March 28, 2024

GlaxoSmithKline Is Investigated in China

A spokesman in London said that GlaxoSmithKline was unaware of the nature of the investigation but that the company’s executives were cooperating.

Two weeks ago, the company fired the head of its research and development staff in Shanghai for misrepresenting data in a scientific paper he helped to write.

Also two weeks ago, The Wall Street Journal reported that a whistle-blower had sent information to GlaxoSmithKline’s board claiming that for years the sales staff in China had engaged in the “widespread bribery of doctors to prescribe drugs.”

The company said on Monday that it had thoroughly investigated the accusations made by the whistle-blower and concluded this year that there was no evidence of bribery or corruption.

Glaxo has said in regulatory filings that the Justice Department and the Securities and Exchange Commission contacted it as early as 2010 about possible violations of the Foreign Corrupt Practices Act in its overseas operations, including China. The company referred to the contacts as “discussions,” rather than an investigation, and said on Monday that they were continuing.

The troubles at the company, also known as GSK, are the latest example of a growing number of multinational corporations coping with bribery and corruption accusations in China, where offering cash bribes and kickbacks is widespread. Several American companies have been prosecuted in recent years in the United States under the Foreign Corrupt Practices Act, which forbids bribing foreign government officials.

The Chinese police made their announcement over the weekend. The public security bureau in the city of Changsha, in central China’s Hunan province, posted a brief statement online announcing an investigation into senior managers at GSK China for economic crimes.

“It is still unclear what is the precise nature of their investigation,” Simon Steel, a company spokesman, said on Monday. “We will cooperate.”

Over the weekend, the Chinese police also detained GlaxoSmithKline managers in Shanghai, Beijing and Changsha, according to Monday’s edition of The South China Morning Post, which is published in Hong Kong.

Glaxo is one of the world’s biggest drug companies. It has both manufacturing and research and development facilities in China, with about 5,000 employees.

Although China accounts for a small share of the company’s global revenue, it is one of the fastest-growing markets. In 2012, the company’s revenue in China rose 17 percent, to nearly $1.2 billion, from 2011, according to the company’s annual report.

Article source: http://www.nytimes.com/2013/07/02/business/global/glaxosmithkline-under-investigation-by-chinese-authorities.html?partner=rss&emc=rss

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