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Feds open new GSK China bribery investigation

GlaxoSmithKline said in a securities filing Wednesday that the DOJ and SEC asked for information about third-party advisers the company hired in China during a corruption investigation there.

GSK said it is also responding to requests from the SFO for more information about the third parties.

In 2014, the SFO started a formal criminal investigation into GSK’s operations in China and several other countries. As part of that investigation, the SFO recently asked for more information about third parties GSK hired in China.

GSK said Wednesday the DOJ and SEC asked for more information after it told them about the requests from the SFO.

In 2013, GSK retained a married couple in China — Peter Humphrey and Yu Yingzeng — to investigate an internal whistleblower.

Humphrey and Yu were arrested and spent months in Chinese jails for illegally buying and selling personal information.

They said GSK duped them into investigating an innocent whistleblower who the company had fired and wanted to silence.

Their civil lawsuit against GSK in the United States was dismissed in October last year.

In 2016, GSK paid the SEC a $20 million civil penalty to settle charges that it violated the Foreign Corrupt Practices Act.

The SEC said GSK’s China-based subsidiaries spent millions of dollars on pay-to-prescribe schemes to pump up sales. GSK settled without admitting or denying the SEC’s findings.

The DOJ didn’t bring an enforcement action after the earlier investigation.

In September 2014, a court in Changsha, China fined GSK $490 million following a conviction for bribery.

GSK’s former head of China operations, Mark Reilly, was given a three-year prison sentence that was suspended. He was deported. Two China nationals working as GSK executives were sentenced to between two and four years in prison.

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

In Wednesday’s SEC filing, GSK said “the SFO has requested additional information . . .  regarding third party advisers engaged by the Company in the course of the China investigations.”

GSK said it “has also informed the SEC and DOJ of these matters and is responding to their requests for additional information.”


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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1 Comment

  1. The best news I have seen for some time.

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