China fines GlaxoSmithKline £297 million for bribery

Saturday 20 September 2014

GlaxoSmithKline has been fined £297 million and its former country manager handed a suspended prison sentence in China for bribery.

The company (GSK) accepted the decision by the Changsha Intermediate People's Court in Hunan province that it had bribed doctors and hospitals to use its products, adding it has taken steps to change its working practices.

The Chinese court handed GSK employee Mark Reilly a three-year suspended sentence and a deportation order. The authorities have been looking into allegations for over a year that GSK staff funnelled hundreds of millions of pounds through travel agencies to bribe doctors and health officials.

GSK said it would change its incentive programme for its sales forces, reduce and alter activities with healthcare professionals and more closely monitor invoices and payments. Reilly was sentenced alongside four Chinese GSK defendants - Steven Liang, April Zhao, Gary Zhang and Delia Huang - who were also given suspended sentences. All five defendants pleaded guilty to charges relating to the bribery of doctors and hospitals in China.

Reilly returned to China last year after the scandal came to light, to help Chinese authorities with their investigation. Although Reilly is no longer country manager in China, he remains a GSK employee.

Chief executive Sir Andrew Witty regretted the damage the case had caused.

He said: "Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this. GSK has been in China for close to a hundred years and we remain fully committed to the country and its people."

GSK also issued an apology to the Chinese people.

It said: "GSK fully accepts the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities. Furthermore, GSK sincerely apologises to the Chinese patients, doctors and hospitals, and to the Chinese government and the Chinese people. GSK deeply regrets the damage caused."

The settlement of the case comes after Britain's Serious Fraud Office (SFO) announced a formal criminal investigation into GSK's sales practices in May.

Slater & Gordon solicitor Jeremy Summers said: "The fine paid by GSK and its public apology could be used by the SFO to bring proceedings in the UK against GSK under section 7 of the Bribery Act. If so, it would be the first such prosecution under the Act."

GSK said it remained committed to its involvement in China, adding it would increase access to its products in urban and rural areas of the country.

Sir Andrew added: "We will also continue to invest directly in the country to support the government's healthcare reform agenda and long-term plans for economic growth."

Last month British investigator Peter Humphrey and his American wife Yingzeng Yu, who were hired by Glaxo in China, were sentenced for illegally collecting private information.

Humphrey was jailed for two-and-a-half years and fined £20,000 along with subsequent deportation from China. Yu was sentenced to two years in prison and a £15,000 fine.