GSK Ordered to Pay $490 Million After Being Found Guilty of Bribery in China

by Kathy Jones on  September 20, 2014 at 9:56 PM Corporate News
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British drugmaker GlaxoSmithKline has been ordered to pay a fine of 3 billion yuan, or $490 million, after a Chinese court found it guilty of bribery following a year-long probe.
 GSK Ordered to Pay $490 Million After Being Found Guilty of Bribery in China
GSK Ordered to Pay $490 Million After Being Found Guilty of Bribery in China

The firm's former head of China operations, Mark Reilly, and other ex-officials were given suspended sentences of between two and four years in prison, the official Xinhua news agency said, and would be deported. It did not provide further details.

The fine levied by the Changsha Intermediate People's Court after a closed hearing in central Hunan province was the largest ever handed down by a Chinese court, according to Xinhua.

It equals the precise amount that China's ministry of public security said last year had been funnelled between GSK and travel agencies since 2007.

Police allege that GSK took kickbacks from travel agencies to organise conferences that never took place.

The Changsha court ruled that GSK had, "according to Chinese law, offered money or property to non-government personnel in order to obtain improper commercial gains, and been found guilty of bribing non-government personnel," the drugmaker said in a statement.

"The illegal activities of GSKCI are a clear breach of GSK plc's governance and compliance procedures; and are wholly contrary to the values and standards we expect from our employees," the company said in an apology posted on its website, adding that it "must work hard to regain the trust of the Chinese people".

Neither the statement nor the apology mentioned the sentencing of Reilly or other officials.

The verdict comes more than a year after Chinese police first accused Reilly of ordering employees to bribe hospitals, doctors and health institutions to gain billions of dollars in revenue.

China's healthcare sector is widely considered to be riddled with graft, partly the result of an opaque tendering system for drugs, and also due to doctors' low salaries.

GSK is the most high-profile target of wide-ranging Chinese inquiries into foreign pharmaceutical firms, as Beijing also mounts probes into overseas companies in sectors ranging from cars to baby milk.

The investigations come against the backdrop of an anti-graft campaign backed by President Xi Jinping to root out official corruption.

Reilly is not the only non-Chinese national to have been ensnared in the probe.

Last month, a Shanghai court sentenced British investigator Peter Humphrey and his American wife Yu Yingzeng to two-and-a-half years in jail for breaching privacy laws.

The investigators had been hired by GSK to investigate the source of a lurid sex tape of Reilly shortly before the probe went public.

Source: AFP

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