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China targets UK exec in GSK corruption probe

Former GSK China manager Mark Reilly said to have ordered sales team to bribe doctors
GSK GlaxoSmithKline house

The first public statement by the Chinese authorities on the allegations of corruption at GlaxoSmithKline has made it clear they believe former subsidiary head Mark Reilly was responsible.

Officials from China's Ministry of Public Security (MPS) and police say Reilly ordered his sales team and other employees to pay bribes to doctors and hospital officials to prescribe GSK products, generating "several billion yuan" in illegal revenue, according to the Xinhua news agency.

Two other Chinese executives - Zhang Guowei and Zhao Hongyan - were also cited by the authorities in the case, which has suggested in the past that some 3bn yuan ($490m) in illicit funds had been funnelled to doctors and healthcare officials via a network of middlemen including travel agents.

Meanwhile, the investigation has also revealed that GSK inflated prices of its products in China, in some cases up to seven times the price charged in other countries, according to Ministry official Gao Feng. Despite earlier reports of a probe into medicine pricing the two investigations had not been officially linked.

The evidence-gathering part of the probe has now been completed and a dossier has now been passed on for prosecution in the courts.

Reilly was replaced last July as general manager of GSK China by Herve Gisserot, but at the time GSK said he would remain on the executive team and was heading up the company's internal investigation into the bribery allegations. He had been head of the Chinese unit since 2009.

It is understood that Reilly left China when news of the allegations first broke but returned in October to help with the enquiries, and since then has been prevented from leaving the country.

Since news of the Chinese investigation broke, rumblings of other corrupt practices have continued to dog GSK. It is facing similar allegations in Poland concerning its asthma drug Seretide (fluticasone and salmeterol) while its business activities in Iraq, Jordan and Lebanon have also come under scrutiny.

GSK has conceded in the past that some of its employees may have acted inappropriately, but has always insisted this was done outside its corporate management and control systems.

In a prepared statement, GSK confirmed it had met with the MPS and "takes the allegations that have been raised very seriously."

"We will continue to fully co-operate with the authorities in this matter [and] want to reach a resolution that will enable the company to continue to make an important contribution to the health and welfare of China and its citizens," it added.

14th May 2014

From: Sales, Marketing, Regulatory

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