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GSK fires Chinese staff over corruption charges

110 employees reportedly dismissed for misconduct

GSK - logo on building 

GlaxoSmithKline (GSK) continues to feel the effects of the bribery scandal in China, with reports now emerging that the company has sacked 110 employees for misconduct.

The layoffs were among staff deemed to have contravened GSK's governance and compliance procedures as well as the "values and standards expected from GSK employees," said the company, which confirmed that the dismissals had taken place but not the number involved.

The sackings were related to misconduct that took place before mid-2013, added GSK, which said in its recent annual report that it has introduced a new governance model in China with additional controls and monitoring of local working practices and financial transactions.

After first being accused of wrongdoing in July 2013, GSK was fined £300m (around $487m) last September by the Changsha Intermediate People's Court in Hunan Province for offering bribes in return for commercial gain. 

The amount of the fine (3bn yuan) was equivalent to the amount of cash the company had been accused of funnelling to doctors via travel agencies in return for prescribing its products. The court also handed down suspended jail sentences to former GSK China head Mark Reilly and other GSK executives.

Earlier this year, GSK was reported to be planning to lay off around 1,000 employees in China over the course of 2015 in the wake of the corruption scandal and declining sales in the country.  It also recently emerged that chief executive Sir Andrew Witty suffered a salary cut to £3.89m in 2014 - a 46% decline on the prior year stemming mainly because of a reduction in performance-related pay, partly as a result of the scandal.

GSK's annual report includes extensive information on its anti-corruption drive and reveals that nearly 4,000 employees were disciplined for policy violations last year, mainly for attendance or payroll issues. 

All told, 373 people were dismissed, with 233 of those resulting from "violations related to sales and marketing codes." Unsurprisingly, the number of code of conduct violations reports from China rocketed from 48 in 2013 to 652 last year.

GSK also said recently that it had bolstered its internal anti-bribery and corruption team with the creation of three regional hubs to provide a consistent approach to investigations across the group and allow it to respond "more quickly and consistently to emerging issues."

Along with a number of its big pharma peers, GSK has been under investigation by the US Securities and Exchange Commission (SEC) and the Department of Justice (DoJ) since 2010 with regard to allegations of violating the US Foreign Corrupt Practices Act (FCPA) in countries including China, Brazil, Russia, Germany and others.

Article by
Phil Taylor

9th March 2015

From: Sales



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