Category: GSK Fraud Fines Crimes etc

Was the GlaxoSmithKline FCPA resolution a missed opportunity?


Yes!…


 https://www.complianceweek.com/blogs/the-man-from-fcpa/was-the-glaxosmithkline-fcpa-resolution-a-missed-opportunity#.V_2JVtw-04A

Was the GlaxoSmithKline FCPA resolution a missed opportunity?

Tom Fox | October 11, 2016

The U.K. pharmaceutical giant GlaxoSmithKline has resolved an outstanding FCPA matter for the conduct of its China subsidiary, GSK-China that settled an SEC investigation for a fine of $20 million, with no profit disgorgement—quite a favorable move for the company. Even more amazingly, the company received a declination from the Justice Department, even though it was under the equivalent of a Deferred Prosecution Agreement, called a Corporate Integrity Agreement, for the actions unrelated to its FCPA violations in marketing off-labeled marketed products.

Of course these resolutions did not stand alone as the company had been sanctioned by the Chinese government with a fine of approximately $490 million back in 2014 for the actions of GSK-China. Company employees were criminally convicted and non-Chinese senior executives of the China business unit, who were convicted were deported from China. GSK’s sales in China went in the tank and continue to suffer through this date.

Perhaps the U.S. authorities felt the company had suffered enough. However, in this age of increasing international enforcement, it may well be the SEC and Justice Department missed an opportunity to demonstrate how they would give credit for anti-corruption prosecutions, done by other governments, under local anti-corruption laws; such as was done by Chinese authorities with GSK-China. U.S. authorities could have not only cited to the successful use of domestic Chinese laws as an example in the international fight against bribery and corruption but also specifically stated that how the fine and penalty paid by GSK-China was considered in the calculation of the fine by U.S. regulators.

Such an approach would have emphasized the U.S. government’s favorable outlook for greater international sanctions against corruption, as well as shown companies that they would not be whip-sawed by regulators across the globe for the same conduct. It could have been one of the most public examples of how the U.S. government viewed the international fight against corruption.

I think an opportunity may have been missed. 

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Seroxat/Paxil Study 329: Nobody Pinned Anything on Us


http://brodyhooked.blogspot.ie/2012/07/inside-paxil-study-329-courtesy-justice.htmlhttp://brodyhooked.blogspot.ie/2012/07/inside-paxil-study-329-courtesy-justice.html

“…Inside Paxil Study 329, Courtesy the Justice Department

I’ve previously discussed the now-infamous Study 329, which took discouraging data on the efficacy and safety of paroxetine (Paxil) in kids and spun it into an article claiming excellent results:
http://brodyhooked.blogspot.com/2011/11/will-brown-university-investigate.html

Thanks to the U.S. Justice Dept. complaint in the suit recently settled by GlaxoSmithKline for a record $3B: http://www.justice.gov/opa/documents/gsk/us-complaint.pdf
–we can follow the history of this study in more detail, based on the internal GSK documents discovered during the proceedings, and see just how the data were manipulated for marketing purposes.

Study 329, directed by Dr. Martin Keller of Brown University, was one of 3 clinical studies in children and adolescents that were all interpreted by GSK scientists between August and October, 1998 to be discouraging. Study 329’s protocol specified two primary endpoints, and on neither measure did Paxil do better than placebo. The study also logged in 11 serious adverse reactions to Paxil, much more than in the placebo group, including 5 with agitated or suicidal behavior, the major risk for which eventually the FDA issued a black-box warning for the SSRI class of antidepressants…”

 

http://davidhealy.org/study-329-response-from-the-authors/#comment-44667

 

What exactly did Martin Keller mean when he said that ‘nobody ever pinned anything on us’? (in regards to his involvement in the Paroxetine-Paxil/Seroxat Study 329).

Interesting ‘choice of words’ methinks…

 


 

Study 329: Nobody Pinned Anything on Us

March, 31, 2016 | 2 Comments

 

 

As We Expected.. No Jail Time For GSK’s Mark Reilly In China…


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.

A Chinese national flag flutters in front of a GlaxoSmithKline (GSK) office building in Shanghai

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.

Mark Reilly of GSK
Mark Reilly used to run GSKCI

“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.

Peter Humphrey China Charges GSK
Peter Humphrey’s health is said to be poor

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.

GSK China-gate: Peter Humphrey and Partner, Yu Yingzeng, Jailed in China


http://fiddaman.blogspot.co.uk/2014/08/gsks-hired-detectives-day-one-as-it.html

Friday, August 08, 2014

GSK’s Hired Detectives – Day One, As It Happened

**UPDATED**

11.00pm: The court sentences Humphrey to two years and six months in jail on charges of “illegally obtaining private information”, a fine of 25,000 yuan, and deportation from China.

11.05pm: The court sentences Yu to two years and in prison on charges of “illegally obtaining private information”, and a fine of 15,000 yuan.

11.07pm: The couple has five days to appeal this verdict. Court is adjourned.

No mention of GSK throughout the trial.

What is striking though is…

3.34pm: Yu’s lawyer asks Yu whose personal information she had obtained. The presiding judge interjects that such this has been dealt with at a pre-trial hearing. If these names are to be named again, then the current hearing could not be public, the judge says.

