Glaxo Fired Executive Who Raised South Africa Race Complaint

GlaxoSmithKline Plc dismissed an executive from its African consumer health-care division for refusing to submit to a performance plan that was initiated a week after he reported alleged racial discrimination to a confidential integrity hotline, company documents obtained by Bloomberg show.

The executive, who was fired on Oct. 3, filed a 17-page report on Aug. 28 to the compliance department through a web portal, alleging that Glaxo’s South Africa consumer health-care division, its most profitable unit on the continent, was a “white island” and restricted black staff from being appointed to senior management positions. Only one of the 21 top managers in the unit is black, the executive said in the report. He asked not to be identified because he is seeking to be reinstated.

Glaxo “encourages people to speak up if they have any concerns without reprisal,” it said in an e-mailed response to questions yesterday, declining to comment on the documents or the dismissal. “As soon as we became aware of these allegations we immediately began an internal investigation process which includes the use of external legal consultants. The investigation is ongoing and if areas for improvement are identified we will act on the recommendations.”

In South Africa, which was white-ruled until 1994, 80 percent of the population is black and the government has enacted laws to encourage the promotion and training of workers from races that were discriminated against during apartheid as well as the sale of stakes in companies to non-white investors.

‘Zero Tolerance’

Glaxo has “zero tolerance for discrimination and aims to create an inclusive workplace to attract and retain the most talented people from all backgrounds and cultures,” it said in yesterday’s e-mail. “We focus on creating an inclusive organization where all employees feel engaged and know their work makes an important contribution.”

A week after filing the report on Aug. 28, the executive was asked to submit to the three-month so-called Performance Improvement Plan. He refused to sign, arguing that his performance met company standards and the program was designed to force him out of the company, a copy of the plan with his comments shows. That incurred a charge of gross insubordination.

In June he was given a review that placed him in the second-highest category of four performance standards. He got an above inflation pay rise and a bonus in March, documents seen by Bloomberg show.

Performance Plan

The company informed the executive he would be placed on a formal performance plan on Aug. 15, a week before he filed the compliance alert, Glaxo said in a separate e-mail today.

“The manager responsible for his dismissal was not made aware of the allegations at any point throughout the performance process,” Glaxo said.

The executive denied he was notified of the plan before the Sept. 4 meeting, according to the documents.

The performance management program was an effort to “retain him successfully” and not force him out, Jonathan Girling, Vice-President in charge of Africa, said in the documents.

The integrity line, known as “Speak Up,” was set up to allow workers to report misconduct, violations of country laws and regulations, according to the Brentford, England-based company’s website. “GSK has procedures to protect and safeguard employees from harassment or reprisal when they report concerns in good faith, are genuine concerns of misconduct, and are not falsely raised,” the company said on the website.

Compliance Alert

The executive received confirmation from Glaxo officials in the U.S. and Dubai that his compliance alert on alleged racial discrimination was being probed, according to copies of e-mails. He was contacted by a Glaxo official five days after his Oct. 3 dismissal, e-mails show. That official told the executive that a lead investigator had been appointed.

The employee also declined an invitation to a Sept. 17 meeting, because the documents stated that it would have signified his acceptance of the performance plan. That incurred a second charge of insubordination.

An external labor consultant hired by Glaxo found the executive guilty of both charges and recommended his dismissal, a copy of that report shows.

Management, Training

While the compliance complaint shows that the South African unit has few black senior managers the company as a whole has a more representative workforce when its other units in the country such as its regional pharmaceutical and consumer divisions, and its African leadership team are considered, according to the compliance report.

Under South African law companies are scored according to how well they include blacks in ownership, management, training and other components. The government can penalize companies with low scores.

Glaxo is compliant with the so-called black empowerment codes at level six and has a five-year employment equity plan, agreed with South Africa’s Department of Labour, the company said in a response to queries. There are eight levels, with first being the highest and eight the lowest.

Glaxo’s business in South Africa is limited to consumer health-care products including Aquafresh and Sensodyne toothpaste and Panadol painkillers. It sells pharmaceuticals exclusively through Johannesburg-based Aspen Pharmacare Holdings Ltd. The South African consumer health-care division has revenue of about 90 million pounds ($141 million), according to the compliance report filed by the executive.

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