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China releases GSK bribery details

Published on 15/07/13 at 07:08am

It has emerged that four senior Chinese executives from GlaxoSmithKline are being held over illegal financial transfers, including allegations of ‘sexual bribery’.

The detained executives are Liang Hong, vice president and operations manager of Glaxo China; Zhang Guowei, a human resources director; Zhao Hongyan, a legal affairs director; and Huang Hong, a business development manager, according to local media reports.

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.

“We have sufficient reason to suspect that these transfers were conducted illegally,” Gao Feng said. “You could say the travel agencies and GSK were criminal partners.

“We found that bribery is a core part of the activities of the company [used] to boost their prices and sales, the company performed illegal actions,” he added.

Gao Feng said that GSK’s top China executive, an English national, had left the country after the probe was announced, and had not returned to China.

The UK newspaper Daily Telegraph had originally reported last week that as many as 30 GSK staff were under house arrest in the country relating to this case.

This comes a week after China’s Ministry of Public Security said GSK executives had confessed to bribery of doctors and hospitals to boost prescriptions, and were also said to be guilty of tax violations.

But Gao Feng has not, however, released details of how much the firm is alleged to have paid these groups.

But he added that the probe had found that GSK “was mainly responsible for the bribes which included cases of sexual bribery”.

The London-based company has maintained that it is innocent, saying an initial investigation into these allegations have not turned up any signs of corruption.

GSK is already embroiled in another investigation in the country into its - and 60 other - pharma firms’ practices, relating to ‘economic crimes’ over alleged price fixing.

The company said in a statement that it is ‘deeply concerned and disappointed’ and will stop using agencies identified in the probe.

"We also fully support the efforts of the Chinese authorities in their reforms of the medical sector and stand ready to work with them to make the necessary changes for the benefit of patients in China," it added.

 

Ben Adams

 

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