Husband-and-wife team detained in GSK corruption probe

PUBLISHED : Friday, 26 July, 2013, 12:00am
UPDATED : Friday, 26 July, 2013, 4:18am

The US citizen detained in connection with Beijing's crackdown on the drug sector has been identified as Yu Yingzeng, the wife of Peter Humphrey, the British man also detained by mainland authorities, Reuters reported yesterday citing two unnamed sources.

The British husband and his Chinese-American wife are co-founders of ChinaWhys, a Shanghai-based risk consultancy that is reported to have performed services for Britain's largest drug maker, GlaxoSmithKline (GSK).

ChinaWhys' website advertises services including improving a company's internal controls to prevent corruption and helping companies respond to corruption issues.

In July 2012, Humphrey published an article on ChinaWhys' website, titled, "Avoiding trouble in China - how to stay on the right side of anti-bribery laws".

Four senior Chinese executives of GSK have been detained on the mainland as part of Beijing's widening investigation into the drug industry. Mainland authorities allege GSK used travel agencies to funnel nearly three billion yuan (HK$3.8 billion) in kickbacks to doctors, hospitals and other groups.

Humphrey is in detention on the mainland and the British Foreign Office has been in touch with him, confirmed Matthew Forbes, the British deputy consul general in Shanghai, who declined to give reasons for his detention.

A US consular official in Shanghai confirmed a US citizen had been detained but declined to give more details.

"It's not surprising this happened. In the last couple of years, there were arrests of Chinese executives at mainland risk consultancies," said a risk consultant who declined to be named. "Every foreign pharmaceutical company in China knows they are going to be under scrutiny."

Every foreign pharmaceutical company in China knows they are going to be under scrutiny

In May, Humphrey had published another article on his firm's website, titled "How fraud investigation just got harder in China".

In January, the mainland authorities restricted access to records filed with the Administration of Industry and Commerce, which was a "major setback" in the fight against fraud and bribery in China, Humphrey wrote in that article.

The restricted access was in reaction to critical reports by US short sellers like Muddy Waters against listed Chinese firms, and exposés in Western media about the wealth of the families of leaders such as Xi Jinping , Bo Xilai and Wen Jiabao , Humphrey wrote.

He cited media reports that more than 1,000 mainland investigators and their alleged sources were detained in May last year and January this year.

Humphrey serves as the managing director of ChinaWhys, while Yu is its general manager, according to the firm's website.

In another development, GlaxoSmithKline has announced that Herve Gisserot will become its new head of operations in China, replacing Mark Reilly, who will remain with the drugmaker as a senior member of the management team.

A spokesman also revealed that travel restrictions on GSK's China finance head, Steve Nechelput, which had prevented him from leaving the country, are believed to have been lifted.