Looks like GSK’s lawyers may have been working behind the scenes.

Here’s a summary transcript of today’s events.

Courtesy of The South China Morning Post.

Back stories at foot of transcript.

8.45am: A prison van carrying Humphrey and Yu arrived at the court on Hongqiao Road

9.31am: The hearing begins, the court says on its Weibo account.

10.02am: Their son Harvey Humphrey, 19, is in the court room along with consular officials. Last month, Chinese authorities backtracked on plans to hold the trial in secret.

10.11am: The presiding prosecutor says Humphrey and Yu were criminally detained on July 11, 2013, and formally arrested on August 16, 2013.

10.16am: Prosecutor: between April 2009 and July 2013, the two defendants obtained 256 items of information including identity documents, travel records, mobile phone numbers from three Chinese sources, who are facing separate investigations. They paid between 800 and 2,000 yuan per piece of information and resold the information to foreign and domestic clients.

10.43am: Prosecutor questions Humphrey: “Are the facts as laid down in the charges against you accurate?” Humphrey replies: “In general, they look correct, but as for the charges, I don’t understand Chinese law, I am therefore not in a position to comment.”

Prosecutor asks again if Humphrey has objections to the charges. Humphrey says he does not object to the charges.

10.52am: Questioned by the prosecution, Humprey explains how he first registered ChinaWhys as a company in Hong Kong in late 2003 and then in May 2004 established his Shanghai-based firm, Shelian.

10.54am: Humphrey explains that he had chose a different name for his Chinese company because the Industrial and Commercial Administration in Shanghai did not approve ChinaWhys as the company’s name.

10.56am: Humphrey lists the services he provided to clients.

10.57am: He said he provided background investigations on companies and potential hires for clients.

10.58am: He also researched industries to help clients understand the business environment and evaluated clients’ employees, partners, suppliers in situations potentially involving corruption of fraud.

11.00am: Humphrey: “Sometimes clients would raise requests we can’t handle ourselves, and we would look for companies which could accomplish it for clients.”

11.01am: Humphrey: “In general, our services are to help reduce risks, especially in terms of fraud and corruption, for our clients.”

Humphrey testifies in English. Quotes are translated from the court’s Chinese-language transcript.

11.10am: Humphrey says he has worked for several hundred clients between 2004 and 2013.

11.14am: Humphrey lays out how he investigated for clients: internet searches, information provided by clients, interviews, on-site inspections. If that information proved to insufficient, he says he contracted other companies to obtain information, but such information accounts for a very small part of his services to clients.

11.15am: The prosecutor asks Humphrey if he had bought large amounts of citizens’ individual information. Humphrey says he contracted other companies to provide such information, paying them a service fee.

11.20am: The prosecutor asks Humphrey why his testimony differed from what he told police earlier over the price of individual pieces of information. Humphrey says he never told police the exact price of each piece of information he had obtained.

11.23am: The prosecutor asks Humphrey whether he has ever tailed or monitored a citizen. Humphrey says he has never provided such services. He says he has helped clients find Chinese companies that could provide such services.

11.25am: Humphrey says the English word “monitoring” covers a wide range of activities including reading news reports.

11.28am: Prosecutor asks if Humphrey posed as a family member or client to interview target companies. He says he had sometimes used aliases in field investigations or telephone calls.

11.30am: Humphrey says he made sure facts, analysis and conjecture were clearly differentiated in his reports to clients.

11.34am: The prosecutor asks whether Humphrey recalled a project called “Blackthorn”.

11.36am: Humphrey is asked whether he paid to obtain a target’s mobile phone records while conducting the “Blackthorn” project conducted for a Finnish company.

11.42am: Humphrey says he could not remember whether he paid for information in this particular case. He says he acquired information from Zhou Hongbo and Liu Yu about a target who worked in Shandong and travelled frequently to Hong Kong. The client wanted to know what the target was doing in Hong Kong and what assets the target had in the territory. Humphrey says he commissioned another company in this case.

11.49am: Prosecutors ask Humphrey about an “Operation Clown” and “Operation Goose” for two German clients. He replies that he remembers these projects, but struggles to recall details.

11.50am: Prosecutors ask Humphrey whether he and his wife have paid for 256 items of information provided by Liu Yu, Cai Zhicheng, and Zhou Hongbo. He says he doesn’t recall specific numbers but says it is possible they have used these services for as many times.

11.52am: Humphrey says he would call the three individuals, each of whom runs their own company, and pass on targets’ names. In the beginning they would provide reports, but later they became more and more lazy, says Humphrey.

11.54am: Information provided to him included targets’ identity and residency information, information on their family members, overseas travel records and mobile phone records.

11.56am: Humphrey says he and, his wife Yu and a former foreign employee have all contacted these three individuals.

12.00pm: Asked by prosecutors, Humphrey says he paid for such private information. He says he saved much of that information on his hard drives. He says all of his company’s financial matters were handled by his wife.

12.01pm: Humphrey says he was aware that he had obtained private information from citizens after 2009, when a new law on the secrecy of private information was enacted.

12.04pm: Prosecutors ask Humphrey whether he changed his work tactics when Liu Yu was detained. Humphreys says he had learned in March 2013 that Liu had gotten into trouble. He says he gradually changed his company’s operations, but had not completed the changes by the time he was himself detained later in the year.

