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Britain's Cameron defends GSK's business practices in China

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(Globalpost/GlobalPost)

By Andrew Osborn and Ben Hirschler

SHANGHAI (Reuters) - British Prime Minister David Cameron on Tuesday mounted a robust defense of GlaxoSmithKline's <GSK.L> business practices in China - where it is being investigated for alleged bribery - calling the firm "very decent".

Cameron's intervention came a day after he raised GSK's situation with China's top leadership in a move one person familiar with the conversation said was designed to draw a line under the company's woes and ensure it was treated fairly.

Cameron is on a trade promotion trip to China with around 100 executives, including GSK Chief Executive Andrew Witty, and is trying to help the firm grapple with the aftermath of accusations it funneled up to 3 billion yuan ($492 million) to travel agencies to facilitate bribes to boost its drug sales.

The claims are the most serious against a multinational in China in years. Police detained four Chinese GSK executives as well as Peter Humphrey, a British man running a risk advisory group. He is still being held.

Cameron on Tuesday gave reporters what amounted to a strong character reference for GSK, making it clear he was happy to fight its corner.

"All I'll say is that from all my dealings with GSK I know that they are a very important, very decent and strong British business that is a long-term investor in China and it's a business that very much does think about the long-term development of its products and its businesses," he said.

"I think it is right to raise a case like that. Britain has a record of properly standing up for British businesses and British individuals, raising individual cases in the right way and about having a proper dialogue with the Chinese authorities about the issues."

The person familiar with the matter said Britain had detected a softening in China's position, saying it had encouraged GSK's Witty to join Cameron in China.

Witty himself has declined to comment on the investigation into alleged illegal payments by GSK to doctors and officials, but told Reuters in Beijing on Monday that the British drugmaker would have something to say "quite soon". <ID:L5N0JH3EG>

GSK is Britain's largest pharmaceuticals business and a major employer of skilled workers, including many scientists. Witty has advised Cameron on business matters in the past and recently wrote a report on universities for the government.

The scandal has tarnished the image of both GSK and its CEO, who has sworn to get to the bottom of any wrongdoing.

GSK's sales in China dived 61 percent in the third quarter after hospital staff shunned visits by its sales teams in the wake of the investigation.

Legal and industry sources told Reuters last month that police were likely to charge some of GSK's Chinese executives but not the company itself. One person with direct knowledge of the situation said the police investigation was likely to be concluded by around early December.

GSK has said some of its senior Chinese executives appear to have broken the law. It has also said it has zero tolerance for bribery, calling the allegations in China "shameful".

GSK sold 759 million pounds ($1.2 billion) of pharmaceuticals and vaccines in China in 2012, up 17 percent on 2011, representing about 3.5 percent of its worldwide total.

($1 = 6.0932 Chinese yuan)

($1 = 0.6105 British pounds)

(Editing by David Evans)

http://www.globalpost.com/dispatch/news/thomson-reuters/131203/britains-cameron-defends-gsks-business-practices-china