GlaxoSmithKline has come under renewed scrutiny after the company admitted a sex tape is at the centre of the corruption scandal engulfing its Chinese business.
The pharmaceutical giant confirmed the existence of footage showing Mark Reilly — who ran the division until last year — having sex with his girlfriend in his Shanghai flat.
The tape was sent to senior Glaxo executives last March, including chief executive Andrew Witty, in an apparent attempt at blackmail. They then authorised Reilly to hire a private investigator to find out who had planted a camera in his bedroom.
This backfired, however, when the investigator, Peter Humphrey, ended up in prison after his enquiries about a well-connected Chinese businesswoman led to his arrest by Shanghai police.
According to reports, the businesswoman was Vivian Shi, Glaxo’s former head of government relations in China. The FTSE-100 company hired her in 2008 from Tianda Pharmaceuticals yet Glaxo executives decided to investigate suspicions that she was orchestrating a smear campaign, which detailed allegations of bribery and corruption against the group.
Humphrey’s investigation into her did not reveal anything but his probe appears to have upset the country’s communist elite. Humphrey was arrested last July along with his wife Yu Yingzeng and remains in detention ahead of a court case next month. They have been accused of violating data protection laws.
Chinese authorities then began their own investigation into Glaxo amid claims it funnelled up to three billion yuan (£284 million) in cash, as well as offering “gifts”, including prostitutes, to doctors and officials in the country to boost sales.
Shares in the company fell 7p to 1566.5p after the latest revelations.
In a statement, it said: “The issues relating to our China business are very difficult and complicated. The investigation by the Chinese authorities remains ongoing and we are co-operating fully with this investigation.”