'Godfather' GlaxoSmithKline accused of China bribes

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published 15 July 2013

GLAXOSMITHKLINE has been accused of behaving like a criminal "godfather" in China, dispensing 3 billion yuan (£323m) in bribes over the past six years. Chinese police say they have identified more than 700 middlemen through whom the pharmaceutical giant allegedly bribed doctors to prescribe GSK medication. Four executives have been detained: Zhao Hongyan, 41, GSK's legal counsel and head of compliance, Liang Hong, 49, vice-president in charge of operations, Huang Hong, 45, in charge of commercial development and Zhang Guowei, 50, the company's human resources director. The company is also accused of unspecified "tax-related crimes". According to Reuters, China is an increasingly important country for international drug-makers, who now rely on growth in emerging markets to offset poor sales in Western markets where many former best-selling medicines have lost patent protection. Earlier this month, Chinese authorities announced they were investigating corruption at GSK. In response, the British pharmaceutical producer launched an internal investigation and claimed it found no evidence of wrongdoing at the company. Gao Feng, the head of the economic crimes investigation unit at the Ministry of Public Security, said the Chinese police are "willing to work closely with our overseas partners to fight this serious crime". GSK apparently used "travel agencies" to dispense the bribes. The Chinese media named Shanghai Linjiang International Travel Agency as one of these firms, saying the company "never had any business in tourism, but its turnover rose to tens of millions." These travel agencies would allegedly invent corporate meetings and the budget for the fake meetings would then be used to bribe doctors to prescribe GSK drugs. Gao Feng also said senior GSK executives had been drawn into close relationships with some of the middlemen, who would give them both financial and "sexual favours" in order to win their business. "You could say the travel agencies and GSK were criminal partners," he said. "Among the partners, GSK was mainly responsible. In a criminal organisation there is always a leader. In this game, GSK is the godfather."