12.06pm: Prosecutors ask Humphrey whether he thinks that private information could be freely sold on the market. Humphrey says he has never engaged in the business of trading private information.

12.10pm: Prosecutors ask Humphrey how much he charged for his reports. Humphrey says the price depended on the amount work the reports required and that his earlier statement saying reports cost between 40,000 and 50,000 yuan was just an approximation.

12.17pm: Prosecutors ask Humphrey about one report for which he charged 2.64 million yuan and used nine elements of private information. Humphrey says he spent almost a year working on the project.

12.18pm: Prosecutors ask Humphrey if he was detained by Shanghai police in his office. Humphry affirms. The prosecution ends its questioning of Humphrey.

12.21pm: Humphrey’s defence team is now questioning him.

12.22pm: Humphrey says his company’s business model has not changed much since he started the company in 2004. Internal graft and corruption increasingly became a focus of his inquiries, he says. He adds that over the last years he increasingly relied on interviews and public information.

12.26pm: Humphrey says 700 is a correct approximate estimate of the number of reports he produced for clients since 2004. He says he only started a numbered filing system in 2005.

12.28pm: Humphrey says he estimated about half of his reports contained some private information.

12.31pm: Humphrey says companies approached him to investigate their suspicions for fraud and graft. He says 90 per cent of such allegations proved correct.

12.33pm: Humphrey says he needed personal information to verify the identity of targets as, for example, company shareholders and to check whether they had conflicts of interests in their business dealings. He also needed the information to prove that targets were in contact with certain other individuals.

12.37pm: Humphrey says Liu Hong, Cai Zhicheng and Zhou Hongbo run their own companies and that he had now way of auditing their operations.

12.41pm: A defence lawyer asks Humphrey whether he paid for services or private information from Liu Hong, Cai Zhicheng and Zhou Hongbo. Humphrey says he paid for services. They provided him with feedback and additional information, he says.

12.45pm: A defence lawyer asks Humphrey whether he knew where the private information he paid for came from. Humphrey says he did not know how the information was obtained. He says he was aware that law firms could obtain some information.

12.47pm: The court directs a defence lawyer for his wife Yu Yingzeng to ask Humphrey questions. The lawyer asks Humphrey about his typical clients.

12.47pm: Humphrey says most of his clients were large or medium-sized companies. Most were foreign companies, but some were Chinese. They operated in manufacturing and finance or were law firms, he says.

12.48pm: These companies hired him to investigate merges, the hiring of senior executives and corrupt practices of employees, he says.

12.51pm: The court rests until 1.30pm.

1.33pm: The court hearing resumes.

2.07pm: Yu’s defence lawyer asks Humphrey whether clients transferred his commissions to his private or to a company bank account. Humphrey says the commissions were transferred to the company’s bank accounts, either in Hong Kong or Shanghai.

2.14pm: Yu’s lawyer asks Humphrey when he actually tailed a target. Humphrey says he never tailed targets, but, in rare cases, commissioned another company. In one such case, Operation Blackthorn, he proved that a Finnish company’s general manager was defrauding the company and saved it from incurring tens of millions of US dollars in damages, he says.

2.16pm: Judges now direct questions to Humphrey.

2.18pm: A judge asks Huphrey whether he consulted his wife Yu over each decision to obtain private information. Humphrey says they sometimes discussed what kind of information they should try to obtain.

2.20pm: A judge asks Humphrey whether he had signed contracts with the companies that provided him with personal information. Humphrey says he did not sign contracts for individual assignments, but had signed framework contracts relating to secrecy and conflicts of interest.

2.23pm: Humphrey says he did not use every bit of private information in his reports for clients. Some elements of private information helped him as background knowledge when compiling such reports.

2.24pm: Yu Yingzeng is now called to testify.

2.38pm: The presiding judge asks Yu whether she has clearly heard and understood the charges brought against her. She says she has heard and understood every word of them.

2.42pm: Asked whether the charges are accurate, Yu says she would like to clarify two points: Firstly, the price of 800 to 2,000 yuan for piece of information is only an approximation. Secondly, they did not sell public information, but used it to create reports. She says they have never bought information for their own benefit.

2.45pm: The prosecution asks whether Yu had problems when she registered their company in Shanghai, Shelian. Yu says they tasked an agency to handle the paperwork. She says she had no problems in the registration process.

2.48pm: The prosecution asks Yu whether they had compiled about 700 reports. Yu affirms, but says some reports were also compiled abroad.

2.48pm: Asked by prosecutors, Yu admitted to using citizens’ private information.

2.49pm: Prosecutors ask Yu about the origin of this information. Yu says until 2009 they obtained information from Zhou Hongbo, from 2009 until 2011 from Liu Yu and most recently from Cai Zhicheng.

2.50pm: Yu says she never tried to bargain down the cost of information.

2.55pm: Yu says she never knew that the information she obtained was illegal. She says because she did not know the information’s origin, she could not have committed a crime. She says she was not aware that obtaining such information was illegal in mainland China, when it possible to legally obtain the same information in Hong Kong. If she had known she was acting outside the law, she would have destroyed all evidence, she argues.

