Four senior GlaxoSmithKline (GSK) executives in China are under arrest, charged with bribery of health officials via a network of criminal third parties.
According to China’s Ministry of Public Security, GSK had the role of a ‘godfather’ co-ordinating a massive five-year bribery operation.
The four Chinese executives received personal financial and sexual incentives from travel agencies to let them carry out bribery, the police claim.
GSK commented: “These allegations are shameful and we regret this has occurred.”
The Chinese police claim that GSK used over 700 middlemen to dispense and conceal bribes to doctors and health officials worth a total of £323m.
The main accomplices were travel agencies that laundered the money through non-existent corporate meetings.
Gao Feng, head of the economic crimes investigation unit at the Ministry of Public Security, commented: “From our investigation, bribery is part of the strategy of this company.”
The four senior GSK executives under arrest are: Zhao Hongyan, Legal Counsel and Head of Compliance; Liang Hong, VP of Operations; Huang Hong, General Manager of Commercial Development; and Zhang Guowei, HR director.
According to Mr Gao, GSK “used travel agents as a money platform” and was “the godfather” in a criminal network. “To win GSK’s favour some agencies not only offered money, but also sexual favours,” he claimed.
GSK said it has put an “immediate stop” to the use of the travel agencies named, and will review all historical transactions with them, adding that it was determined to “root out corruption”.
According to the Beijing News, doctors had credit cards from the travel agencies and received “kickbacks” whenever they prescribed GSK drugs.
GSK’s sales in China rose by 17% in 2012, but their success in penetrating this ‘expanding market’ may now be subject to question.