GlaxoSmithKline boss Sir Andrew Witty:: UK headquarters 'knew nothing' of China fraud

Scandal has seen a number of executives detained

The head of drugs giant GlaxoSmithKline has sought to blame a handful of senior managers for corruption allegations it is facing in China and said the company itself had been a victim of their actions.

Sir Andrew Witty said bosses at the multinational pharmaceuticals company's London headquarters knew nothing of the millions of pounds in bribes allegedly being paid to doctors and health officials to boost sales and raise prices.

The GSK chief executive said he was willing to travel to the country to address the multimillion-pound bribery allegations, which he described as "shameful", though other top executives were handling the company's response there.

He brushed off questions about whether he would accept any bonus this year in the light of the claims, saying it was too early to say what the consequences of the investigation would be, and maintained the company's control and audit systems were "extremely robust".

"Just as we see in all large organisations, unfortunately there is a risk that individuals can sometimes do inappropriate things," Sir Andrew told reporters during a conference call as GSK published second quarter results.

"I remain strongly of the view that 99.99% of the people in this organisation are absolutely operating in the appropriate way and understand not just the rules but the values the company stands by."

He added: "As far as headquarters, we had no sense of this issue.

"This seems to have been a number of senior managers all acting outside our processes."

The chief executive admitted that the scandal would have an impact on the company's performance in China.

It is claimed that senior managers at GSK funnelled money through travel agencies for "conference services", with cash then kicked back to the managers and some of it used for bribes.

Sir Andrew said: "It appears that certain senior executives in the China business have acted outside our processes and controls to both defraud the company and the Chinese health care system.

"To see these allegations about people working for GSK is shameful.

"For me personally they are deeply disappointing."

He said the company was determined to fight corruption and had begun an independent review to establish what happened.

The scandal has seen a number of executives detained and Steve Nechelput, the company's finance director in the country, banned from leaving - though he has not been held or questioned himself.

Sir Andrew said he was "absolutely willing and ready to go to China when it is the right moment" but expressed confidence in the "strong senior management" dealing with the allegations.

He admitted that the company had also been in contact with authorities in the UK and the US amid speculation that GSK could face criminal action under their laws as well as from the Chinese inquiry.

"We have reached out to various regulators on both sides of the Atlantic to open up channels with them," Sir Andrew said.

"We have consulted with the UK Government and they have been helpful, through the Foreign Office, in giving us advice."

Sir Andrew was speaking as the company announced second quarter turnover to the end of June at £6.6 billion, up 2%, though pre-tax profits were down 16% to £1.3 billion from the same period last year.

He said the period had seen encouraging progress in the late stage medicines pipeline with US approvals for three new drugs.

Pharmaceuticals and vaccine turnover in the US was up 5% but flat in Europe, blamed on austerity measures and the use of generic drugs as alternatives to some older products.

Sir Andrew said in a preface to today's results that it was looking for sales to grow broadly across its emerging markets.

He added: "Clearly, we are likely to see some impact to our performance in China as a result of our current investigation, but it is too early to quantify the extent of this."

Today's report also made reference to "alleged serious economic crimes by GSK China's pharmaceutical operations" in its section on legal matters.

It said: "It is not possible at this time to make a reliable estimate of the financial effect, if any, that could result from this matter."

Meanwhile, Sir Andrew said plans to sell drinks brands Lucozade and Ribena remained on track and agreement was expected to be reached by the end of the year.

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent