Couple make public confession over alleged £320m GSK Bribery Scandal


http://www.independent.co.uk/news/world/asia/british-investigator-peter-humphrey-regrets-illegal-data-scam-on-china-tv-8785368.html

British investigator Peter Humphrey ‘regrets’ illegal data scam on China TV

Couple make public confession over alleged £320m bribery scandal a drugs giant

Chinese state television has broadcast a confession by British corporate investigator Peter Humphrey who, along with his American wife, has been held in connection with an alleged £320million bribery scandal at drugs giant GlaxoSmithKline.

“The way we acquired information was sometimes illegal. I feel very regretful about it and want to apologise to the Chinese government,” Mr Humphrey said in the CCTV report.

Such public apologies are common by Chinese officials and celebrities accused of wrongdoing, but a confession by a foreigner rarely happens.

Mr Humphrey sat with his wife Yu Yingzeng – both in orange prison vests and handcuffs – during the report.

The couple were arrested on 16 August in Shanghai and charged with operating illegal research companies and trafficking personal information about Chinese citizens, police said.

Mr Humphrey, 57, and Ms Yingzeng are founders of ChinaWhys, a Shanhai-based risk management firm, which provides investigation services to companies.  GlaxoSmithKline – the biggest UK-listed pharmaceutical firm – was one of their clients.

GSK is accused of working with Chinese travel agencies to host conferences for up to 2,000 people, with events costing about 10million yuan (about £1m).

Chinese authorities claim GSK executives inflated the cost of these events to use excess cash to pay bribes to doctors and middlemen.

The company has admitted some of its China executives may have violated both Chinese law and the company’s  policy. A GSK spokesman confirmed they were co-operating with the authorities.

CCTV’s television broadcast also showed Mr Humphrey’s and Ms Yingzeng’s offices being raided, as well as interviews with police officers.

“[The] Investigation found that the couple illegally trafficked a huge amount of personal information on Chinese citizens to seek profits via registering so-called research companies in Hong Kong and Shanghai since 2003,” the Xinhua news agency reported.

Mr Humphrey was formerly a Reuters correspondent in Hong Kong. After leaving the news agency 14 years ago he worked as an investigator in different parts of Asia, tracking white collar crime and corporate fraud.

Ms Yingzeng is a California-educated accountant who has served as a financial controller in the United States and Hong Kong, and as a high-level advisory consultant in China.

ChinaWhys’ website claims Ms Yingzeng: “Is experienced in operational/financial audit to identify management control weakness, bribery concerns and fraud risks.”

It says she has worked on “complex fraud investigations at multinational operations in China, [with] successes including solving a supply chain fraud by establishing activity links to capture criminal evidence for a US food manufacturer”.

The British Embassy in Beijing confirmed last week that Mr Humphrey had been arrested and they were providing consular assistance, but gave no details of charges.

Bob Fiddaman on “Andrew Witty and GSK China Scandal”


http://fiddaman.blogspot.ie/2013/08/andrew-witty-i-know-narrrrrrrrthing.html

Monday, August 26, 2013

Andrew Witty… I know narrrrrrrrthing

Like a script from the 70’s classic Fawlty Towers, GSK Head, Andrew Witty, has recently claimedthat GSK HQ in London knew nothing about the fraud occurring in China [back stories herehere,here]

If Witty is telling the truth one has to ask why he knew nothing. He’s the head of the company and surely this means keeping his fingers on the pulse at GSK, both at home and globally.

Witty, who last year, blamed Glaxo’s history of fraudulent promotion on “part of an era”, is, in essence, deflecting blame on his own poor performance as a Chief Executive.

Glaxo were found guilty and fined a record breaking $3 billion for that particular crime and Witty spun his company’s dirty deeds by blaming an era that he, allegedly, had nothing to do with. So, he was, it can be argued, blaming his predecessor Jean Pierre Garnier.

Nothing changes. Now, it appears, Witty is, once again, deflecting blame.

Digging through the archives we can see that this isn’t the first time Glaxo have been embroiled in controversy regarding payments made to doctors.

