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Monday
Jul212014

Reports: GSK fired China staff in 2001 for bribes

Press reports that GlaxoSmithKline fired employees of its China unit in 2001 for paying bribes to government officials could complicate the company's defense of current allegations about illegal sales practices in several countries.

"About 30 staff in GSK's vaccines business were dismissed . . . after they were found to be involved in bribing Chinese officials and taking kickbacks, Reuters said Thursday, following a report that first appeared in the Financial Times.

News of firings in China more than a decade ago could make it hard for GSK and some senior executives to deny wide knowledge of recently reported corrupt sales practices in China and elsewhere.

GSK confirmed the reports. "The specific matters occurred more than 12 years ago. We believe appropriate investigation and action was taken at the time," the company said.

In July last year, China authorities accused GSK of paying $482 million in bribes to health officials and doctors to boost sales. China's Ministry of Public Security said since 2007 GSK had used 700 travel agents to deliver the illegal payments.

In May, the company confirmed that the UK Serioius Fraud Office had launched a formal criminal investigation into GSK's commercial practices.

Earlier this month, China prosecutors arrested Mark Reilly, the British former boss of GSK's China unit, and two Chinese executives for offering bribes to hospital personnel and doctors. All three face life in prison if convicted.

In the U.S., GSK is under investigation for FCPA offenses.

In April, GSK disclosed an internal investigation into allegations that it had hired government-employed doctors and pharmacists in Iraq to serve as paid sales reps for its products.

GSK is also investigating alleged bribes to doctors in Jordan and Lebanon.

Polish authorities have said they're investigating alleged bribery of doctors by GSK representatives.

GSK has said it has a "zero tolerance for unethical or illegal behavior."

A year ago, China state TV broadcast a confession by GSK's vice president of China operations, Liang Hong. He  admitted bribing doctors. He said the bribes amounted to twenty to thirty percent of the drug prices.

A report by local China media in June said GSK has fired 150 staff there for improper sales practices in the currrent bribery probe.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.