GSK says some executives may have broken Chinese law

Monday 22 July 2013 11.58
GSK's Abbas Hussain some senior employees had acted outside of the firm's "processes and controls"
GSK's Abbas Hussain some senior employees had acted outside of the firm's "processes and controls"

Drugs giant GlaxoSmithKline has admitted that certain top executives appeared to have broken Chinese law, as the company faces an investigation over bribery allegations there.

The company also said it would cut medicine prices for Chinese patients in the wake of the scandal, in which funds were alleged to have been paid to doctors and health officials to boost sales and raise prices.

Abbas Hussain, GSK's president of emerging markets and Asia Pacific, said after a meeting with Chinese authorities over the weekend that some senior employees had acted outside of the firm's "processes and controls".

Meanwhile another British drugs firm, AstraZeneca, said its office in Shanghai had been visited by police though a spokeswoman said it appeared to be a local police matter related to a sales representative and not connected to any other investigations.

Mr Hussain flew to China to deal with the crisis which has seen four of GSK's executives questioned and Steve Nechelput, its finance director in the country, banned from leaving.

It has already expressed its regret over the "shameful" allegations and said it had immediately stopped using travel agencies said to have been used to funnel the payments to recipients of bribes.

Mr Hussain said following the meeting with China's Ministry of Public Security: "GSK is taking this situation extremely seriously and that is why we are here.

"Certain senior executives of GSK China, who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law. We have zero tolerance for any behaviour of this nature."

Mr Hussain said the company shared the desire of Chinese authorities to "root out corruption wherever it exists" and that it would work with the MPS, taking "all necessary actions" as the investigation continued.

He said GSK supported Chinese reforms to the medical sector.

"We will actively look at our business model to ensure we make a significant contribution to meeting the economic, healthcare and environmental needs of China and its citizens.

"In addition, savings made as a result of proposed changes to our operational model will be passed on in the form of price reductions, ensuring our medicines are more affordable to Chinese patients."

A GSK spokesman declined to comment on whether Mr Nechelput's travel ban had been discussed during the meeting.

Meanwhile another British national has been detained in China, reportedly as part of the investigation. GSK said the man, named in reports as Peter Humphrey, had never been an employee of the company.

Mr Humphrey runs Hong Kong based ChinaWhys, an investigation and risk consultancy that focuses on fraud and accounting for multi-national businesses operating in China, according to the Daily Telegraph.

The reason for his detention remained unclear but he was understood not to have been formally arrested, the newspaper reported.

A British Foreign Office spokesman said: "We are aware of the detention of a British national in Shanghai. We are providing consular assistance to the family."

Separately, AstraZeneca said in a statement: "AstraZeneca can confirm that it was visited by the Shanghai Public Security Bureau - Huangpu Branch regarding a local police matter focused on a sales representative.

"We believe that this investigation relates to an individual case and while we have not yet received and update from the Public Security Bureau, we have no reason to believe it's related to any other investigations."

The company said it adhered to high ethical standards and did not tolerate illegal or unethical conduct in business activities.