In 2003, admittedly before Witty was in charge, the Finance Police in Veneto, Italy, charged 72 Italian doctors and Glaxo employees with bribery and corruption, charging that Glaxo employees showered cash, gifts and trips on doctors to encourage them to prescribe more Glaxo products. [1]

Déjà vu anyone?

Just like the Chinese allegations Glaxo were accused back in 2003 of wining and dining doctors and sending them on lavish trips in an effort to get them to prescribe more of it’s products.

How did Glaxo’s then medical director, Giuseppe Recchia, react to news of the illegal activities?

“We think we acted according to the standards fixed by the law.”

Marvelous isn’t it.

During the 2003 investigation it was learned that 26 chiefs and assistant chiefs of hospital departments, five university professors, and four heads of hospital pharmacies were invited to “medical tours” to places such as Monte Carlo in the days of the Formula 1 Grand Prix or to Sharm el Sheik or Damascus, or they received tens of thousands of pounds cash with fictitious justifications.

The current Chinese investigation alleges pretty much the same although we can throw prostitution into the pot as well.

I wonder if Witty’s predecessor knew nothing about what was going on in Italy – that seems to be the standard these days. Run a large corporate company, cover oneself in garlands with praise received, deny any knowledge of any wrong-doing when criticism is aimed and fired.

Witty claims that London HQ had no knowledge of what was going on in China. His London HQ have known for years that thousands of people have found Seroxat withdrawal problematic… they still did nothing to help these consumers.

If Witty had any gumption about him, if he really wanted to practice what he preached then maybe it’s time for him to sit down with Seroxat victims, maybe he could write directly to Secure Law, the UK law firm representing claimants who became addicted to Glaxo’s wonder pill.

Then again, I’m guessing even Witty would find it difficult to face victims or even their representatives… he’d have to get past his own lawyers first who would gently advise him that meeting with Seroxat victims/representatives would be an admission of guilt… and we can’t have GSK looking guilty can we?

What happened in China “I know nothing”

What happened in Italy? I know nothing”

Ignorance is bliss eh.

This one’s for you Mr Witty.

[1] Italians Link Glaxo to Illegal Doctor Gifts

Bob Fiddaman

“But it happened on your watch Sir Andrew”…


http://www.thisismoney.co.uk/money/markets/article-2376947/Glaxo-chief-Sir-Andrew-Witty-rising-bribery-crisis-engulfing-pharma-giant-China.html

Glaxo chief rising above bribery crisis engulfing pharma giant in China

By RUPERT STEINER

PUBLISHED: 21:37 GMT, 24 July 2013 | UPDATED: 21:37 GMT, 24 July 2013

Glaxo’s chief executive has sought to distance himself from bribery allegations engulfing the pharma giant in China.

Sir Andrew Witty was speaking for the first time since it emerged some of his senior executives allegedly bribed doctors and officials with money and offered to arrange sexual trysts.

He said he had delegated responsibility to a senior colleague, Abbas Hussain, because he had to focus on other things.

Danger signs: Sir Andrew Witty insists the pharma giant will 'do the right thing' in the Far EastDanger signs: Sir Andrew Witty insists the pharma giant will ‘do the right thing’ in the Far East

Witty, said: ‘I take this very seriously but the organisation has to do a lot of things beyond focus on China.

‘My job is to ensure that we do the right things in China…and that we continue to deliver all of the other activities which need to be achieved in the company.’

China accounts for 3 per cent of annual sales worth around £1billion.

Witty acknowledged the allegations were ‘shameful’ and said: ‘I am personally very disappointed.’ He said he had not visited the country and would only go when ‘it is the right moment’.

He has dispatched Hussain, the leader of his European and emerging markets business, to spearhead the ‘day-to-day response’.

Witty said it was too early to start thinking about gestures such as forgoing his bonus.

‘Where I think we need to be focused is to make sure that we are working with the authorities to get to the truth of what has happened,’ he said.

‘Once we have understood that, then obviously those consequences need to be considered.’

