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Glaxo Executives Admit to Bribery, Tax Crimes, China Says

Some Glaxo Executives Admit to Corruption, China Says
Glaxo is suspected of trying to increase sales channels and prices by using avenues such as travel agencies to bribe or sponsor projects of government officials, medical associations, hospitals and doctors, and faking tax receipts, China’s Ministry of Public Security said on its website today. Photographer: Simon Dawson/Bloomberg

July 11 (Bloomberg) -- Some GlaxoSmithKline Plc executives have admitted to corruption in China, after authorities found evidence of serious commercial bribery and tax-related crimes, the government said.

Glaxo is suspected of trying to increase sales channels and prices by using avenues such as travel agencies to bribe or sponsor projects of government officials, medical associations, hospitals and doctors, and faking tax receipts, China’s Ministry of Public Security said on its website today. The company has found no evidence of bribery or corruption of doctors or officials in China, it said in an e-mailed statement.

Today’s statement marks the first time the government has given details of corruption allegations against Glaxo that surfaced last month. Public security officials in the city of Changsha were investigating senior executives at Glaxo China on suspicion of economic crimes, the city’s police said on its official blog on June 28, without elaborating.

Glaxo rose 0.4 percent to 1,759.50 pence at 9:25 a.m. in London. The stock has returned 35 percent this year, outpacing the 21 percent return for the Bloomberg Europe Pharmaceutical Index.

Glaxo said July 8 that it was probing a complaint about how employees in China sell Botox to doctors, and its inquiries had found no evidence of bribery or corruption in relation to sales of the wrinkle treatment. The London-based company found no evidence of wrongdoing after completing a four-month investigation into a whistle-blower’s claims of corruption and bribery at its China business, the drugmaker said June 13.

Travel Agencies

The suspected executives from Glaxo and officials from relevant travel agencies confessed to the crimes in a preliminary interrogation, according to the ministry’s statement on its website. The ministry didn’t identify the individuals or travel companies.

“We are willing to cooperate with the authorities in this inquiry,” Glaxo said in today’s statement. “But this is the first official communication GSK has received from the PSB in relation to the specific nature of its investigation,” the company said, referring to China’s Public Security Bureau.

Glaxo takes all bribery and corruption allegations seriously and continually monitors its businesses to ensure they meet the company’s compliance procedures, according to the statement.

“We have done this in China and found no evidence of bribery or corruption of doctors or government officials,” Glaxo said. “However, if evidence of such activity is provided we will act swiftly on it.”

To contact the reporter on this story: Natasha Khan in Hong Kong at nkhan51@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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