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  • Dec 19, 2014
  • Updated: 12:00am

GlaxoSmithKline

The London-based multinational drugmaker, also known as GSK, supplies key products such as vaccines in China, as well as drugs for lung disease and cancer. In 2013, the company was targeted by Chinese authorities over alleged corruption, price-fixing and quality controls.

NewsChina
CRIME

Chinese government accuses ex-GSK head Mark Reilly of bribing doctors

Following 10-month probe into firm, Beijing says Mark Reilly bribed doctors to use Glaxo drugs and then tried to hide his activities

PUBLISHED : Wednesday, 14 May, 2014, 12:44pm
UPDATED : Thursday, 15 May, 2014, 7:17pm
 

The Chinese government has publicly accused a British executive of GlaxoSmithKline (GSK) of bribing doctors to use its drugs and then trying to cover up his activities during a subsequent investigation.

If convicted, Mark Reilly, the former China head of GSK, could face a prison term - an extremely rare fate for a senior foreign executive on the mainland.

Police have completed a 10-month investigation into Britain's largest drug firm, the Ministry of Public Security said on its website yesterday. The ministry had passed the case to the Changsha People's Procurator in Hunan , which is reviewing the case, said a GSK spokesman.

It is really mind-boggling how a British [executive] can behave like this
WANG BING, LAWYER

Wang Bing, a Beijing-based partner with US law firm Faegre Baker Daniels, said: "British companies have strict ethical and anti-bribery rules. It is really mind-boggling how a British [executive] can behave like this. It is rare for a British [executive] to be involved in such a scheme in such a blatant manner."

The UK Serious Fraud Office is aware of the allegations against GSK but would neither deny nor confirm it was investigating the firm under the UK Bribery Act.

The Ministry of Public Security alleged that Reilly, GSK vice-president Zhang Guowei and GSK legal affairs supervisor Zhao Hongyan formed an emergency group in 2012 to bribe law enforcement and other officials in Beijing, Shanghai and elsewhere to block a government investigation of GSK.

"Reilly and other senior GSK executives proactively covered up the bribery activities and strongly maintained the financing channels through which the bribes were funnelled," the ministry alleged.

Reilly was replaced as GSK's China head last July.

The Ministry of Public Security alleged that from January 2009, with the support of other GSK executives like Zhang, Reilly set up sales units that gained billions of yuan in illegal income from bribing doctors, hospitals and health officials.

Since 2010, GSK's Chinese subsidiary GlaxoSmithKline (China) Investment (GSKCI) had spent tens of millions of yuan bribing hospitals to use GSK's liver drugs instead of Chinese-produced drugs, the Ministry of Public Security claimed. GSKCI spent 13 million yuan buying gifts like cars, television sets and video cameras, which were given as bribes to clients in health-care organisations, it said.

A GSK spokesman said: "We have today met with the Ministry of Public Security, which updated us on their investigation. We take the allegations very seriously. They are deeply concerning to us and contrary to the values of GSK."

The prosecution of foreign nationals by the Chinese authorities is likely to prompt or accelerate similar investigations by the regulators of other countries, said Keith Williamson, head of forensic and dispute services for Asia at Alvarez & Marsal, an international professional services firm.

As a British firm listed in London and New York, GSK is subject to the UK Bribery Act and US Foreign Corrupt Practices Act.

"The investigation and possible prosecution by the Chinese authorities of such a senior foreign national is likely to set alarm bells ringing for other senior foreign nationals in China and multinational companies," said Williamson.

Brent Carlson, a Hong Kong director of international business advisory firm AlixPartners, said: "The news is a reminder that China is serious about its crackdown on corruption."

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This article is now closed to comments

chaz_hen
Sucks when you're a foreigner playing by Chinese rules. When they realize you're getting the upper hand, they start a witch hunt...
China67
How about the domestic "players", any of those in court yet?
mfchung
Why isn't GSK being investigated in HK? The next time you try and buy some aspirins or paracetamol in your nearest supermarket or chemist, what you will find is GSK's Panadol. Not just one type of Panadol but a dozen different shapes of sizes of Panadol. Panadol just happens to be paracetamol but relabeled, it also happens to be 10 times the price of paracetamol. Anyone from anywhere else in the world is able to buy a box of paracetamol for 2-3 HKD, but in HK only Panadol is available at 30+ HKD. Now tell me GSK isn't bribing anyone in HK.
keithkklau@gmail.com
all drugs firms in China are bribing in different forms. when those doctors are receiving a very low consultation fee and the government continues to fail to increase the medical spending, bribery will continue until there is a total restructure of the health system.
Paradox314
Yeah, what a difficult position to be in - to be required to follow ethical principles while competing in a totally corrupt system.
ntmount
When in Rome, do as the Romans do?
ntmount
When in Rome, do as the Romans do?
zhi.chen.10420
UK Anti-Bribery Act has been around since 1906, but this is the first case that I witnessed its application in China, which serves as a good lesson for the foreign investment in China. Those companies have to play with cautious in the future, especially those British and US. firms.
ngsw
Go to street drug stores and they will give you cheap generic pills dispensed from a large bottle.

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