2.59pm: Yu says 90 – 95 per cent of the information she obtained from Liu Yu, Zhou Hongbo and Cai Zhicheng related to targets’ identity and residency. Phone and overseas travel records have only become recently available, she says.

3.02pm: Yu says only she and her husband knew about Liu, Zhou and Cai’s identities. Prosecutors ask whether she had to go through these agents to obtain information because the information she needed was not publicly available.

3.05pm: Yu says the prosecutor’s assumption is incorrect. She says she knew that Zhou Hongbo was a lawyer and that lawyers could obtain information. She says she did not know how Liu and Cai obtained their information.

3.07pm: “We did not know obtaining these pieces of information was illegal in China”, says Yu.

3.07pm: “Do you think it would touch your privacy if your husband’s or son’s private information was sold and bought?”, asks the prosecutor.

3.09pm: “I have lived abroad for a very long time, my US phone number and address can be found in the yellow pages, it is very easy in the US to find such information,” replies Yu.

3.10pm: Yu says she only rarely assigned another company to tail a target. “95 per cent of our employees’ work was done in the office, investigating online,” she said.

3.14pm: Prosecutors ask Yu whether she has ever impersonated a client, an investor or a relative of a target to obtain information.

3.15pm: Yu says they have pretended to be business contacts.

3.16pm: Asked by prosecutors, Yu says they charged clients between 20,000 and 200,000 for individual reports.

3.17pm: Asked by prosecutor show she paid Liu, Cai and Zhou, Yu says she wants to clarify that she they mostly provided company records. She then says she sometimes transferred their commissions to their private accounts in Hong Kong or the mainland.

3.29pm: The prosecution ends its questioning of Yu.

3.30pm: Yu is now questioned by her own defence lawyer. When asked, Yu says she emigrated to the US in 1981 aged 28. She returned to China in 1999.

3.34pm: Yu’s lawyer asks Yu whose personal information she had obtained. The presiding judge interjects that such this has been dealt with at a pre-trial hearing. If these names are to be named again, then the current hearing could not be public, the judge says.

3.36pm: Yu’s lawyer asks her whether the information she acquired was generic or targeted towards certain people. Yu says she acquired information to prevent and deal with internal corruption in companies and not use this information for individual profit.

“We helped clients solve problems that public security organs could now solve, making them more transparent and open,” she says.

3.42pm: Yu’s lawyer asks her what kind of information she obtained. Yu says 90 – 95 per cent of information was identity and residency information, which, she says, was required to find out whether a client’s employee used a relative to open their own company.

3.44pm: Asked whether every report contained private information, Yu says those containing private information were few and much even less since 2011.

4.07pm: Yu tells the court how they used overseas travel records, including to Hong Kong, to trace fraud.

4.09pm: The presiding judge asks Humphrey’s lawyer whether he wants to ask Yu any questions. Asked, Yu describes the workflow of a typical investigation.

4.12pm: Yu reiterates she obtained information from the client, from online sources or third parties.

4.15pm: Yu accepts the charges in as much as she bought information from a third party, but rejects them saying that she did not sell the information, but only used it to provide analysis to clients.

4.16pm: The defence teams end questioning. The judged ask some additional questions.

4.17pm: Asked by a judge, Yu says she did not sign contracts with Zhou, Liu or Cai, because the amount of money involved was too small.

4.19pm: Asked by a judge whether they would have been able to complete their assignments without private information, Yu says: “More is always better than less.”

4.23pm: The court calls Humphrey back to the stand.

4.27pm: The prosecution submits the testimony of three foreign executives and a former employee at Shelian.

4.31pm: The prosecution submits a second set of evidence: testimony by four former Shelian employees and a technician who provided repair services to Shelian.

4.35pm: After a brief interruption debating the merits of the evidence, the prosecution continues with submitting further elements of the second set evidence: testimony by three more former employees. Humphrey interjects, saying two employees only worked with him only very briefly.

4.52pm: The prosecution submits a third set of evidence to the court: testimony by Humphrey, Yu, testimony by Zhou Hongbo, Liu Yu, Cai Zhicheng.

4.57pm: Liu Yu says she was criminally detained in January 2013 for illegally obtaining private information.

4.59pm: Cai Zhicheng says he charged Humphrey 1,500 yuan for every piece of information he provided: identity and residency papers, overseas travel records.

5.01pm: Zhou Hongbo says Humphrey paid thousands and sometimes more than 10,000 yuan for the investigation of a target, which normally lasted between half a month and a full month.

Transcript will be updated during the day.

**UPDATED**

5.41pm: The prosecuion says it can prove with its evidence that Humphrey and Yu bargained with third parties over the price of private information they acquired. It also says that private information of all citizens is covered by criminal law, not merely information handled by public organs and companies.

5.44pm: The prosecution submits the fourth set of evidence: Documents, computers and harddrives seized at their residence in Beijing and their office in Shanghai. One harddrive contained 48,849 documents that relate to the charges, one laptop contained 52,234 documents relating to the charges, the prosecution says.

5.47pm: Humphrey says many of the documents could be duplicates.

**UPDATED**

5.50pm: The prosecution says evidence proves that Humphrey tailed a target in Operation Blackthorn. Humphrey says the task was carried out by a third party.