Witty also used a third-quarter update, in which profits fell, to warn the scandal would hurt performance.

Glaxo’s management team in China has been left in disarray by police allegations that they are looking at payments up to £319million to travel agencies to facilitate bribes to doctors and officials. Glaxo has appointed an American law firm to carry out an independent review of its Chinese systems.

The firm has admitted some Chinese executives appeared to have broken the law and says it has been liaising with regulators including the Serious Fraud Office. Glaxo has also been in contract with the Government through the Foreign Office.

Witty said the investigation ‘appeared to be focused on a number of senior managers who have been operating outside of our processes, potentially defrauding GSK and also at  the same time allegedly doing some things in the market place which are clearly inappropriate and illegal’.

The allegations overshadowed the first signs a pipeline of new drugs could transform performance. Core second-quarter profit fell to £1.943billion from £1.979billion. The shares rose 13p to 1681p.

Comments (7)

The comments below have not been moderated.

 View all

I completely agree, AW is incompetent… he doesn’t have an y idea of what is going in the company. Believe you me!

– Always reading , Uckfield, 25/7/2013 23:07

Click to rate    Rating   3

Report abuse

But it happened on your watch Sir Andrew!!

– Lonesailor , Jeuss, Switzerland, 25/7/2013 21:05

Click to rate    Rating (0)

Report abuse

Poor chap, probably got short term memory loss over the £3 BILLION fine accepted in USA only in 2012 for doing other naughties.

– timothytimberlak , dorset, 25/7/2013 20:32

Click to rate    Rating   4

Report abuse

Quick, find me a fall guy!

– timothytimberlak , dorset, 25/7/2013 19:47

Click to rate    Rating   3

Report abuse

the ‘man at the top’ is paid to tackle the tough issues, if you’re not man enough then step aside!

– Bob , Harare., 25/7/2013 14:36

Click to rate    Rating   4

Report abuse

So profits fell. It is very worrying when those at the top don’t know what is going on in overseas subsidiaries.

– John , Dartford, 25/7/2013 12:40

Click to rate    Rating   3

Report abuse

the man should fall on his sword….he is either incompetent for not knowing what was going on, which is unlikely….or he was involved either actively or passively. neither is acceptable in a man in his position

– Robinc , Guildford, United Kingdom, 25/7/2013 11:16

Click to rate    Rating   5

GlaxoSmithKline China scandal: British man arrested


http://www.theguardian.com/business/2013/aug/21/glaxos-smithkline-china-british-couple-arrested

A Chinese employee walks into a GlaxoSmithKline (GSK) office in Beijing
A Chinese employee walks into a GlaxoSmithKline office in Beijing. Peter Humphrey and Yu Yingzeng were detained as police investigated bribery allegations involving the company. Photograph: Jason Lee/Reuters

A British risk consultant held in China since mid-July amid an investigation into the country’s pharmaceutical industry has been arrested, the British embassy in Beijing and his family said on Wednesday.

Peter Humphrey and his wife, Yu Yingzeng, were detained in Shanghai on 10 July as police investigated bribery allegations against GlaxoSmithKline.

In China, an arrest typically means police believe they have enough evidence for a case to be brought to trial. Detentions can last for weeks and end in release without charges being filed.

It was not immediately clear if Humphrey’s arrest was directly related to the investigation of GSK, which has been accused by China of funnelling up to 3bn yuan (£312m) to travel agencies to facilitate bribes to doctors and officials.

China has taken a tough stance on corruption and high prices in the pharmaceutical industry as it widens access to healthcare, bringing an estimated $1tn healthcare bill by 2020.

“We can confirm the arrest of a British national, Peter Humphrey, in Shanghai on Monday19 August. We are currently providing consular assistance,” a British embassy spokeswoman, Hannah Oussedik, told Reuters by phone.

Oussedik declined to offer additional information about the reasons for Humphrey’s arrest. The US embassy in Beijing could not be reached immediately to confirm whether Yu had also been arrested. The US consulate in Shanghai declined to comment.

