The current GSK China-gate scandal (which involved a massive 500 million dollar bribery network spanning hundreds of individuals across China) is fast becoming like something straight from a John Le Carre spy novel.
It looks like the Chinese authorities intend to prosecute- the former GSK head of their Chinese division- Mark Reilly. He could technically face life in prison for what the Chinese claim to be, an extensive bribery network directed by Reilly, involving hundreds of millions of dollars, and several hundred people (including drug reps, Chinese GSK executives, doctors, fake travel agencies, and prostitutes). It will be interesting to see if the Chinese do send Reilly to prison, but what will be even more interesting is- who was above Reilly? and were they directing, or ordering him, to set up this bribery network, which apparently has been in place since around 2009. Will Reilly do a plea bargain with the Chinese authorities, and in return for lesser sentencing, perhaps he will expose others further up the food chain? Only time will tell.
At the moment all we have is speculation, but it is intriguing speculation nonetheless. Another interesting aspect of this China-gate drama is the matter of GSK and their future in China. It has been rumored that, as a result of this Chinese bribery scandal, and a loss of Chinese profits, that GSK might decide to abandon China altogether. Personally, I would be shocked if GSK decide to abandon China altogether – but it will be interesting to see how this saga all unfolds…
There has also been speculation that the Chinese intend to fine GSK up to 3Billion dollars for their crimes in China. This figure would echo their previous fine for over 3 Billion by the US authorities in 2012. Although it sounds like a massive fine, and to the mere mortal it is astronomical, to a drug company like GSK, a few billion in fines has always been just the cost of doing business, therefore I suspect they will view their Chinese fine in the same way. Despite being clearly one of the most corrupt and fraudulent international companies in the world, in their home country of Britain, GSK are treated like royalty. They operate above the law because they are the UK cash- cow, they are long established as a major UK corporation, and they even have the backing and support of the UK prime minister, David Cameron, and George Osborne, the UK Chancellor. It will be interesting to see if the downfall of Mark Reilly (and who he might decide to bring down with him) changes that scenario… stay tuned.
GSK’s Mark Reilly faces up to 10 years in prison
Thought I’d give my take on GSK and the recent [ahem] bribery scandals in various parts of the world. I say ‘my take’ because it’s something that GSK or their highly paid attorney’s can’t ‘take’ from me. It’s mine and I wish to share it.
So, news today that Chinese officials have charged the former British boss of GSK’s China operations.
And what have they accused him of?
Well, nothing out of the ordinary [by GSK’s standards that is]
Mark Reilly fled China when the going got tough. He later returned, not as a goodwill gesture – he returned because the Chinese police wished to interview him, a result of which saw him arrested then, some months later, charged with offences relating to bribery.
GlaxoSmithKline CEO, Andrew Witty, has kept quiet since his initial statement he made midway through last year. He claimed that neither he or GSK HQ in the UK knew anything about the corrupt practices occurring in their China branch.
So news today that has implicated a British employee who has been charged with corporate bribery, bribing non-government officials and bribing business units should force some kind of statement from Witty. Alas, he remains tight-lipped.
Are we expected to believe that Mark Reilly, upon his initial return to the UK in July 2013, lied to Andrew Witty?
10 days into the investigation and GSK’s head of operations in China, who at this point fled the country, is replaced by someone else. Who smelled the rat, or was this just standard procedure when an employee from GSK is under investigation?
Reilly has enjoyed an illustrious career at GSK. He joined them in 1989, 5 years later, in 1994, he became Finance Director, Discovery Research, WWR&D before moving on to become Assistant Corporate Controller, Corporate Finance, a position that lasted 2 years.
In 1999 he became Vice President Finance UK Pharmaceuticals, this lasted for just over 4 years before he decided to try his hand abroad.
From 2003 to 2006 Reilly was based in Singapore, his title, Vice President Finance, Asia Pacific.
He returned to the UK to take up the position of Senior Vice President, International Finance – this lasted just 2 years before Reilly was, once again, jet-setting.
Between January 2009 – January 2010 he was General Manager, China Pharmaceuticals. In February 2010 he added Hong Kong to his title – thus becoming General Manager, China Pharmaceuticals and HK.
So, where exactly did it go wrong for Reilly?
Was he just a bad egg in a company who have always played things by the book?
Was he the runt of the litter?
Was he just a rogue employee who went off the rails because of a personal greed?
Or is this simply a culture at GSK?
It was early in his career at GSK, 1994, that Reilly was introduced into the world of finance. From that point Reilly seems to have made a very rapid climb up the promotional ladder at GSK.
Reilly has a BSc, Medical Sciences, he has a PhD, Pharmacology/Neurosciences – strangely, between 1987 – 1989 he added an ACA in Business, Finance and Accounting to his list of honours. The ACA qualification is one of the most advanced learning and professional development programmes available.
Safe to assume then that Reilly was no mug.
We can see from a 2010 presentation given by Reilly that a goal of GSK was to gain more sales of its respiratory drugs in China.
