China names GSK bribery suspects

GSK's office in Beijing. Four managers have been named as suspects in a bribery case. Photograph: Alexander F Yuan/AP

Chinese state media have named four managers of drug manufacturer GlaxoSmithKline accused by police of paying millions in bribes to doctors and others.

The police ministry had earlier announced that GSK employees were under investigation for paying bribes that were passed through travel agencies. It said the bribes were aimed at increasing sales.

Four employees being questioned include a vice-president and human resources director of Glaxo's Chinese unit, the Xinhua News Agency said on Monday, citing police as the source of the information.

They were named as Liang Hong, vice-president and operations manager; Zhang Guowei, vice-president and human resources head; Zhao Hongyan, legal affairs director; and Huang Hong, business development manager.

Investigators also questioned the corporate representative of the Shanghai Linjiang International Travel Agency, Xinhua said. It cited an unnamed investigator who said most of the agency's business came from laundering money for the bribery scheme.

The report said at least 50m yuan (?5.4m/$8.2m) passed through a travel agency as part of a scheme to hide the bribes. It said one suspect had authority to approve a budget of hundreds of millions of yuan but did not say how much of that might have been used for bribery. The scheme helped the employees circumvent GSK's rules that limited gift-giving to 300 yuan per recipient, Xinhua said.

GlaxoSmithKline PLC said on Monday that it was co-operating with the authorities. "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," it said in a statement.

"Such behaviour would be a clear breach of GSK's systems, governance procedures, values and standards. GSK has zero tolerance for any behavior of this nature."

It said GSK was reviewing all third-party agency relationships and had "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".

The police ministry said last week that GSK employees were suspected of paying bribes to doctors, hospitals, medical associations and government officials.

GlaxoSmithKline said in June that it had investigated an accusation that its salespeople in China bribed doctors and found no evidence of wrongdoing. The company has said the police investigation might be based on information from the same anonymous source.

GSK is headquartered in Britain but has a presence in the US, which could make it liable to penalties under US anti-bribery laws.

Last week state media reported the government was investigating production costs for 60 foreign and domestic drug companies in a possible first step toward changing state-set maximum prices. The announcement gave no indication any companies were suspected of wrongdoing.

Source: http://www.guardian.co.uk/business/2013/jul/16/china-names-gsk-bribery-suspects

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