“They should lose their License to operate, not fines, and long stretch in Jail”
(comment on the Telegraph article)
Legal experts warn recent developments will have drawn more scrutiny from the Serious Fraud Office
British drug giant GlaxoSmithKline will come under more pressure from prosecutors in the UK and US after admitting that it is investigating bribery allegations in several countries, legal experts have said.
The drug maker has, within the last two weeks, been forced to admit it is looking into bribery allegations in four countries: Poland, Iraq, Jordan and Lebanon.
These admissions come months after the company became embroiled in a major bribery scandal in China, where it was accused of funnelling as much as £320m to doctors and government officials to boost sales. GSK has said it is co-operating with the Beijing authorities’ investigation.
If the allegations are successfully prosecuted abroad, GSK may also have breached the UK’s powerful bribery laws. Britain’s Bribery Act, which counts failure of a company to prevent bribery as an offence, can be applied to domestic companies operating abroad and foreign companies with a presence in the UK.
Reuben Guttman, a director of US law firm Grant & Eisenhofer, said GSK could also be vulnerable to prosecution under America’s anti-corruption laws.
“GSK is a company that trades on our exchanges; a determination that it had engaged in bribery of foreign officials would have implications under the US Foreign Corrupt Practices Act,” he said.
“This means GSK could be subject to monetary penalties in the US and claims could be brought by the SEC or the Justice Department,” Mr Guttman added, pointing out that in the past “sanctions have been in the millions of dollars”.
Nathan Peacey, regulatory partner at law firm Bond Dickinson, said Britain’s Serious Fraud Office was likely to be considering action against the drug maker.
“The SFO is keen to create the impression that they have a number of ongoing investigations and that we can expect to see prosecutions in the not too distant future,” he said.
Mr Peacey said that if GSK was charged by the SFO, the most likely outcome would be a deferred prosecution arrangement (DPA), a new sentencing option which holds back prosecution as long as the company agrees to take certain measures to address any issues. DPAs were introduced in February as an alternative to prosecution, which under the Bribery Act could involve a ban from public contracts.
“The public interest in prosecuting and debarring GSK, one of the UK’s flagship companies, from selling medicines to hospitals the world over has got to be very questionable. If it turned out there were grounds to prosecute, GSK should surely be a prime candidate for a deferred prosecution agreement,” said Barry Vitou, corporate crime partner at law firm Pinsent Masons.
The SFO has not yet launched an investigation into GSK, a necessary prerequisite to charging the company, and will neither confirm nor deny its interest in the drug maker. However Glaxo has said it is in contact with both the SFO and the Department of Justice (DoJ) in the US “as appropriate”, and legal experts believe the authorities have been following the case with interest.
“The reality is that to all intents and purposes GSK is subject to regulatory scrutiny already. GSK is firmly in the cross hairs of the SFO and DoJ,” said Mr Vitou.
“Against this backdrop, a formal SFO investigation is more form over substance at this point. Whether or not GSK is a potential target for prosecution will, of course, be dependent on the actual conduct and not newspaper stories,” he added.
GSK has insisted that it does not have a systemic bribery problem, and that any wrongdoing it has unearthed was by rogue salesmen working outside the company’s control processes.
The company has also pointed out that the number of cases of sales and marketing misconduct it faces are “very similar to those reported by other companies in our sector”.
Legal experts, however, have said recent media attention on Glaxo could nonetheless make it more vulnerable to scrutiny from prosecutors.
“The problem GSK has is that it is a business under the spotlight. In that context, it [the news flow] is extremely unhelpful,” said Mr Vitou.
Mr Peacey added that the growing list of countries where GSK is investigating alleged bribery “makes it feel like it will be harder for them to demonstrate a single isolated incident”.