Blog 22nd Sep 2014

A bitter pill to swallow: The GSK bribery investigation

Last Friday, GlaxoSmithKline’s China operating company was found guilty of bribery offences and fined £297m. GSK’s former head of operations in the country, Mark Reilly, was given a three-year suspended sentence and will be deported to the UK. Four other GSK employees also received suspended sentences. The charges related to payments made by employees from a £320m hospitality fund to agents who gave cash and presents to doctors in exchange for their promoting GSK’s products.

The sentences do not mark the end of GSK’s Chinese problems. In May of this year, the Serious Fraud Office announced an investigation into GSK’s commercial practices and has sought the assistance of whistleblowers. The US Department of Justice is also investigating whether the conduct in China breached its Foreign Corrupt Practices Act.

GSK said that this was “a deeply disappointing matter for GSK” and has published an apology to the Chinese government and people.

The company has emphasised that the activities of its employees in China were wholly inconsistent with its governance and compliance procedures, but they are hardly an isolated issue. The Polish anti-corruption bureau has charged a GSK regional manager and eleven doctors with bribery offences arising from payments allegedly made to health centres. GSK meanwhile is running an internal investigation into allegations reported by the Wall Street Journal that its employees in Iraq made payments to local doctors and pharmacists in an effort to boost sales, as well as a separate investigation into allegations of bribery by employees in Jordan and Lebanon. In 2012, the company paid $3bn to settle charges that its staff had encouraged US doctors to prescribe medication for unapproved uses.

GSK said that the number of its employees disciplined for breaches of sales and marketing policy is similar to those reported by other pharmaceutical companies, and that it is “confident…that we do not have a systemic issue with unethical behaviour”.

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