GlaxoSmithKline staff held in three Chinese cities as graft investigation widens

Employees of GlaxoSmithKline seized after whistle-blower appears to have tipped off police

PUBLISHED : Monday, 01 July, 2013, 12:00am
UPDATED : Monday, 01 July, 2013, 7:29am

Chinese police have detained employees of British pharmaceuticals giant GlaxoSmithKline (GSK) in Beijing, Shanghai and Changsha, following allegations of data fraud and bribery in the multinational's mainland operations.

Last week, police seized several people at GSK's Shanghai office, including a senior foreign finance executive. They also took employees from the company's Beijing office, said a source in Shanghai's pharmaceutical sector.

"GSK Shanghai staff were told to take Friday off," said the source, who did not want to be identified. "The case has been sparked by some whistle-blower within the company. This is not the first time its staff have alerted police about the company's bribery activities."

Xinhua reported that it had learned from police that several senior executives from GlaxoSmithKline (China) Investment Co in Changsha, the capital of Hunan province, were being investigated by the city's police for suspected economic crimes.

Changsha police declined to provide Xinhua with more details. The Post's Shanghai source was unable to provide details of the arrest of GSK executives in Changsha. Calls to Changsha police were not returned.

Last month, it was reported that New York- and London-listed GSK, which has over US$500 million of investments in China, was conducting an internal investigation into allegations from an anonymous tipster that its sales staff in China were involved in widespread bribery of doctors to prescribe drugs from 2004 to 2010.

On June 11, a company spokesman said GSK had fired its China head of research and development, Zang Jiangwu, after discovering a scientific paper co-authored by Zang contained fake data. Three other GSK employees were reportedly put on leave and another employee resigned. GSK's R&D centre is in Shanghai.

In 2010, the US Department of Justice launched an investigation into AstraZeneca, GlaxoSmithKline and other global pharmaceutical giants over alleged violations of the US Foreign Corrupt Practices Act in China. That probe is still under way.

It is not known if the mainland arrests are related to GSK's internal investigation into bribery, the fake data or the US investigation of GSK.

Some very big foreign companies have fallen foul of the law in China in the past.

In 2010, four employees of British-Australian mining giant Rio Tinto were arrested and jailed for bribery and infringing trade secrets.

In 2007, US management consultancy McKinsey said two of its employees in Shanghai were investigated by police on suspicion of accepting bribes.

GSK could not be reached for comment.




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