January 22, 2021

Glaxo Used Travel Firms in Bribery, China Says

What they uncovered, they said Monday, was a conspiracy involving tens of millions of dollars and directed by senior executives at the British drug giant GlaxoSmithKline.

Investigators said that for years, senior executives at the company joined with travel agencies and consulting firms in China to funnel bribes to doctors, hospitals, medical associations, foundations and government officials.

The payoffs, investigators said, helped bolster drug sales and allowed GlaxoSmithKline, also known as GSK, to sell its products for higher prices in China.

At a news conference in Beijing, the authorities accused senior executives at GSK of organizing fictitious conferences, overbilling for training sessions and accepting kickbacks in the form of cash and luxury travel.

In some cases, the authorities said, travel companies eager to sign long-term deals with GSK hired young women to engage in what officials called “sexual bribery” with managers at the drug maker.

“It’s like a criminal organization — there’s always a boss,” Gao Feng, head of the economic crime unit of the Chinese Ministry of Public Security, said at the news conference. “And in this case, GSK is the boss.”

The revelations come just days after the police announced that GSK managers had confessed to engaging in bribery and tax fraud.

On Monday, the government said four senior executives at GSK were being detained, including the head of the drug maker’s legal department and two vice presidents and the head of business development in China. The four named are all Chinese nationals, the police said.

Mark Reilly, the head of GSK’s operations in China, a British national, recently left the country, the police said. The departure took place shortly after investigators raided the company’s offices.

“This is a very serious allegation, and the chief of China has left China,” Mr. Gao said.

The investigation is a huge embarrassment for GSK, which recently fired the head of its research and development department in Shanghai for misrepresenting data in a paper he co-wrote in 2010.

The company also said earlier that it had conducted an internal investigation into its China operations this year after a whistle-blower said bribery had been used to bolster drug sales. The company said it had found no evidence of wrongdoing or bribery in its China operation.

But on Monday, GSK issued a statement from London indicating grave worry: “We are deeply concerned and disappointed by these serious allegations of fraudulent behavior and ethical misconduct by certain individuals at the company and third-party agencies. Such behavior would be a clear breach of GSK’s systems, governance procedures, values and standards. GSK has zero tolerance for any behavior of this nature.”

The statement went on: “GSK shares the desire of the Chinese authorities to root out corruption. These allegations are shameful and we regret this has occurred.” The company said it would cooperate with the authorities in China and take immediate action to stop dealings with travel agencies that may have committed fraud.

At the news conference Monday in Beijing, the authorities said that the investigation was continuing and that the case involved scores of travel agencies as well as other multinational corporations that also may have fabricated travel bookings.

By detailing what they called GSK’s fraud, the investigators suggested it was a common business tactic that effectively cheats the purchasers of drugs.

“From our investigation, we found that bribery was part of the strategy of the company,” Mr. Gao said of GSK.

The investigation is certain to heighten concerns among other global drug makers, some of which are under growing scrutiny from regulators in the United States and elsewhere over the incentives they give to doctors or clients.

Some of the toughest penalties could come in the United States, because most major drug makers are subject to the U.S. Foreign Corrupt Practices Act, which bars companies from making payoffs to government officials in foreign countries in exchange for business.

Kim Nemirow, a Hong Kong-based attorney at the U.S. law firm Ropes Gray, said global drug companies face stiff challenges in China: their sales agents deal mostly with Chinese government officials because much of the health care sector is controlled by the state.

“The government is pervasive in all aspects of this industry — the doctors, the pharmacies, the distributors, the state-owned hospitals. And that means what they do could come under the U.S. F.C.P.A.,” Ms. Nemirow said, referring to the corrupt practices act.

Article source: http://www.nytimes.com/2013/07/16/business/global/glaxo-used-travel-firms-in-bribery-china-says.html?partner=rss&emc=rss

DealBook: Fallout Continues at Vietnamese Bank

A branch of Asia Commercial Bank in Hanoi.Agence France-Presse — Getty ImagesA branch of Asia Commercial Bank in Hanoi.

HONG KONG — Police in Vietnam have arrested the former head of one the country’s biggest banks, state media said Friday, as the fallout from a banking scandal continues to spread.

The ministry of public security’s investigation department arrested Ly Xuan Hai, who had resigned as general director of the Asia Commercial Bank, ‘‘for allegedly violating state regulations on economic management leading to serious consequences,’’ the state-owned Vietnam News Service reported on Friday.

The arrest of Mr. Hai, 47, which took place on Thursday when the police searched his home and office, is the latest development in a brewing banking scandal that has already this week toppled a co-founder of the bank, prompted a broad sell-off in Vietnam’s stock market and forced the Communist-run country’s central bank to step in and help fend off a run on deposits at Asia Commercial Bank.

The trouble at the bank began on Tuesday, when news broke that authorities on Monday had arrested the bank’s co-founder and former vice chairman, Nguyen Duc Kien, an influential local businessman who retained stakes in several banks and other businesses and who is also a soccer aficionado who served as the general manager of the Hanoi Football Club.

Asia Commercial Bank, in which Mr. Kien, 48, retains a stake but no longer has any management role, had tried to distance itself from his arrest for what it described as ‘‘his own personal wrongdoings in business.’’

The bank, 15 percent owned by the British bank Standard Chartered, 7.3 percent by the Hong Kong-based conglomerate Jardine Matheson Holdings and 6.8 percent by the Vietnam-focused investment and fund manager Dragon Capital, said in a statement Tuesday that the arrest of Mr. Kien ‘‘has no impact on A.C.B.’s financial position, its decision-making process and its operations.’’

But despite that reassurance, pledges of liquidity from the central bank and calls for calm from the securities regulator, investors and customers fled.

By Friday, shares in the bank had fallen 16 percent over the previous week. The broader Ho Chi Minh Stock Index also fell, ending the week down 7.8 percent as companies associated with Mr. Kien were especially hard hit.

Customers lined up to withdraw their money from the bank’s branches on several days during the week. The new bank chief, Do Minh Toan, who was appointed to replace Mr. Hai, told state media that customers withdrew around 5 trillion Vietnamese dong, or $240 million, worth of deposits on Wednesday alone. The bank had 146 trillion dong in customer deposits at the end of June, according to filings.

Article source: http://dealbook.nytimes.com/2012/08/24/fallout-continues-at-vietnamese-bank/?partner=rss&emc=rss

China Creates New Agency For Patrolling The Internet

BEIJING — A powerful arm of China’s government said Wednesday that it had created a new central agency to regulate every corner of the nation’s vast Internet community, a move that appeared to complement a continuing crackdown on political dissidents and other social critics.

But the vaguely worded announcement left unclear whether the new agency, the State Internet Information Office, would in fact supersede a welter of ministries and other government offices that already claim jurisdiction over parts of cyberspace.

China’s State Council Information Office said it was transferring its own staff of Internet regulators to the new agency, which would operate under its jurisdiction. Among many other duties, the agency will direct “online content management;” supervise online gaming, video and publications; promote major news Web sites; and oversee online government propaganda. The agency will also have authority to investigate and punish violators of online content rules, and it will oversee the huge telecommunications companies that provide access for Internet users and content providers alike.

The State Council is a cabinetlike agency that effectively manages the government’s day-to-day operations. Two former officials at its Information Office will run the new agency, and executives from two central ministries — public security and information technology — will also serve in senior positions, the announcement stated.

The mushrooming growth of China’s Internet business has spawned a sort of land rush for regulatory turf by government agencies that see in it a chance to gain more authority or more money, or both. At least 14 government units, from the culture and information technology ministries to offices that oversee films and books, have some hand in what appears on China’s Internet. Others have interests in Internet-related ventures like the sale of censorship software that could prove to be lucrative sources of income.

Wednesday’s announcement indicated that the new office would work with other government units that regulate parts of the Internet, which could dilute internal opposition. But the sweeping nature of the announcement left some experts unconvinced.

“My guess is that it’s going to be quite a fight for these existing regulators to give up power, because it’s such a big and lucrative endeavor,” Bill Bishop, a Beijing-based independent analyst of the Internet industry, said an interview. “It’s not clear from this announcement, either in English or Chinese, whether the new agency is going to oversee them or coordinate with them.”

Article source: http://feeds.nytimes.com/click.phdo?i=0b0a8690e05ed8a2d706ae28e2fee394