GSK used travel agencies for China bribes: police'
Beijing, July 15, 2013
Chinese police on Monday accused British drugmaker GlaxoSmithKline of channelling bribes to Chinese officials and doctors through travel agencies for six years to illegally boost sales and to raise the price of its medicines in the country.
Since 2007, the company had transferred as much as 3 billion yuan ($489 million) to more than 700 travel agencies and consultancies, said Gao Feng, head of the economic crimes investigation unit at the Ministry of Public Security. He did not make clear how much of this money was allegedly spent on bribes.
Four senior Chinese executives from GlaxoSmithKline (GSK) had been detained, Gao added, speaking at a news conference.
Last week the Ministry of Public Security said GSK executives in China had confessed to bribery and tax violations.
GSK officials were not immediately available for comment. The company has previously said it had found no evidence of bribery or corruption in China, but added it would cooperate with the authorities. It has said it was only told about the investigation in early July.
Until Monday, Chinese authorities had released few details on the probe into Britain's biggest drugmaker, one of a string of investigations into foreign firms and their pricing practices in the world's second-biggest economy.
"We have sufficient reason to suspect that these transfers were conducted illegally," Gao said at the ministry's imposing headquarters in Beijing, which is usually off limits to foreign reporters.
"You could say the travel agencies and GSK were criminal partners. Among the partners, GSK was mainly responsible. In a criminal organisation there is always a leader."
Gao said police had uncovered information during their investigation that pointed to similar money transfers made by other multinational pharmaceutical companies in China.
"Whether they were engaged in illegal behaviour, you can go interview them ... You just need to ask them one question: Are you sleeping well at night?" said Gao.
He did not name any other foreign companies.
China is an increasingly important country for international drugmakers, which are relying on growth in emerging markets to offset slower sales in Western markets where many former top-selling medicines have lost patent protection.
IMS Health, which tracks pharmaceutical industry trends, expects China to overtake Japan as the world's second-biggest drugs market behind the United States by 2016. - Reuters