian, jailed for between seven and 15 years in 2009.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
musicOfficial chart could be moved to accommodate Friday international release day
Sport
Wes Brown is sent-off
football
News
i100
Sport
Italy celebrate scoring their second try
six nations
Sport
Glenn Murray celebrates scoring against West Ham
footballWest Ham 1 Crystal Palace 3
Arts and Entertainment
Drake continues to tease ahead of the release of his new album
music
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower