Monday, July 15, 2013

First GSK denied......

GSK Admits China Corruption Claims 'Shameful'

By Mark Stone, Asia Correspondent

Chinese police have released further details of what they claim is a massive programme of bribery by GlaxoSmithKline (GSK) in China.

According to a police official in Beijing, the British drugs manufacturer has transferred as much as £323m to over 700 travel consultants since 2007.

Separately, TV interviews have emerged with some of the GSK staff alleged to have been involved in the bribery.

The Chinese authorities allege that GSK officials used the travel agents as vehicles through which to bribe doctors, hospital bosses and government officials. According to Chinese police, the travel agents were paid to offer services to officials in return for the purchase of GSK branded products.

Gao Feng, the head of the Economic Crime Investigation Unit of China's ministry of public security, claimed that some travel agents offered "sexual bribery" to GSK employees to secure favours. He did not elaborate on those allegations.

In a statement to Sky News, GSK said: "We are deeply concerned and disappointed by these serious allegations of fraudulent behaviour and ethical misconduct by certain individuals at the company and third-party agencies. Such behaviour would be a clear breach of GSK's systems, governance procedures, values and standards. GSK has zero tolerance for any behaviour of this nature. 

"In the meantime, we are taking a number of immediate actions. We are reviewing all third party agency relationships. We have put an immediate stop on the use of travel agencies that have been identified so far in this investigation and we are conducting a thorough review of all historic transactions related to travel agency use.

"GSK fully respects the laws and regulations in China and expects all staff to abide by them. GSK shares the desire of the Chinese authorities to root out corruption. These allegations are shameful and we regret this has occurred. We will cooperate fully with the Chinese authorities in the investigation of these new allegations.

Signage is pictured on the company headquarters of GlaxoSmithKline in west London
The GSK global headquarters in Brentford, west London

"We will take all necessary action required by the outcome of this investigation," the statement concluded.

According to police, four senior Chinese executives from the firm are being held and questioned.

China's Xinhua State News Agency named them as: Vice President and Operations Manager Liang Hong, Vice President and Human Resources Director Zhang Guowei, Legal Affairs Director Zhao Hongyan, and Business Development Manager Huang Hong.

In TV interviews aired by China's state-run CCTV (China Central Television), the suspects are heard apparently confessing to the bribery.

Speaking in Chinese, one of the employees, Liang Hong said: "We began to cooperate with Shanghai Linjiang International Travel Service Co Ltd since 2010.

"Within the following three years, about 10 meetings had been held, with participants ranging from over 100 in small meetings to 2,000 in large-scale meetings."

A reporter then asks him how much money would be involved in one of the large scale meetings.

"The expenses for the largest-scale one exceeded ten million yuan (£1.07m)." Liang says.

In another interview, an employee from one of the travel firms reportedly used by GSK staff, explains the alleged process.

"He (Liang Hong) said he need to visit a professional or a leader and bring some gifts with him," Weng Jianyong, Boss of Shanghai Linjiang International Travel Agency said.

"But according to the company (GSK) discipline, the gift can only value 100 or 200 yuan, (£10-£20) so it doesn't work at all. Then he said to me to give him some cash.

"The money sometimes reaches 500,000 yuan (£50,000) for an activity," Weng Jianyong alleged.

Last week, Sky sources confirmed that a British national was detained and questioned by Chinese authorities in Shanghai last week. He or she has since been released.

Sources revealed that dozens of Chinese police entered the GSK Shanghai offices on June 27, went into the offices of senior British staff and seized paperwork.

After the raid GSK circulated an internal memo, seen by Sky News, which said: "At this stage, it is unclear about the precise nature/purpose of their visit and investigation.

"We will of course cooperate with their inquiries, but are unable to comment further at this stage."

GSK operates a zero-tolerance policy toward bribery and issues staff with a 16-page booklet outlining its guidelines.

The Brentford-based company said in June that it had already investigated an accusation that its sales people in China bribed doctors and found no evidence of wrongdoing.

The drug-giant has a growing business in China. It currently employs more than 5,000 people at eight sites across the country and has investments totalling £300m.

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