SFO instigates criminal investigation into GSK

A formal criminal investigation has been begun into corruption accusations against GlaxoSmithKline by the UK’s Serious Fraud Office.

The former general manager of GSK’s Chinese operation and two other executives have already been charged in Hunan province with corruption involving millions of dollars.

The charges, of bribing doctors, hospital staff and others to use GSK drugs, have been brought against Mark Reilly and two Chinese colleagues, Zhang Guowei and Zhao Hongyan.

Under the UK Bribery Act the UK fraud police are empowered to investigate corruption allegations at home and abroad and to prosecute. GSK says it will co-operate fully with the police.

In China the public security ministry police said they had found 46 suspects altogether as part of a “complete bribery chain” paying doctors, hospitals and government officials.

Precise figures were withheld but previously officials have accused GSK of funnelling up to 3bn yuan ($480m, £286m, €350m) through travel agencies to bribe doctors and officials.

The charges, which carry maximum life sentences, were harsher than the industry had expected.

In the intensely competitive and growing Chinese pharmaceuticals market GSK had built up its revenue to 6.9bn yuan by 2012 but could eventually lose its business licences in the country if the allegations are proved.

Prosecutors could even bring criminal charges against GSK, said Steven Dickinson, a partner in the law firm Harris Moure in Qingdao, eastern China.

John Huang, co-founder and managing partner of the Shanghai law firm MWE China, said: “This GSK case is very well known in the public domain, drawing everyone’s attention. The government wants to kill the chicken to scare the monkey and I think this will have a ripple effect.”

GSK, Britain’s largest pharmaceuticals company, insists it has zero tolerance for bribery and is co-operating with the Chinese police.
It said in a brief statement: “We take the allegations that have been raised very seriously. They are deeply concerning to us and contrary to the values of GSK.”

The company has announced a review of its sales and marketing practices worldwide to prevent irregularities and is examining other claims that bribes were paid to doctors in Poland, Iraq, Jordan and Lebanon.

In its corruption crackdown China has extended its inquiries to other large international pharmaceuticals companies, including AstraZeneca, Bayer, Eli Lilly, Novartis, Novo Nordisk, Roche and Sanofi.