Glaxo China Accused of Tax Evasion by Country’s Legal Newspaper

GlaxoSmithKline Plc’s China unit was accused by a government-run legal newspaper of failing to pay more than 100 million yuan ($16 million) in import duties and taxes for its HIV treatment.

The company evaded the taxes from 2005 to 2008, China’s Legal Daily newspaper reported May 16 on its Weibo microblog.

Glaxo’s former China chief Mark Reilly, a British national, was indicted May 14 as local police handed a case to prosecutors accusing him of ordering bribes to doctors. The executive left the country after some Glaxo employees were detained in June. The following month, the drugmaker said Reilly would assist the police in the bribery probe after returning to China.

Calls from Bloomberg News to Glaxo’s Singapore-based spokesman Garry Daniels weren’t answered, and the company didn’t immediately respond to queries sent by e-mail to its Singapore and London offices.

The Legal Daily is an official newspaper of the China Communist Party’s Commission for Political and Legal Affairs and is “the Party’s main mouthpiece in the fields of politics and law,” according to its website.

The Glaxo unit also manipulated prices of other imported and locally made drugs by providing falsified costs to Chinese regulators, the newspaper said.

Glaxo is investigating allegations its employees bribed doctors in Jordan and Lebanon, it said in a statement on April 16, following claims of similar behavior in Iraq and Poland. The drugmaker fired 48 employees last year for violating sales and marketing practices and disciplined another 113, it said in the statement.

— With assistance by Daryl Loo

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