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China holds four GSK managers for bribery: state media

It is common practice in China for pharmaceutical firms to offer doctors and hospitals bribes to have their products used, industry officials say.

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(PETER PARKS/AFP/Getty Images)

Chinese police have detained four top executives of British drug firm GlaxoSmithKline (GSK) in China for alleged bribery and other offenses, state media said Monday.

The managers whose responsibilities included operations, human resources, legal affairs and business development had committed "serious" economic crimes, the official Xinhua news agency said.

The Beijing News newspaper said in a separate report that more than 20 people, including the four executives, were being held in connection with the investigation, which came to light earlier this month.

Others were pharmaceutical and travel industry officials, it said, with at least four travel agencies involved.

Chinese authorities said last week that GSK staff had bribed government officials, pharmaceutical industry groups, hospitals and doctors to help sales of their products and increase prices for drugs.

The bribes were given directly or made through travel agencies and project sponsorship, the ministry of public security said last Thursday.

It did not specify the suspects' citizenships, but in London the Foreign Office said it was providing consular assistance to a British national.

It is common practice in China for pharmaceutical firms to offer doctors and hospitals bribes to have their products used, industry officials say.

At the same time, GSK executives took kickbacks from travel agencies in return for choosing them to organize conferences, said the ministry, which is in charge of China's police.

Gao Feng of the ministry's economic crime investigation unit told reporters on Monday that 3.0 billion yuan ($484 million) had been funneled between GSK and travel agencies since 2007, Dow Jones Newswires reported.

At least one GSK executive also allegedly received sexual services in what Chinese law calls "sexual bribery", the Beijing News said.

The company said in a statement on Monday it was "deeply concerned and disappointed by these serious allegations of fraudulent behavior and ethical misconduct by certain individuals at the company and third-party agencies".

It pledged to "cooperate fully" with investigating authorities and said it had stopped using those travel agencies which have been identified so far.

GSK said in a statement last week it had found "no evidence of bribery or corruption of doctors or government officials" in China.

GSK is one of the largest multinational pharmaceutical companies in China with total investment of more than $500 million, according to its website.

In a separate investigation, China's top economic planner said earlier this month it was probing 60 pharmaceutical companies for excessive charges, including a GSK joint venture.

The National Development and Reform Commission is sending teams to check wholesale prices and production costs of dozens of companies, a move analysts say is aimed at cutting healthcare costs for ordinary Chinese.

http://www.globalpost.com/dispatch/news/afp/130715/china-holds-four-gsk-managers-bribery-state-media-1