Shanghai police did not respond to a request for comment.

A statement issued by a member of Humphrey’s family said both Humphrey and Yu had been arrested.

A source close to the family said they had not yet been told which charges would be laid against Humphrey, or when, but the statement said lawyers had told the family that the couple were detained last month because they had broken a law related to buying private information.

Humphrey and Yu co-founded ChinaWhys, a business risk advisory firm that has done work with drug companies, including GSK, separate sources familiar with the matter have said.

Humphrey worked as a journalist for Reuters in the 1980s and 90s. The ChinaWhys website says he has been a risk management specialist and corporate detective for 14 years.

In March 2010, four executives from mining giant Rio Tinto were jailed for taking bribes and stealing commercial secrets. Three of those executives were Chinese while the fourth was a Chinese-born Australian.

Police Say Sexual Favors Spur $1.5 Billion Glaxo China Sales


http://bloom.bg/1bFIG9k

http://www.governamerica.com/news/903-police-say-sexual-favors-spur-1-5-billion-glaxo-china-sales#.UgbbCiv71b4

 

GlaxoSmithKline Plc (GSK)’s (GSK) sales in China jumped 20 percent to about 1 billion pounds ($1.5 billion) last year, almost quadruple the pace of growth across its emerging markets. Police say bribes and sexual favors spurred the gain.

Glaxo’s Chinese Nightmares Continue…


http://www.bloomberg.com/news/2013-08-07/race-to-publish-shows-glaxo-zeal-to-get-leg-up-in-china.html

Liu Xuebin recalls working 12-hour shifts and most weekends for months, under pressure to announce research results that would distinguish his GlaxoSmithKline Plc (GSK) lab in Chinaas a force in multiple sclerosis research.

It paid off — for a while. Nature Medicine published findings about a potential new MS treatment approach in January 2010 and months later Liu was promoted to associate director of Glaxo’s global center for neuro-inflammation research in Shanghai. Two months ago, his career unraveled. An internal review found data in the paper was misrepresented. Liu, 45, who stands by the study, was suspended from duty on June 8 and quit two days later.

His story, told in a cafe a short stroll from his former workplace, offers insight into Glaxo’s zeal to succeed in the world’s fastest growing major drugs market, where the London-based company languishes in 12th place. Glaxo is now the subject of a corruption probe, and three other drugmakers have been, or are in the process of being, examined by authorities in China, where intense competition built incentives for employees to bend rules and cut corners.

“It was extremely tough, we were all very tired and everyone was competing to be first,” Liu said in an interview last week. “Everyone had many projects. The more you do, the more likely you will make mistakes.”

The China-born scientist was the first of 18 authors on the 2010 paper, which included graphs later shown to have incorrectly labeled healthy human cells as being those frommultiple sclerosis patients. Liu says he opposes a retraction of the paper.

R&D Head Fired

“It was an honest mistake, and it doesn’t affect the findings,” he said, sipping a cappuccino. “I can confidently say that I can recreate the result in any laboratory.”

Glaxo, the U.K.’s largest drugmaker, disclosed the error in astatement on its website on June 10, the day Liu resigned. The head of Chinese research and development was fired and three others were placed on administrative leave pending a final review, it said. The paper, titled “Crucial role of interleukin-7 in T helper type 17 survival and expansion in autoimmune disease” was from preclinical, early stage research and didn’t directly involve patients.

‘Clear Evidence’

“Our thorough investigation found clear evidence of data misrepresentation and 16 of the 18 authors on the paper have agreed it should be retracted,” David Daley, a Glaxo spokesman inLondon, said in an e-mailed response to questions. “We will not tolerate activity and behavior that falls short of the high standards expected from our employees.”

Daley didn’t respond to a question regarding the competitive environment Liu described. Nature Publishing Group declined to comment specifically on the status of Liu’s paper.

“The only people who can retract papers are authors or editors,” Editor-in-Chief Phil Campbell said in an Aug. 3 e-mail. “Editors may be requested to retract a paper over the heads of authors, whether by the authors’ institution or company or by anyone else.”

