GlaxoSmithKline accused of being 'ringleader' in massive China drug sales bribery scandal

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Chinese police today accused GlaxoSmithKline of being the “ringleader” in a massive bribery scandal over drugs sales, involving as many as 700 middlemen and some 3 billion yuan in bribes over the last six years.

Four GSK executives have been detained amid allegations they bribed Chinese officials, doctors and hospitals to illegally boost sales and raise the price of medicines, police said. They also claimed GSK employees received bribes “of a sexual nature” as well as cash bribes from middlemen travel companies.

“We found that bribery is a core part of the activities of the company,” said Gao Feng, head of the economic crime investigation division of China’s Ministry of Public Security. “To boost their prices and sales, the company performed illegal actions.”

The four detainees are Chinese nationals employed as GSK and are China’s head of compliance, the vice president in charge of operations, the commercial development manager and the human resources director, Gao said. He added that the British head of Glaxo’s business in China, Mark Reilly, had left the country on June 27, after the probe was announced, and has not returned,

“You better ask him yourself why he has left China and is not willing to return so far,” Gao said. “We did not take any measures to stop his departure.” He added that Chinese investigators had not “received any information from the UK headquarters” and said: “This is a very serious violation and a high profile case, we are wondering why we have not yet received any information”.

Glaxo responded that it was “deeply concerned and disappointed by the serious allegations.” A spokesman added: “Such behaviour would be a clear breach of GSK’s systems, governance procedures, values and standards. GSK has zero tolerance for any behaviour of this nature. GSK shares the desire of the Chinese authorities to root out corruption. We will cooperate fully with the Chinese authorities in the investigation of these new allegations. We are reviewing all third party agency relationships.  We have put an immediate stop on the use of travel agencies that have been identified so far in this investigation and we are conducting a thorough review of all historic transactions related to travel agency use.

“GSK fully respects the laws and regulations in China and expects all staff to abide by them.”

The comments came as Gao said: “Just like criminal organisations always have a ringleader, in this criminal scheme GSK is the ringleader. We have also found some clues about similar activities by other foreign pharmaceutical companies, but we haven’t ascertained whether these were illegal activities.”

It is understood Reilly returned to the UK for a planned business meeting, but is now staying here to work with Glaxo’s China leadership team from afar, as well as with management in the UK.