“Chinese police suggested more recently that the company did know about the alleged corruption, with state news agency Xinhua reporting: “As the investigation is moving on, it is becoming clear that it is organised by GSK China rather than drug salespeople’s individual behaviour.”
The Xinhua report added: “When investigated, the company passed the buck to sales force. But the police investigation has found that GSK China went through the motions in internal auditing so as not to discover these violations.”
Who’s betting that it will be the Chinese GSK Executives that will go down for this?
GSK’s Mark Reilly barred from leaving China
Mark Reilly, who formerly headed up GlaxoSmithKline’s China operation, has been in the country for several weeks and is under order from the authorities not to leavePhoto: Reuters
The British former chief of GlaxoSmithKline’s operation in China has returned to the country to “help” police with bribery investigations but has been barred from leaving, it can be disclosed.
Mark Reilly, 47, is being kept in China by investigators while they look into claims that the pharmaceutical giant dispensed up to £300m in bribes to doctors and hospital managers to persuade them to prescribe its drugs. It follows a request from the authorities that he remain in the country.
Mr Reilly left China in July, shortly before the Chinese police revealed the investigation and arrested four Chinese GSK executives. The company said he had returned at the end of July to “help the police with their investigations”.
On Tuesday, GSK broke its silence on Mr Reilly’s activities in China, saying that he met with Chinese authorities in the central city of Changsha several weeks ago “to provide them with information and assistance”.
However, the company denied suggestions Mr Reilly was being held in a hotel room in the city. “At no point was he detained,” said a company spokesman. “Mark remains in China to help further with the investigation should it be required. He is no longer in Changsha.”
Mr Humphrey, who founded the corporate investigation company ChinaWhys, was paraded in handcuffs on state television with his wife Yu Yingzeng at the end of August.
The police said Mr Humphrey had illegally sold the personal information of Chinese citizens to his clients. “To obtain this information, I sometimes used illegal means. I want to apologise to the Chinese government,” Mr Humphrey said on television.
A pharmaceutical executive suggested Mr Humphrey was hired by Mr Reilly to investigate certain GSK employees and that he had subsequently helped Mr Reilly leave the country.
“The police were really angry that Reilly left in the first place. They had put a travel ban on him. And Humphrey helped him leave,” he said.
A spokesman for GSK said that back in June, Mr Reilly left China on a scheduled flight and was not under a travel ban at the time.
The investigation into GSK is so sensitive it has now been put under the direct control of Li Keqiang, the Chinese prime minister.
“I do not think they will charge Mr Reilly,” the source said. “Li will not want to make such a big wave. He is supposed to be supporting the Free Trade Zone in Shanghai, for example. I think they will charge maybe eight to ten of the Chinese executives.”
GSK also last month withdrew its membership of RDPAC, the trade association for foreign pharmaceutical businesses in China, which is in the process of drawing up a new code of conduct to try to satisfy Chinese regulators that no further intervention from the government is necessary.
“Everyone is nervous. The foreign heads of all the firms here in China have their boards calling them every day for an update on the situation. Everyone is trying to distance themselves from GSK,” one of the executives said.
The families of the detained GSK staff have also formed themselves into a group to try to argue for leniency. The investigation into the company continues.
“We are waiting for the third wave of revelations in the state media,” said one source. “After that, I expect they might move to file charges”.
British head of finance for GlaxoSmithKline is banned from leaving China after officials accuse the company of bribing politicians
- British finance chief banned from leaving since the end of June
- Steve Nechelput is still working and has not been arrested or detained
- Pressure mounts on GSK over bribery allegations
By SAM WEBB
PUBLISHED: 16:02 GMT, 17 July 2013 | UPDATED: 16:35 GMT, 17 July 201Beijing is preventing a top UK executive working for one of the world’s biggest drug companies from leaving China because of bribery charges against the firm.
Police accuse British firm GlaxoSmithKline of bribing officials and doctors and have placed travel restrictions on GlaxoSmithKline’s head of finance Steve Nechelput, a UK national, a spokesman for the drugmaker said today.
The ban was imposed at the end of June and Mr Nechelput continues to carry out his work in China, as well as being free to move around the country.
He has not been questioned, arrested or detained by police, the spokesman added.
Beijing is preventing Steve Nechelput, drug company GlaxoSmithKline’s head of finance for China, from leaving the country. Pictured, the entrance to the company’s headquarters in Shanghai, China (file photo)
Police have accused GSK of transferring up to £321million to 700 travel agencies and consultancies over six years to facilitate the bribes.
Four Chinese nationals employed by the company have been detained.
It is alleged doctors and officials were paid off to use GSK products and keep prices artificially high.
In response, GSK said it was deeply concerned by the allegations, which it called ‘shameful’.
A spokesman for the UK Consulate in Shanghai said British officials are in close contact with GSK regarding Mr Nechelput and said it stood ready to provide consular assistance.
Asked if London was concerned about the travel restriction, he added: ‘If there’s an inquiry underway then that’s a matter for the Chinese authorities.’Former Chinese Premier Wen Jiabao at GlaxoSmithKline’s Headquarters in Brentford, West London. GSK is one of the largest British investors in China
With investigations focused on malpractice by some of GSK’s Chinese employees, one industry insider said it was likely China wanted Nechelput to remain in the country to provide financial information, if needed, as inquiries progress.
China is increasingly important for big drug groups, which rely on growth in emerging markets to offset slower sales in Western markets where many former top-selling medicines have lost patent protection.
IMS Health, which tracks pharmaceutical industry trends, expects China to overtake Japan as the world’s second-biggest drugs market behind the United States by 2016.
GSK was one of the one of the first multinational companies to fund pharmaceutical research and development in China and has invested more than £107million there in the past 20 years, according to the company’s website.
It has established Clinical Research Centres in China with over 200 drug development projects conducted in collaboration with over 30 medical universities and hospitals.
China has long been known for a culture in which drug companies make payments to doctors, since physicians rely on rewards for writing prescriptions to offset meagre salaries.
Those practices, however, are increasingly at odds with a crackdown on corruption under President Xi Jinping and Premier Li Keqiang, leaving companies struggling to toe the line while not forgoing business in a highly competitive market.