5.53pm: A defence lawyer for Humphrey reiterates his client’s point. His other lawyer says tailing a target is not necessarily illegal. There are no legal provisions banning the tailing of others to protect one’s own legitimate interests, says the lawyer.

5.55pm: The court rests for a ten minute break.

**UPDATED**

5.59pm: The court releases its next transcript. A defence lawyer for Yu says monitoring is only once mentioned in the deposition and it referred to an employee standing outside an office building for over three hours.

6.01pm: The prosecution says it documented the use of private information in 27 reports in this set of evidence submitted to the court. It adds that it provided relevant information in the pre-trial hearing.

**UPDATED**

6.25pm: The court says on its Weibo post that it will hold a press conference on the trial at 7.30pm. The hearing is still ongoing.

6.37pm: Prosecutors say Shelian company had revenue of 20.96 million yuan between 2005 and 2013. The company earned 830,000 yuan for its work on the Operations Goose, Clown and Blackthorn, prosecutors say.

6.43pm: Prosecutors submit Humphrey’s testimony to police in which he reportedly said that he was aware he was operating in a legal grey zone. He was counting on luck and not considering the consequences, he reportedly told police.

6.46pm: Prosecutors submit Yu’s testimony to police in which Yu reportedly said she obtained hukou information, information on a target’s family members, criminal records and telephone records from Zhou Hongbo. She paid 2,000 yuan for personal information and ordered 20-30 items every year, she said.

6.49pm: Yu worked with Liu Yu until Liu was detained in 2013, according to the police record. Liu provided hukou information, information on a target’s family members, criminal record, overseas travel records, mobile phone records and other information. Liu charged about 800 yuan for an item of information.

6.51pm: Cai Zhicheng provided information of about 20 individuals to Humphrey and Yu, according to Yu’s statement to police. Cai charged between 1,000 and 1,500 yuan.

6.53pm: Yu reportedly told police that they transfered Zhou, Cai and Liu’s commission to their US dollar accounts in Hong Kong.

6.54pm: “Our buying of private information was wrong, but it was not a business operation,” she reportedly told police. “We have a grey zone in this industry, at the time we used extraordinary channels to buy these citizens’ personal information.” Yu reportedly said they relied on luck, did not consider the consequences and regretted their actions.

**UPDATED**

6.59pm: Reacting to the evidence submitted to the court, both Humphrey and Yu say she never told police they relied on luck. Yu said she did not know about the legal environment after the 2009 criminal law reform on privacy.

7.03pm: Humphrey asks the prosecution when police received a first complaint. Prosecuters say the case file started on July 1, 2013.

7.08pm: A defence lawyer submits a third letter attesting to the couple’s good character, two earlier ones’ had already been submitted to the court .

7.09pm: The court concludes the examination of evidence.

7.11pm: The court moves to closing arguments. The prosecution begins.

7.15pm: The prosecution closes by saying that the couple has for nine years bought information on citizens’ identity and residency, family members, vehicle registration, phone records, overseas travel records and had their staff pretend to be employees, investors, clients, or delivery personell to obtain further information. They hired agents to tail and monitor citizens to know more about their living habits and movements.

7.17pm: The prosecution says the couple’s crime was particularly egregious, because they committed it over a period of nine years and because they reaped enormous benefits.

7.19pm: The prosecution closes with a plea for the sanctity of the private space. “Let’s try to consider, if our citizens live in fear in such an environment, how can they feel secure, free or have human rights?”

7.30pm: The court hearing takes a break, to resume later this evening.

More to follow…

**UPDATED**

8.00pm: In his closing defence, Humphrey said the duo did not sell personal information, but rather, sold the analysis and research of such information to clients. He added that the company’s main service is to investigate internal graft, fraud and help cultivate a good business environment. “They have no other ways of achieving this goal.”

8:10pm: In her closing defence, Yu asked the prosecution for proof that 300 reports out of the 700 used personal information. She also disputed the company’s revenue, saying that the prosecution did not calculate for profit after expenses and costs. She shared an anecdote: “Someone saw a thief steal something, but the police said there’s no evidence therefore they can’t arrest the thief, so the person found the evidence and arrested the thief, then the police came back and said the person broke the law. The public security organ said you violated the thief’s rights.”

8:15pm: The court rests for 30 minutes.

**UPDATED**

9:00pm: Both defence lawyers argue that Humphrey and Yu’s actions have inflicted limited harm to society and does not constitute a crime.

9:15pm: The prosecution maintains that the duo violated citizens’ rights. “Before a court ruling, those they investigated have not been deemed corrupt, how can you say the parties you are investigating are corrupt?”

**UPDATED**

10.10pm: In his closing statement, Humphrey talks about his childhood fascination and respect for China. Growing up in a poor family, he saw the China in 1979 and wanted to be a part of its development. He says he has always supported anti-corruption in China, and many of his projects dealt with helping different companies detect internal corruption and fraud. He and his wife wanted to give back to the Chinese community but failed due to their lack of understanding on the 2009 criminal law reform on privacy. Humphrey apologises for disobeying the law and expresses regret. “My wife and I still love and respect China passionately.” He hopes the court will accept their apology.

