By tothetick on July 22, 2013
GlaxoSmithKline has announced today that there appears to have been various executives that have indeed broken the law in China and that comes just two days before releasing interim results on GSK on Wednesday July 24th. It has emerged that on Sunday July 21st, GlaxoSmithKline made contact with the British Fraud Office in order to discuss its fraudulent activities in China.
GSK: Andrew Witty
Sir Andrew Witty, Chief Executive Officer of GlaxoSmithKline will come in for a severe roasting and have a few questions to answer on Wednesday as results are published for the British pharmaceutical company.
The reason why GSK has contacted the British Fraud Office is that under British law (2010 Bribery Act) the Serious Fraud Office has the right to investigate both in the UK and overseas. But, more importantly, if the company that is accused of fraud alerts the SFO and takes an active role in demonstrating that they are doing everything to rectify the situation, then they may gain immunity from prosecution. It remains to be seen whether that will be upheld in China.
But, this is not the first incidence of bribery that has taken place concerning GSK. In 2012, GSK reached a deal valued at $3 billion in the USA when it was discovered that the company had been peddling their drugs in the US by providing doctors there with lavish holidays. At the time Andrew Witty stated “In recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the US to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently”. The question is now being raised as to whether the procedures were fundamentally changed everywhere, or not.
According to a statement issued by GSK bribery has taken place and four executives working for the company have been detained by police and are in custody at the present time. GSK’s international president for emerging markets, Abbas Hussain said “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”. In addition, Steve Nechelput, the Finance Officer has been detained also and is not allowed to leave the country while investigations are being carried out.
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Gwen Olsen spent fifteen years as a sales rep in the pharmaceutical industry working for health care giants including Johnson & Johnson, Syntex Labs, Bristol-Myers Squibb, Abbott Laboratories and Forest Laboratories.
Published Jan 31, 2010