Four senior executives of GlaxoSmithKline are being held in China ‘on suspicion of economic crimes involving 3 billion yuan ($489 million) of spurious travel and meeting expenses, and receiving sexual favors,’ Bloomberg said Monday.
The head of China’s economic crimes unit at the Public Security Ministry told a press briefing in Beijing the alleged offenses ‘date to 2007 and involved 700 travel agencies.’
Police said the drugmaker won sales by paying bribes to Chinese doctors and medical officials through the travel agencies.
The detained executives are Chinese nationals, according to a local report.
They were named by the Xinhua news agency as Liang Hong, vice president and operations manager of Glaxo China, Zhang Guowei, a human resources director, Zhao Hongyan, a legal affairs director, and Huang Hong, a business development manager.
A whistleblower claimed GlaxoSmithKline’s China staff committed ‘widespread bribery of doctors to prescribe drugs,’ the Wall Street Journal reported last month.
The Chinese government investigation follows U.S. investigations of possible FCPA violations committed by the U.K.-based pharma giant in China.
GSK disclosed in earlier SEC filings that the DOJ and SEC contacted the company in 2010 about possible violations of the FCPA.
Chinese police in June reportedly detained GlaxoSmithKline managers in Shanghai, Beijing, and Changsha.
‘They are suspected of trying to increase sales channels and inflate prices by using avenues such as travel agencies to bribe government officials, medical associations, hospitals and doctors, and faking tax receipts, the ministry said on its website today,’ Bloomberg said Monday.
GlaxoSmithKline plc trades on the NYSE under the symbo GSK.
Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.