Saturday, July 20, 2013

GlaxoSmithKline rushes executives to China to handle response to intensifying bribery and corruption crisis that has rocked group

By Ben Griffiths

PUBLISHED: 21:56, 19 July 2013 | UPDATED: 21:56, 19 July 2013

GlaxoSmithKline has rushed its emerging markets boss and two other senior executives to China to handle its response to the intensifying bribery and corruption crisis that has rocked the group.

The FTSE 100-listed pharmaceuticals giant has parachuted in Abbas Hussain, pictured below, its president of emerging markets, along with the head of internal audit and another senior legal official.

The trio have been briefed by GSK chief executive Sir Andrew Witty to co-operate fully with China’s Ministry of Public Security, which is holding four local executives as part of a probe into the healthcare industry.

GlaxoSmithKline: Bitter pill

GSK (down 12p at 1715p) has been accused of paying £323m in bribes to doctors, hospital managers and other officials since 2007 to persuade them to prescribe its medicines in what China has labelled a ‘criminal’ act. 

Money is alleged to have been routed via 700 travel agencies acting as middlemen, while there are also claims of ‘sexual bribery’. GSK has branded the allegations ‘shameful’.

The decision to send the executives to China demonstrates the seriousness with which GSK views the situation, which risks undermining Witty’s ethical clean-up and the company’s prospects in a potentially huge emerging market for its medicines.

The British finance director of GSK in China, Steve Nechelput, has been banned from leaving the country while his boss, Mark Reilly, remains in London having left China on July 5.

The Chinese scandal is set to overshadow GSK’s latest financial results on Wednesday.


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