Thursday, July 11, 2013

China security ministry says GSK executives confess to crimes

BEIJING (Reuters) - Executives of British drug maker GlaxoSmithKline Plc in China have confessed to charges of bribery and tax law violations after initial questioning by Chinese police, China's security ministry said on Thursday.

The company is suspected of offering bribes to government officials, medical associations, hospitals and doctors to boost sales and prices, the ministry said in a statement on its website.

GSK is also suspected of using fake receipts in unspecified tax law violations, the ministry said.

"After initial questioning the suspects have admitted to the crimes, and the investigation is ongoing," the Ministry of Public Security said in the statement.

The statement did not give details on the number of executives questioned, their identities or when the questioning took place.

Officials at GSK could not immediately be reached for comment.

China in recent months has targeted foreign firms on multiple fronts including alleged price-fixing, quality controls and consumer rights, forcing companies to defend their reputations in a country where international brands often have a valuable edge over local competitors in terms of public trust.

Police in the south-central Chinese city of Changsha said last week they were investigating high-level Chinese staff at GSK on suspicion of unspecified economic crimes.

GSK said on Monday it was investigating new allegations that its staff had used improper tactics to market Botox in China, but had so far found no evidence of bribery or corruption.

GSK, Merck & Co Inc and other foreign and domestic drugmakers are also being investigated by China's top economic planning agency on cost and pricing issues.

China is an increasingly important market for international pharmaceutical companies, which are relying on growth in emerging markets to offset slower sales in Western markets where many former blockbuster drugs have lost patent protection.

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