In those situations, Nature’s editors will decide in consultation with the authors, Campbell said.

The disputed research isn’t part of the investigation of Glaxo China announced in late June by the nation’s Public Security Ministry of alleged economic crimes involving 3 billion yuan ($489 million) of spurious travel and meeting expenses, and trade in sexual favors. Glaxo’s head ofemerging markets Abbas Hussain said on July 22 after meeting with government officials in Beijing that some of its employees may have broken China’s laws. The drugmaker has said it’s cooperating with the government’s investigation.

Rapid Expansion

Still, Liu’s experience tells of the rapid expansion in research from immune diseases to herbal medicines that Glaxo underwent in China and of the competitive environment in which he and colleagues worked.

Johnson & Johnson was fined for monopolistic practices last week. Eli Lilly & Co. was reviewed earlier this year by authorities in Shenyang, the company said on Aug. 1. An unidentified whistle-blower alleged that Sanofi gave about 1.69 million yuan ($276,000) in bribes to 503 doctors in China, the 21st Century Business Herald reported today.

Sanofi “takes very seriously” the allegations in the report and has established processes in place for reviewing and addressing such issues, the company said in an e-mailed statement today, adding it was premature to comment further.

‘Virgin Territory’

“For Glaxo and for other multinationals, China represented virgin territory — it could build up its sales force and R&D effort in parallel there,” said Navid Malik, head of life sciences research atCenkos Securities Plc (CNKS) in London. “Because it’s still under-penetrated, they could think about how to target certain disease areas where they can build sales infrastructure and roll out their R&D cheaply and efficiently.”

The China-based research units of most global drugmakers tend to support centers located in the U.S. and Europe. Glaxo’s facility in Shanghai was different: it was conceived to lead the company’s global efforts in research into neurodegeneration.

It would “eventually direct the global discovery and development activities” for disorders such as multiple sclerosis, Parkinson’s disease and Alzheimer’s disease, Glaxo said in a May 2007statement.

Establishing the center didn’t only enable Glaxo to tap a pool of talented Chinese researchers — many of whom had worked overseas, as Liu had — it was also politically savvy, said Fabian Wenner, a health-care analyst with Kepler Capital Markets in Zurich.

‘Solid Presence’

“If you want a government contract, it’s easier for you to negotiate if you have a solid presence in China,” Wenner said in a telephone interview.

Liu, who moved to the U.S. after obtaining a doctorate in immunology from Beijing Medical University in 1999, was part of the diaspora of Chinese researchers returning home.

A U.S. permanent resident, he worked as a senior biologist at the Bethesda, Maryland-basedNational Institutes of Health before becoming the 30th person hired at Glaxo’s Shanghai research center in December 2007. The center, located in a technology park on the eastern outskirts of Shanghai, now has a staff of about 500.

“This was my first job in industry and there was a very different culture,” Liu said behind thick, rimless glasses and dressed in a short-sleeve checked shirt tucked neatly into his belted trousers. “I was also not experienced with compliance back then, and we didn’t pay enough attention to things such as recording of reports from our collaborators.”

Colleague Competitors

There was also a culture in which Glaxo scientists were grouped into competitive teams, known as discovery performance units, which vied internally for funds every three years, he said. Those who failed to meet certain targets risked being disbanded.

The publication of Liu’s paper in Nature Medicine was initially lauded by Glaxo, he said, adding that the company rewarded his 30-strong team with 20,000 yuan ($3,300), which they spent on a team-building trip.

“We heard Pfizer (PFE) and a few other universities and research institutes were working on something similar,” Liu said of his research. “If someone else had published ahead of us, it would have screwed up our plans. The novelty would have been lost.”

He’s now unemployed and contemplating returning to the U.S. to escape damage done to his reputation in China.

“This situation has destroyed my past and maybe even my future, but I still hope someday to be back researching drugs,” Liu said.

To contact Bloomberg News staff for this story: Daryl Loo in Beijing at dloo7@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net