Ten months ago, when Chinese authorities first made allegations of corruption against GlaxoSmithKline‘s local unit, it was possible to think the affair would be resolved quietly and quickly. GSK might pay a modest fine, pledge to monitor staff more closely and offer the Chinese lower prices on prescription medicines.
That comfortable script looked less likely to prevail as the police investigation dragged on and new allegations were aired regularly in state-owned media.
Now it is obvious that the Chinese authorities are not interested in a quiet settlement. China‘s ministry of public security says it has evidence of “massive and systemic bribery” and has implicated Mark Reilly, GSK’s country head.
No charges have yet been laid but that step appears a formality.
“We take the allegations that have been raised very seriously. They are deeply concerning to us and contrary to the values of GSK,” said the company. As a holding statement, that’s as one would expect. But at some point GSK will have to say something meaningful.
If the company accepts the evidence of systemic bribery, it will have to explain how such corruption could have happened without being detected by head office. If, on the other hand, chief executive Sir Andrew Witty feels Reilly (who, note, is still on the payroll) and his colleagues are being treated unfairly by the less than transparent Chinese justice system, it is hard to understand why GSK would wish to stay in China.
“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,” concluded GSK’s statement. Yes, that’s a reasonable ambition. It may prove impossible to achieve.