China Slaps $500M Fine on GlaxoSmithKline for Bribery

Chinese authorities accused GSK’s China chief of scheming a “massive bribery network” that helped the company with higher drug prices and illegal revenue of more than $150 million

China has fined British pharmaceutical giant GlaxoSmithKline $491.5 million after a Chinese court found its subsidiary in the country guilty of bribing non-government staff. Chinese state media said it was the biggest corporate fine the nation has ever issued.

GSK in a statement said that it has fully cooperated with the Chinese authorities and taken steps to expansively amend the issues distinguished at the unit.

“The illegal activities of GSKCI (GSK China Investment Co. Ltd.) are a clear breach of GSK’s governance and compliance procedures; and are wholly contrary to the values and standards expected from GSK employees,” Glaxo said in the statement.

GSK’s Former China Chief Receives Prison Sentence

Xinhua, China’s principle state media outlet, reported that Glaxo’s former China chief, Mark Reilly, was sentenced to between two and four years in prison, however it also reported the sentence was suspended for four years. Mr. Reilly will be deported, Xinhua revealed. Xinhua didn’t divulge details of the legal procedures concerning Mr. Reilly, among what he was charged with and what he pleads to the charges.

Mr. Reilly has been in China for over a year, after saying he was returning there to help Chinese official investigating the case. Mr. Reilly stepped down from his position soon after authorities began probing allegations of bribery at the pharmaceutical subsidiary, although, he did remain a GSK employee. GSK hasn’t commented on Mr. Reilly’s sentence in statement provided early Friday.

Chinese authorities had accused Mr. Reilly of scheming a “massive bribery network” that helped the company with higher drug prices and illegal revenue of more than $150 million, investigators said in May. Mr. Reilly, a Briton, and two Chinese-born executives, Zhang Guowei and Zhao Hongyan, had also bribed government authorities in Beijing and Shanghai, they added.

A few weeks ago, Shanghai court sentenced two foreign private investigators who had worked for GSK for unlawfully acquiring data on Chinese nationals. The case brought up issues about the cutoff points of due diligence and other efforts to gather data in China, a geography where industry and corporate data as well as executive backgrounds could be a little difficult to get hold of.

GSK published a statement on its website that it “sincerely apologizes to the Chinese patients, doctors and hospitals, and to the Chinese government and the Chinese people.”

China Accused of Violating International Trade Accords

Previously Industry Leaders Magazine reported that as of late the U.S. Assembly of Commerce and various business gatherings have “made their complaints public over the recent chain of investigations scrutinizing at least 30 foreign firms in China, as China solicits to implement its six-year-old anti-monopoly law.” According to State Media outlets, China is targeting more than “1,000 companies in China’s auto sector, including manufacturers, suppliers and dealers” under anti-monopoly probes by the government.

Earlier this month, various media outlets reported on how “the Price bureaus in Shanghai and Hubei Province announced their first ever anti-trust fine for price-fixing to foreign automakers including Volkswagen and Fiat’s Chrysler a combined sum of $46 million.”

China on the other hand has been giving clarifications stating that it treats domestic and foreign companies equally as per the law and that ventures up implementation is a part of its efforts to help its citizens and bring more market powers into its economy.

In August, foreign investment in China reached its lowest as witnessed in previous four years; a drop analysts ascribed to China’s abating economic growth as well as uncertainty by foreign organizations.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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