A British GlaxoSmithKline executive has been accused by Chinese police of running “a massive bribery network”, as the corruption scandal at the pharmaceutical group deepens.
Mark Reilly ran GSK’s operations in China but now risks a jail sentence in the country after he was accused of offences that carry a maximum sentence of life in prison.
Chinese police claimed that that Reilly and two other Chinese executives, Zhang Guowei and Zhao Hongyan, bribed doctors and hospital officials. The bribery allegations, which will now be passed to prosecutors, were harsher than many Chinese-based executives expected, Reuters reported.
The police accused GSK, the UK’s largest pharmaceutical company, of offering billions of yuan in bribes to doctors and other hospital staff in order to boost sales of its products. Although Reilly stood down from running GSK’s China operations last July he remains an employee.
A report by the Chinese state news agency Xinhua highlights the role of the Briton. Zhang, a former vice-president of GSK China, told Xinhua that pressure to increase sales led to the bribery. “When Reilly took over the post the company’s strategy shifted from profit-oriented to sales-oriented. The sales target in China was raised every year to compensate the reduction in US and European markets.”
When lurid allegations of doctors being bribed with £320m worth of extravagant gifts and sexual favours first emerged last year GSK said the investigation was focused on Chinese executives rather than British managers.
GSK declined to comment on the specific allegations against Reilly. But in a statement the company said: “We take the allegations that have been raised very seriously. They are deeply concerning to us and contrary to the values of GSK.
“We want to reach a resolution that will enable the company to continue to make an important contribution to the health and welfare of China and its citizens.”
Reilly has been working for GSK since 1989, according to his LinkedIn profile. A graduate of University College London, he holds a PhD in pharmacology and an accountancy qualification. He rose up the GSK ranks, doing a variety of commercial jobs that included stints in Singapore, the USA and GSK’s headquarters in London. He took charge of GSK’s operations in China in January 2009, and was based in Shanghai. He left the country last July when the bribery scandal broke. He later returned and was subsequently barred from leaving. Ten days after the scandal broke Reilly was replaced as GSK’s China boss by Herve Gisserot.
Chinese police have not said whether Reilly has been detained, but officials at the British Consulate in Shanghai have said they are in contact with him and providing assistance.
GSK is also embroiled in a similar scandal in Poland after a whistleblower, Jarek Wisniewiski, told the BBC’s Panorama programme that company representatives paid doctors to boost prescriptions. GSK is also investigating bribery allegations in Jordan and Lebanon.
Chinese police Wednesday charged the British former boss of GlaxoSmithKline’s China unit and two other company executives with corruption for bribing health officials and doctors.
A Ministry of Public Security official said in Beijing that Mark Reilly (pictured) and two Chinese executives, Zhang Guowei and Zhao Hongyan, offered bribes to hospital personnel and doctors to boost GSK’s sales.
All three defendants face up to life in prison.
In July last year, China authorities accused GSK, the UK’s biggest pharma, of paying $482 million in bribes. The Ministry of Public Security said that since 2007 GSK had used 700 travel agencies to deliver the illegal payments.
Police then detained four GSK executives, including Zhang, a GSK human resources director, and Zhao, a legal affairs director.
Reilly had left China when the scandal broke but “voluntarily returned to cooperate with police.” Retuers said.
In October, Xinhua reported that Reilly was in China helping with the investigation and hadn’t been detained.
Reuters said it wasn’t able to contact him Wednesday.
A British consulate spokesperson in Shanghai told Reuters “officials were in regular contact with Reilly and were providing consular assistance.”
Xinhua said GSK’s China revenue was $1.1 billion in 2012, nearly double from when Reilly took over in 2009.
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In April, GSK said it was investigating allegations the company hired government-employed doctors and pharmacists in Iraq as paid sales reps for its products.
The pharma also said it is investigating allegations of bribery in Jordan and Lebanon.
In Poland, GSK is facing a criminal probe for allegedly bribing doctors between 2010 and 2012. Prosecutors said last month they have evidence of illegal payments to 13 health centers.
Thirteen people have been charged by Poland’s anti-corruption bureau.
Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.