10.20pm: In her short closing statement, Yu expresses regret over their crimes and begs the court to forgive her husband.

10.30pm: The verdict will be released after the court rests.

**UPDATED**

11.00pm: The court sentences Humphrey to two years and six months in jail on charges of “illegally obtaining private information”, a fine of 25,000 yuan, and deportation from China.

11.05pm: The court sentences Yu to two years and in prison on charges of “illegally obtaining private information”, and a fine of 15,000 yuan.

11.07pm: The couple has five days to appeal this verdict. Court is adjourned.

GSK : Living Up To Their Reputation As The Most Corrupt Company In The World


July 16, 2014 10:00 pm

GSK admits to 2001 China bribery scandal

GlaxoSmithKline faces further scrutiny from US prosecutors after it emerged that staff were caught bribing Chinese officials more than a decade ago.

The revelation comes as US and UK authorities investigate allegations that GSK employees bribed doctors and officials more recently to boost drug sales in China.

More

On this story

The Financial Times has learnt that GSK also found problems with its China vaccine business in 2001 that led to the firing of about 30 employees.

The US Department of Justice, which is investigating the current allegations, will take a close look at the earlier scandal, said a former senior DoJ official who asked to remain anonymous. If it found a pattern of such behaviour, the justice department was likely to take a tougher stance towards the company, legal experts said.

GSK has been under scrutiny in China since authorities last year accused it of paying up to $500m in bribes. The DoJ is looking at the case as part of a broader probe into drugmakers under the Foreign Corrupt Practices Act.

Two people familiar with the 2001 scandal said GSK found that staff were bribing Chinese officials and taking kickbacks. The company acknowledged the matter for the first time to the Financial Times, but said it had dealt with the issue rigorously.

Timothy Blakely, a partner at the US law firm Morrison & Foerster, said US prosecutors would have to examine the 2001 case under justice department guidelines to see whether there was a pattern of behaviour.

“It is something that a prosecutor would have to take into account,” said Mr Blakely.

GSK asked PwC to investigate the case when the corruption suspicions emerged. “These matters occurred over 12 years ago. We believe appropriate investigation and action was taken at the time,” it said.

One member of the PwC team in 2001 was Peter Humphrey. Now an independent investigator, he is being held in China on charges of illegally buying private information in connection with GSK’s current scandal.

The rapid move to hire PwC in 2001 contrasts with the response to the current scandal. After a whistleblower made allegations against the company last year, GSK first relied on an internal probe with external legal and auditor support. That inquiry found no evidence of systemic corruption, although some staff were dismissed for expenses irregularities.

GSK has since hired Ropes & Gray, a US law firm, to conduct an external inquiry. In May, Chinese police said they had evidence of “massive and systemic bribery”.

“We have zero tolerance for unethical behaviour,” GSK said. “We investigate any allegations put to us and take action where necessary.”

The earlier scandal came the year after GSK was formed via a merger of Glaxo Wellcome and SmithKlineBeecham. In late 2001, Paul Carter, GSK’s new China head, asked PwC to investigate after suspicions of corruption emerged, including the fact that two staff had been detained in China without him being told.

PwC confirmed the suspicions, and Mr Carter fired the Chinese head of vaccine sales in China. Mr Carter left GSK in 2005 long before the current problems emerged. He declined to comment.

Chris Baron, the general manager for the vaccines unit in 2001, denied knowledge of the bribery at the time. He was suspended and, soon after, left the company.

Mr Baron said PwC concluded he had “no personal involvement or knowledge” related to the bribery. But he said “there was some debate as to whether I may have been insufficiently diligent to spot the matter earlier”.

At the time of the 2001 incident, Sir Andrew Witty, GSK chief executive, was the company’s head of Asia-Pacific, but his responsibilities excluded China. GSK said Sir Andrew “was not involved in and was not aware of” the case at the time.

Sir Andrew has tried to cast GSK as a leader in ethical reforms since it was hit with a record $3bn DoJ fine for marketing abuses in 2012. But his clean-up effort, including measures to cut the link between sales volume and pay for marketing personnel, has been overshadowed by the latest scandal in China.

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Of Course GSK Will Deny They Have A “Systemic Corruption” Problem!..


Last updated: April 14, 2014 4:31 pm

GSK denies systemic corruption problem after fresh allegations

A GlaxoSmithKline logo is seen outside one of its buildings in west London, February 6, 2008©Reuters

GlaxoSmithKline has denied that it has a systemic problem with corruption after fresh bribery allegations against the company emerged in Poland.

The UK drugmaker said it had disciplined an employee in connection with claims that it bribed Polish doctors to promote its asthma drug Seretide.

This followed the revelation last week that GSK was investigating alleged improper practices in Iraq and nine months after Chinese authorities launched a bribery probe against the company.

The Polish case, highlighted by the BBC’s Panorama programme on Monday, shows how GSK has become a lightning rod for scrutiny of illicit practices in the drugs industry since it was accused of funnelling $500m to Chinese doctors and officials.

GSK said it took all such cases seriously but insisted they did not represent a pattern of wrongdoing.

It said the Polish case dated back to 2011 and involved an individual regional sales manager who had since been “reprimanded and disciplined”.