In fact page 12 of his presentation pretty much spells it out for us all. [Fig 1]
“Respiratory market is a major opportunity”
Let’s look at when news of the Chinese scandal first broke.
According to interviews published by Xinhua, the official state-run news agency, several GSK employees have confessed to bribing doctors with gifts, travel, lecture fees and cash bonuses to persuade them to prescribe more of the company’s drugs.
A man surnamed Li, who is a regional sales manager at GSK China in central China’s Henan Province, said that salespersons at the company received special training on sales skills and methods, especially how to maintain relations with hospitals and doctors, Xinhua reports.
The man, who is in charge of selling respiratory drugs to more than 10 hospitals in the province’s capital city Zhengzhou, added that salespersons established good personal relations with doctors by catering to their pleasures or offering them money, in order to make them prescribe more drugs. [Source]
“Respiratory market is a major opportunity”
A doctor from a “reputable hospital” whose real name was not given, claimed that one GSK representative had “blatantly offered kickbacks to doctors”.
“For example, 20 yuan [£2.11] for each pack of Seretide, an asthma-treating inhaler; and 10 yuan [£1.05] for each dose of Flixotide, an asthma-treating spray.”
If a doctor appeared reluctant to accept cash, GSK “salespeople” would offer them “gifts, free travel after meetings and lecture fees.”
“In fact, many doctors received lecture fees even when the lectures did not exist,” Xinhua reported. [Source]
Seretide is a drug manufactured and marketed by GSK, a drug used in the treatment of…you’ve guessed it, respiratory problems. It’s also the same drug that Reilly referred to in his 2010 presentation [Fig 1]
“Less than 1m current patients on Seretide”
What better way to increase the number of patients on Seretide than to offer cash incentives to doctor’s who prescribe it!
Putting the Chinese scandal aside for just one moment. Let’s just focus on a BBC Panorama programme that aired a few weeks ago in the UK.
Panorama’s ‘Who’s paying your doctor?‘ saw investigative journalist Shelley Jofre unearth new evidence that Glaxo were pretty much doing the same thing in Poland.
Jarek Wisniewiski, who worked as a sales rep for GSK Poland for eight years told Panorama that in 2010, he worked on a marketing programme across Poland to promoteSeretide. He said that, on paper, money was provided for educating patients about the drug but claims it was, in reality, paying doctors to prescribe more of the medicine. He added…
“I pay for education and in the same meeting I said that I need more prescriptions for Seretide. So … they knew exactly for what I pay.” [Source]
So, how did we get from one illegal promotional push of Seretide in China to another illegal promotional push of Seretide in Poland. The two countries are miles apart.
Was an executive decision made that “We should do as the Chinese do” or was it merely a coincidence that GSK Poland was operating in pretty much the same way as GSK China?
One drug pushed illegally in two different countries and Glaxo’s CEO knew nothing about it?
Back in July 2013 a Glaxo spokesperson claimed that…
“We take all allegations of bribery and corruption seriously. We continuously monitor our businesses to ensure they meet our strict compliance procedures. We have done this in China and found no evidence of bribery or corruption of doctors or government officials.” [Source]
Exactly who is it at GSK that monitor its businesses to ensure they meet their strict compliance procedures?
Why hasn’t this person/persons been hauled over the coals for failing to join the dots with regard to the bribery that was, seemingly rife, in China?
Thing is, and this has been evident throughout the years with GlaxoSmithKline, they are a company – any wrong-doing by an employee is covered up and it’s left to outside investigators to try and find the culprit, the man/woman who ‘pushed the button’, so to speak.
It’s only when the outside investigation pinpoints the ring leaders that we have Glaxo come out and say how shocked they are and that they will do everything in their power to help the investigation.
This is when GSK become transparent, they do so not of their own freewill, they do so because their hand has been forced by the strong arm of the law. However, they do it in such a way that dupes the general public into believing that they have always been as transparent as ever.
Think about it. If GSK were transparent they wouldn’t have had so many lawsuits filed against them. Lawsuits are only filed because GSK initially deny charges brought against them. In law, GSK don’t want to have to admit to anything because it sets a precedence – this is why we see them time and time again settle cases brought against them out of court – when a case is settled they get those who brought the claims against them to sign confidentiality agreements – in essence these agreements state that GSK accept no liability of the charges made against them.
China is a different kettle of fish though. Legal experts are suggesting that GSK’s Mark Reilly could face up to 10 years in prison. Let’s hope it’s not Beijing’s Municipal Prison.
Troy Bremer, an Australian found guilty of fraud, spent a number of years at Beijing’s Municipal Prison. “The officers destroy your body, mind, heart and spirit”, he told theSydney Herald in an exclusive interview back in 2013.
Heaven forbid that Reilly gets sentenced to 10 years in a hell hole such as Beijing’s Municipal Prison. Whatever he’s done it does not warrant such abuse.
Hopefully Reilly will see sense and try to cut a deal. The most obvious ‘Get out of jail card’ he could play would be to name names, to tell the authorities he did what he did because he was told to by senior executives.
I mean, why protect the scum that has left him out to dry?