Business & Economy
10:48 am
Thu July 11, 2013

GlaxoSmithKline Executive In China Confesses To Paying Bribes

Credit GlaxoSmithKline

Authorities in China say a number of senior executives working for GlaxoSmithKline in that country have been placed under criminal investigation for suspected bribery and tax related violations.  The British pharmaceutical company's US headquarters are in Research Triangle Park. 

In an interview broadcast on WUNC, the BBC’s John Sudworth reported that the ministry of public security said the employees offered large bribes to officials, medical associations, hospitals and doctors to boost drug sales.

A statement from GlaxoSmithKline says the company is “willing to cooperate with the authorities in this inquiry,” yet has found no evidence of bribery or corruption. They also said they “take all allegations of bribery and corruption seriously.”

UPDATE: The BBC's Martin Patience reported from Beijing on July 16:

In a trial broadcast on TV, a disheveled-looking GlaxoSmithKline senior executive confessed to paying bribes. He said that his actions had pushed up drug prices in the country. 

GlaxoSmithKline is accused of widespread corruption in order to increase its market share in China. Officials here say that the pharmaceutical giant funneled payments through hundreds of travel agencies. Its offices have been raided and its warehouses in China are now sealed off. GlaxoSmithKline has promised to cooperate with authorities, adding that the allegations are shameful.

It's reputation has already taken a huge hit in China. And it's till not clear what fines or punishments the company may face. But how this case is handled in China will be very carefully watched by other multinationals operating here.

According to the New York Times, "multinational drug companies employ more sales agents in China than they do in the United States."

The BBC also reported that the Swiss pharmaceutical company, Novartis, which has a lab in Holly Springs, N.C., has announced the details of a revised pay-off to its former chairman after the original $77 million figure sparked a public outcry.  Daniel Vasella will now receive $5 million in cash and shares.  Novartis will also pay him $25,000 a day for consultancy work. 

In March, a national referendum in Switzerland produced an overwhelming vote in favor of restricting payments to company executives.