According to Panorama, 11 doctors and one GSK manager have been charged by Poland’s anti-corruption agency over alleged bribery between 2010 and 2012.

Jamie Cartwright, a lawyer at Charles Russell, a law firm, said allegations of bribery in an EU country could catch the attention of authorities in the US and UK, which both have powers to prosecute companies for overseas corruption.

“In Iraq and maybe even China there is perhaps a recognition of the difficult local conditions, but in Poland a company would be expected to uphold the same standards as in any other EU country,” said Mr Cartwright.

In the BBC documentary, Jarek Wisniewski, a former GSK sales representative in the Polish region of Lodz, is quoted as saying: “There is a simple equation . . . we pay doctors, they give us prescriptions. We don’t pay doctors, we don’t see prescriptions for our drugs.

“We cannot go to doctors and say to them, ‘I need 20 more prescriptions’. So we prepare an agreement for them to give a talk to patients, we pay £100, but we expect more than 100 prescriptions for this drug. It’s a bribe,” Mr Wisniewski adds.

GSK said on Monday it had found “evidence of inappropriate communication in contravention of GSK policy by a single employee”.

Lombard on GSK

Jonathan Guthrie

A ‘zero tolerance policy’ towards impropriety by employees is easier to maintain if you are only dimly aware what they are up to, writes Jonathan Guthrie.

Continue reading

“We continue to investigate these matters and are co-operating fully with [Polish authorities].”

In its latest annual report, GSK revealed that 161 violations of sales and marketing practices were reported in 2013, with 48 people leaving the company as a result.

This is similar to other drugmakers, including AstraZeneca, the Anglo-Swedish company, which reported 149 such cases, and Roche of Switzerland, which declared 136.

GSK last December announced an overhaul of its marketing operations to remove individual sales targets from its representatives and to stop paying doctors to attend medical conferences and make speeches on the company’s behalf.

On Monday the company said: “We agree there is a need to modernise interactions between the pharmaceutical industry and healthcare professionals to ensure patients’ interests are always put first and to eliminate even a perception of a conflict of interest.”

How Serious Is The Paroxetine (Seroxat) Contamination From GSK’s Cork Site?


According to this legal web-site... 

This a very serious issue... 

With Possible legal Ramifications...

http://www.schmidtlaw.com/gsk-recalls-paxil-after-fda-warning-letter/

April 3, 2014 — The U.S. Food and Drug Administration (FDA) has issued a Warning Letter to GlaxoSmithKline (GSK) after finding that the company did not fully address contamination in certain lots of Paxil (paroxetine). GSK has agreed to recall the affected batches.

The problem was discovered during an investigation of a facility in Cork, Ireland. The FDA alleges that GSK became aware that pharmaceutical waste (active ingredients, intermediates, and solvents) could potentially contaminate Paxil in January 2012. It took until April 2013 to complete a risk-assessment. In the meantime, GSK continued to sell potentially-contaminated Paxil.

GSK has defended themselves by saying that the problem is not likely to cause patient injuries. However, the FDA says it is “concerned that your firm does not consider the entry of pharmaceutical waste streams into your manufacturing process a significant deviation with a potential quality impact.”

The FDA has threatened to embargo shipments of drugs from Cork, Ireland. They have also threatened to withhold approval of any new drugs manufactured by GSK.

If the FDA was forced to take such actions, it could interrupt supply — the facility is the main site where paroxetine is manufactured, according to Reuters.

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What’s Really Behind GSK’s New Business Model? (From Mad in America Blog)


http://www.madinamerica.com/2013/12/whats-really-behind-gsks-new-business-model/

What’s Really Behind GSK’s New Business Model?

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December 20, 2013

GSK has recently announced that it will cease paying doctors for promoting its drugs and sponsoring them to attend conferences and sever the link between pay for its sales representatives and the numbers of prescriptions physicians write.

Commentary from the critics of GSK have attributed the changes they are making to pressure from the government or the requirements of recently enacted legislation. My assessment of the situation is that this could not be further from the truth.

In my view, the key to GSK’s actions is in a small paragraph from the Chair of the Board in their most recent annual report which reads “Operating in a responsible and ethical way is essential for the commercial success of GSK.”
From a business perspective there are very clear reasons why GSK are doing this and why other pharmaceutical companies will follow suit. My reading of GSK’s annual report leaves me in no doubt that they are changing their business model because it is likely to increase their profitability – not because they are being forced to. I do not think GSK is concerned to any great extent about legislative change because it, along with the other players in the pharmaceutical industry, has considerable power not only to influence US legislation but to control the legislation of other countries.

Consider the Trans Pacific Partnership Agreement (TPPA) currently being negotiated between eleven Asian and Pacific-rim countries, including the United States. Key to this agreement are
• the protection of patents by US pharmaceutical companies which would see member countries’ domestic legislation controlled or overturned

• provisions for pharma to sue governments for millions in damages for undermining the value of their investments by purchasing generic drugs; and
• compensation for drug companies if the market approval process for medicines extended beyond a drug’s patent term.

The proposed Article 15 of TPPA would specifically prevent countries enacting law that was unanimously agreed by all parties in their Parliaments.

