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UK authorities open investigation into GSK

Serious Fraud Office launches probe after international corruption allegations
GSK - logo on building

An investigation into GlaxoSmithKline (GSK) has been opened by the UK's Serious Fraud Office (CFO) in the wake of corruption allegations in China and other countries.

Details of the investigation remain sketchy. GSK is not commenting on the specific lines of enquiry being pursued by the SFO, but said in a statement it would "continue to cooperate fully" with the government department.

The SFO confirmed in a statement that a criminal investigation had been opened, and added that it would welcome approaches "from anyone with inside information on all our cases, including this one."

GSK staff in China - including former general manager Mark Reilly - look likely to face formal charges of large-scale corruption after a dossier was passed onto prosecutors by investigators earlier this month. That case is in itself remarkable because it could represent the first time the Chinese government has prosecuted a western company for bribery and corruption of Chinese citizens in China.

Since then additional allegations of bribery have emerged from a whistleblower in Poland - as well as Iraq, Jordan and Lebanon - and so an official investigation by the UK authorities has been all-but inevitable.

GSK is vulnerable to prosecution outside China as its shares are listed in the UK as well as in the US. Last September, the US Department of Justice expanded an ongoing probe into the company's business practices - which resulted in a $3bn settlement in 2012 for mis-promoting medicines - to include its activities in China.

Anti-corruption laws in both countries mean that prosecutions can be brought even if no crimes were committed within the UK or US.

Since the 2012 DoJ settlement, GSK has implemented a series of changes to try to de-incentivise corrupt practices, for example by doing away with sales targets for reps and using in-house doctors and scientists rather than external speakers to present on its products.

At the heart of the UK and US investigations will be GSK's often-repeated position that any corruption took place outside of its corporate management and control systems, was not a systemic issue and that senior GSK executives were unaware of the activity.

GSK is being investigated by the SFO under the auspices of the UK's Bribery Act, which came into effect in 2011. The first charges brought under the Act were laid last August against four executives from a bio fuels company, and if charges were brought against GSK it would be the first case involving a large corporation.

Article by
Phil Taylor

28th May 2014

From: Sales, Regulatory

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