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China fines GSK $490 million for bribery

A court in China fined UK pharma giant GlaxoSmithKline $490 million Friday following a conviction for bribery.

GSK’s former head of China operations, Mark Reilly, was given a three-year prison sentence that was suspended, the BBC said. The court ordered Reilly to be deported.

The convictions came after a one-day trial in the city of Changsha.

Other GSK executives who are China nationals were sentenced to between two and four years in prison, the South China Morning Post said.

China authorities in July 2013 accused GSK of paying $482 million in bribes to health officials and doctors to boost sales. China’s Ministry of Public Security said GSK had used 700 travel agents to deliver the illegal payments since 2007.

Mark Reilly, a UK citizen, was arrested in May this year by the Ministry of Public Security for offering bribes to hospital personnel and doctors.

Two Chinese executives, Zhang Guowei and Zhao Hongyan, were arrested at the same time. Four others had been detained in July 2013.

All of the individual defendants faced up to life in prison.

China state TV broadcast a confession last year by GSK’s vice president of China operations.

GSK CEO Andrew Witty said in a statement Friday: “Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this.”

The statement said “the illegal activities of [GSK China] are a clear breach of GSK’s governance and compliance procedures; and are wholly contrary to the values and standards expected from GSK employees.”

GSK published a Chinese-language apology to the Chinese government and its people on its website.

The UK Serious Fraud Office opened a criminal investigation in May into alleged overseas bribery by GSK.

In April this year, GSK said it was investigating allegations that it had hired government-employed doctors and pharmacists in Iraq to serve as paid sales reps for its products.

The company is also investigating alleged bribery of doctors in Jordan and Lebanon.

Polish authorities have said they are investigating alleged bribery of doctors by GSK representatives.

The U.S. DOJ and SEC contacted the company in 2010 about possible violations of the FCPA in China and other countries.

In August, a court in Shanghai sentenced a British investigator and his American wife who had done work for GlaxoSmithKline to two-and-a-half years in jail for trafficking personal data.

Peter Humphrey and Yu Yingzeng were arrested in July 2013.

GSK had hired their Shanghai-based firm, ChinaWhys, to investigate emails from a former employee that alleged widespread bribery.

The ex-employee was also suspected of circulating a sex tape of Reilly with his girlfriend.

The court ordered Humphrey to be deported after he serves his sentence.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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