GlaxoSmithKline Fined £297m For China Bribes
The pharma firm’s former China boss is said to escape jail time as GSK tries to draw a line under a “deeply disappointing” matter.
GSK acknowledged wrongdoing in its statement
GlaxoSmithKline (GSK) has been fined almost £300m by a court in China – a record in the country – for bribing health officials to use its products.
The pharmaceutical firm confirmed the £297m penalty imposed by the Changsha Intermediate People’s Court in Hunan Province, saying it accepted that illegal activities took place and the fine would be paid through existing cash resources.
The Chinese state news agency, Xinhua, reported that the former head of GSK in China and other executives faced jail terms but a GSK source told Sky News that Mark Reilly was to be deported after being handed a three-year suspended sentence.
The company’s statement said the court found that “GSK China Investment (GSKCI) …offered money or property to non-government personnel in order to obtain improper commercial gains.
“The illegal activities of GSKCI are a clear breach of GSK’s governance and compliance procedures; and are wholly contrary to the values and standards expected from GSK employees.
“GSK has published a statement of apology to the Chinese government and its people on its website.
“GSK has co-operated fully with the authorities and has taken steps to comprehensively rectify the issues identified at the operations of GSKCI.
“This includes fundamentally changing the incentive programme for its salesforces (decoupling sales targets from compensation); significantly reducing and changing engagement activities with healthcare professionals; and expanding processes for review and monitoring of invoicing and payments.”
GSK chief executive Sir Andrew Witty added: “Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK.
“We have and will continue to learn from this. GSK has been in China for close to a hundred years and we remain fully committed to the country and its people.”
The investigation took a number of twists with a British man, who was hired as an investigator by GSK, being jailed for two years and six months in August.
The Chinese authorities claimed Peter Humphrey illegally obtained Chinese citizens’ personal information and sold it to companies including GSK.
The London-listed firm hired him after an anonymous email, containing a sex tape of Mr Reilly and his Chinese girlfriend, was sent to senior management in January last year.
The email alleged corrupt practices in GSK’s China operation.
GSK’s ethical standards have also been called into question in Lebanon, Iraq, Jordan,Syria and Poland.
Its share price was almost 0.6% higher in the wake of the announcement.