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GSK exec admits bribery on live TV

Published on 16/07/13 at 02:37pm
GSK image

A senior member of GSK China has appeared on state television admitting the firm’s guilt in the ongoing bribery allegations.

Liang Hong, the vice president of operations in China, appeared on one of China Central Television’s (CCTV) news programmes, from what appears to be a detention cell.

Mr Liang, who appeared unkempt, told the cameras: “Having spent time reflecting over the past couple of days, I think the money we spent to run our business was too much.”

He went on: “All of these costs [of GSK’s bribery] were included in the price of the drugs. The money we spent running the business accounted for about 20% to 30% of the drug price.”

China is well-known for its treatment of political dissidents in the country, who are often swiftly taken from their homes and put into detention cells. This is the first time, however, that a pharma firm has seen one of its executives put in this situation.

Yesterday it emerged that four senior Chinese executives from GlaxoSmithKline - including Mr Liang - were being held over illegal financial transfers, including allegations of ‘sexual bribery’.

Gao Feng, head of the economic crimes investigation unit and chief investigator for this case, said GSK had transferred as much as 3 billion Yuan (£323 million) to around 700 travel agencies and consultancies since 2007.

As reported by the Daily Telegraph, Mr Gao claims that GSK hid the corruption in its accounts by over inflating the sum paid. The extra money would then be split: some going to bribe doctors, some retained by the middlemen and some given as kickbacks to GSK executives.

Mr Liang told CCTV: “Some expenses cannot be reimbursed through GSK China. For example, the money spent on maintaining good relations with the government. So that was paid out by the Linjiang Travel Agency.” He made no mention of any other agencies used by the firm.

Weng Jianyong, the head of the travel agency, also appeared on CCTV to describe his relationship with Hong.

“He (Liang Hong) would tell me that he may need to visit some experts or government officials and give them some gifts. My calculation shows that I have given Liang about 2 million Yuan [£215,310], around 1 to 1.2 million in cash and the other 800,000 in travel.”

GSK speaks out

GSK released a statement yesterday saying it would review all third party services it uses, and would stop using these travel agencies in China.

It went on: “We are deeply concerned and disappointed by these serious allegations of fraudulent behaviour and ethical misconduct by certain individuals at the company and third-party agencies. 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.”

It added that it “shares the desire of the Chinese authorities” to root out corruption, and that: “These allegations are shameful and we regret this has occurred.”

The company is also under investigation with 60 other firms in the country over allegations of ‘economic crimes’ relating to price fixing.

Ben Adams

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