Across the countries represented, the unprecedented secrecy under which these negotiations have taken place has been strongly criticized. This secrecy does not extend to the pharmaceutical industry however. The Dominion Post in New Zealand reports that a politician with top-level United States security clearance was barred from viewing the draft text as was US Senate finance subcommittee on trade chairman Ron Wyden who sits on the committee that oversees America’s intelligence agencies but that “more than 600 representatives of pharmaceutical and film corporations are given access because they are deemed to be US Government ‘advisers’’’

Surely, you may be thinking, if the pharmaceutical industry had this power the first thing it would do is to dismantle the regulatory process, removing the need to obtain very expensive approval before marketing its drugs. Not so. Strong regulation serves a very important function in any industry that of providing a strong barrier to entry for new competitors. Michael Porter of Harvard Business School, a world leading authority on company strategy and competitiveness, identifies barriers to entry for new companies as one of the keys to industry profitability.

The cost of the drug approval process is a significant barrier to the establishment of new drug companies and therefore a deterrent to the entry of new competitors to the market, something that works in the favour of pharmaceutical companies. Far better to control regulators like the FDA than to abolish them, and that’s exactly what Big Pharma have done. The regulatory process also serves the interests of pharmaceutical companies by giving the consumer a sense of security that drugs have been through an independent quality control process.

Removal of the regulatory regime could see a flood of new pharmaceutical companies enter the market, increasing competition and reducing profits. The goal of pharma is to control regulation, not to abolish it and there is ample evidence that they have been successful in achieving control of regulatory policy and practice internationally.

In my view, the key driver of GSK’s shift away from providing incentives to doctors and to their sales reps for influencing prescribing practice is that these practices threaten their profitability.
The only distribution channel (the path through which goods and services travel from the vendor to the consumer) for prescription drugs is the medical profession, and the actions of the pharmaceutical industry have undermined confidence in the honesty and integrity of this channel. Low levels of trust in the medical profession result in reduced profitability for Big Pharma.

Americans are turning to complementary and alternative medicine because they feel the current healthcare system is failing them for many reasons. These, according to an analysis of the CAM market include “cost prohibitive prescriptions, impersonal & dismissive physicians, a heavy reliance on drugs, misdiagnosis, and conflicting views regarding the maintenance of wellness. “

GSK’s recent prosecutions and fines have undermined their reputation but in practice this is unlikely to have much impact on sales. Governments not consumers are their customers and government purchasing agents are interested in the quality and price of drugs not in whether the company who produces them behaves ethically or not. While patients may question the class of drugs they are prescribed there is no evidence they are aware of who manufactures the particular brand of drug they are prescribed or reject prescriptions because of the manufacturers reputation.

More relevant to sales is the impact GSK’s actions may have had on public confidence in the medical profession who are the pharmaceutical company’s distribution channel. Prescribing behavior is the biggest driver of pharmaceutical sales. Loss of confidence in doctors represents a huge threat to profitability.
While in the past, increasing sales through providing incentives to doctors to prescribe has been a successful strategy, revelations about the prevalence and quantum of incentives to doctors has damaged public confidence in the integrity of the medical profession to the extent that GSK and its rivals have seriously harmed their own distribution channel.

We have seen this happen in other industries. A Deloitte survey of retirement advisers found that 20% of respondents didn’t trust advisors to provide objective advice and were concerned that they were motivated to guide them towards investments benefitting the provider rather than the client. The survey found that 83% of those who have a high level of trust in advisors sought their advice, compared with only 32% of those who have a low level of trust.

Given that doctors are the sole distribution channel for drugs, it is in the interests of pharma to ensure they are trusted by consumers and are not perceived as compromising their commitment to patient care as a result of their relationship with the pharmaceutical industry. Stopping payments to doctors and funding for medical conferences and severing the ties between sales rep remumeration and prescribing rates will be key to convincing consumers of the independence of doctors.

Marketing guru Kotler believes that strong brands are the only route to sustained, above-average profitability and that great brands present emotional benefits, not just rational benefits. Great brands work more on emotions than on product attributes and benefits and show social responsibility care and concern for people and society.
There is a niche in the market for a pharmaceutical company to become the leader in ethical practice. Branding is about perception rather than reality and it is not necessary for GSK to be ethical in reality but to create the perception of being so.

The recently announced changes in GSK’s business practices are, in my view, aimed at increasing confidence in the medical profession and positioning GSK as the ethical player in the pharmaceutical industry, they have nothing to do with requirements imposed by government.

Ethics Blog Casts An Eye On GSK


http://tfoxlaw.wordpress.com/2013/08/19/gsk-in-china-a-game-changer-in-compliance/#comment-15484

August 19, 2013

GSK in China: A Game Changer in Compliance

I have published my first eBook-GSK in China: A Game Changer in Compliance. In this eBook, I review the information on the GlaxoSmithKline bribery and corruption allegations in China to-date, what you can do about it as a compliance practitioner and what it may all mean for international companies doing business in China.

I am sure that you will find it useful going forward to your compliance challenges. It is available through Kindle for only $4.99. You can download a copy here and start reading about it now.

Remembering GSK’s 3 Billion Fine: The Biggest Healthcare Fraud in US History!


It is just unbelievable how this pharmaceutical company is permitted to continue to operate…