GSK Workers in China Admit to Bribery

GSK Workers in China Admit to Bribery

July 11th, 2013 // 2:01 pm @

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The GSK drama that has been ongoing in China in recent weeks became more serious, as several top executives confessed to crimes of bribery and tax-related crimes. This is according to the Ministry of Public Security in China.

The statement from the ministry describes the offenses as very serious economic crimes, related to offering large bribes to various officials in the government, in medical industry groups, hospitals, and to doctors. The hope was to expand the drug market for GSK and to get prices higher. The bribes usually were paid out through travel companies or sometimes as what was called ‘project sponsorships’, although this was not given a clear definition by the ministry.

GSK also is thought to have engaged in a type of tax evasion. The company sent out value added tax invoices and worked with travel companies to send out fake invoices to finance various types of illegal deals. Several GSK executives in China also are thought to have taken kickbacks and bribes from several travel companies. Travel agency employees also are being held and are being questioned by authorities in China.

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This serious disclosure comes soon after GSK admitted that it was doing internal investigations into accusations by a tipster that workers were giving bribes to doctors to prescribe drugs, such as Botox. GSK has not admitted to any wrongdoing in that case.

Giving gifts is normal in China. But a big question is this: Will Chinese authorities now start to explore the business practices of other big drug makers in China, especially ones that are quickly expanding their operations in this country?

Overall, Glaxo work in China has been under a large cloud for a month. Last month, the firm stated that a paper that was published in a scientific journal had fake data in it. One of the authors, who was a  senior VP, was fired. The company also is looking for a retraction, and three other workers were put on leave pending the final review, and another worker quit.

These scandals are quite embarrassing for GSK, because this is only a year after the company pleaded guilty and paid $3 billion to resolve charges that it had engaged in off label promotion of several medicines, and also for failure to report to FDA safety data and for reporting fake prices.

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