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Baxter confirms China payment offenses

Drug and medical device maker Baxter International Inc. told the Wall Street Journal last week that following whistleblower complaints, it investigated allegations and found improper expense payments by a China joint venture.

The Guangzhou Baxter Qiaoguang Healthcare Co. staged a conference last year that didn't happen. But the company paid a travel agency for the event, according to the Journal report.

Baxter received internal complaints from employees of the joint venture in July 2012 and conducted an investigation.

The travel agency was identified as the Beijing Youth Travel Service Co. It charged Baxter 93,400 yuan (a$15,100) for the conference at the Crowne Plaza Shenyang Parkview.

The Wall Street Journal said,

But an employee in the banquet and meeting department of the Crowne Plaza Shenyang Parkview said no event was organized for that date involving Baxter or medicines. She also said the hotel had no record of a meeting on that date organized by the Beijing Youth Travel Agency. The woman declined to give her name.

The China joint venture partner is Guangzhou Baiyunshan Pharmaceutical.

Baxter said it hasn't been contacted by authorities in China about the violations.

It has 'disciplined the venture's leadership, conducted new training and enhanced its controls and monitoring of interactions with Chinese health-care professionals, according to people familiar with the matter,' the Journal said.

The 'tipster's documents allege that employees at Baxter's joint venture paid travel agencies for arranging conferences between 2011 and 2012 for Chinese health officials. But employees at several hotels identified as the conference sites in the documents said they had no records of the conferences,' the Wall Street Journal said.

Baxter's China joint venture sells intravenous nutrition products.

Another drug maker, U.K.-based GlaxoSmithKline, is facing a sweeping investigation in China.

Authorities suspect the company of paying $489 million in bribes to doctors and medical officials, using more than 700 travel agents as go-betweens.

At least 18 people, including four senior executives, have been detained in the probe.


Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.