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GlaxoSmithKline 'the big boss' in £300m bribery scandal, China says GlaxoSmithKline 'the big boss' in £300m bribery scandal, China says
(about 9 hours later)
China has accused GlaxoSmithKline of behaving like a criminal "godfather", bribing doctors with cash and sexual favours in return for prescribing the British pharmaceutical company's drugs. China has accused the British pharmaceutical company GlaxoSmithKline (GSK) of behaving like a criminal godfather, bribing doctors with cash and sexual favours in return for prescribing its drugs.
Chinese police have detained four senior Chinese GSK executives as part of an investigation which stretches back to 2007 and involves deals worth 3bn yuan (£320m). Chinese police have detained four senior Chinese executives as part of an investigation that stretches back to 2007 and involves deals worth 3bn yuan (£320m).
The Chinese investigator leading the inquiry said the head of GSK's Chinese operations, Mark Reilly, a British national, had left the country on 27 June and had not returned. The Chinese investigator leading the inquiry said the head of GSK's Chinese operations, Mark Reilly, a British national, had left the country on 27 June.
Gao Feng, the head of China's fraud unit, said: "We found that bribery is a core part of the activities of the company. To boost their share prices and sales, the company performed illegal actions."Gao Feng, the head of China's fraud unit, said: "We found that bribery is a core part of the activities of the company. To boost their share prices and sales, the company performed illegal actions."
GSK is alleged to have used a network of more than 700 middlemen and travel agencies to bribe doctors and lawyers with cash and even sexual favours.GSK is alleged to have used a network of more than 700 middlemen and travel agencies to bribe doctors and lawyers with cash and even sexual favours.
In a rare public briefing to reporters Gao added, in a clip recorded by a Daily Telegraph reporter: "There is always a big boss in criminal organisations and in this case GSK is the big boss. In order to win the favour of GSK, some travel agencies don't just offer money to their executives, but also sexual bribes." In a rare public briefing to reporters Gao added, in a clip recorded by a Daily Telegraph reporter: "There is always a big boss in criminal organisations, and in this case GSK is the big boss. In order to win the favour of GSK, some travel agencies don't just offer money to their executives but also sexual bribes."
GSK said it was "deeply concerned and disappointed" by the allegations and said it would co-operate fully with the Chinese authorities. However, Gao said the Chinese investigators had yet to receive any information from GSK's British headquarters. GSK said it was "deeply concerned and disappointed" by the allegations, and would co-operate fully with the Chinese authorities. However, Gao said the investigators had yet to receive any information from GSK's British headquarters.
"This is a very serious violation and a high profile case – we are wondering why we have not received any information," he said. "As for the chief of the China business, you better ask him yourself why he has left China and is not willing to return so far." "This is a very serious violation and a high-profile case," he said. "We are wondering why we have not received any information. As for the chief of the China business, you had better ask him yourself why he has left China and is not willing to return so far."
Gao said the Chinese authorities had not prevented Reilly from leaving the country, but added that the Chinese police were "willing to work closely with our overseas partners to fight this serious crime".Gao said the Chinese authorities had not prevented Reilly from leaving the country, but added that the Chinese police were "willing to work closely with our overseas partners to fight this serious crime".
Chinese newspapers said travel agencies working for GSK would invent meetings that required travel, but use the money to bribe doctors to prescribe GSK drugs. "Each doctor had a credit card from the company. The kickbacks were transferred to the cards the day after the drugs were prescribed," one newspaper alleged. Chinese newspapers said travel agencies working for GSK would invent meetings that required travel but use the money to bribe doctors to prescribe GSK drugs. "Each doctor had a credit card from the company. The kickbacks were transferred to the cards the day after the drugs were prescribed," one newspaper alleged.
GSK, Britain's biggest drug company, said it had stopped using all of the travel agencies identified by the Chinese police. "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," a spokesman said. GSK said it had stopped using the travel agencies the Chinese police had identified. "We are conducting a thorough review of all historic transactions related to travel agency use," a spokesman 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.""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."
The company said it shares China's desire to "root out corruption": "These allegations are shameful and we regret this has occurred." The company said it shared China's desire to "root out corruption". "These allegations are shameful and we regret this has occurred," it said.
Last week, GSK said a four-month internal investigation into its Chinese operation had found no evidence of bribery or corruption of doctors or officials.Last week, GSK said a four-month internal investigation into its Chinese operation had found no evidence of bribery or corruption of doctors or officials.
Gao said the GSK inquiry could be extended to other foreign drug companies. "We have also found some clues of illegal money transfers involving other foreign companies," he said.Gao said the GSK inquiry could be extended to other foreign drug companies. "We have also found some clues of illegal money transfers involving other foreign companies," he said.
"I need to remind foreign pharmaceutical companies that because they occupy a leading position in the industry and reap huge amounts of commercial profits, they should also bear a great responsibility to society and the public. While we don't expect them to set a moral example, we expect them to obey the law.""I need to remind foreign pharmaceutical companies that because they occupy a leading position in the industry and reap huge amounts of commercial profits, they should also bear a great responsibility to society and the public. While we don't expect them to set a moral example, we expect them to obey the law."