(NaturalNews) First came the denials, then - finally - the admission that, yes indeed, some of GlaxoSmithKline's senior Chinese executives broke the law in a $484.8 million cash and sexual favors scandal.
Britain's Guardian newspaper reported on July 22 that the mega-drugmaker's head of emerging markets, Abbas Hussain, had been sent to Shanghai in an effort to manage the crisis, where he apologized to Chinese authorities and pledged that his Big Pharma firm would be taking the charges against its personnel "extremely seriously."
"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," said Hussain, who is the brother of England cricketer Nasser Hussain. "We have zero tolerance for any behavior of this nature."
History of corruption in China
The company's admission and Hussain's apology came a month after Britain's largest drug manufacturer announced it had found "no evidence of corruption or bribery in our China business," the result of a four-month internal investigation.
Though China's public security ministry accepted the apology, the agency nonetheless issued a statement condemning the GSK execs, saying they "violated China's laws and damaged markets by engaging in bribery to raise drug prices, expand sales and reap inappropriate profits."
From the Guardian:
The Chinese authorities have arrested four senior Chinese GSK executives as part of the investigation into claims that doctors were bribed with cash and sexual favors in return for prescribing GSK's drugs.
One of the arrested executives has confessed to the allegations on Chinese state television from what appeared to be his detention cell.
GSK China's British finance director, Steve Nechelput, has been prevented from leaving the country. The leading Chinese investigator has raised questions over why Mark Reilly, the UK head of GSK's Chinese operations, left China for Britain just before the charges were announced and has not returned. GSK said Reilly is not scheduled to return to China.
It wasn't clear whether China will execute those involved in this scandal, as the government executed a pair of milk producers for selling more than three million pounds of contaminated milk products in 2009, but we'll keep you posted [http://www.nytimes.com].
Meanwhile, Chinese authorities moved to detain Peter Humphrey, a British private investigator who has a past association with GSK. "Humphrey, founder and managing director of risk advisory and investigations firm ChinaWhys, was arrested in Shanghai on 10 July," said the Guardian.
China casting suspicious eye at other Western Big Pharmas?
On its website, ChinaWhys notes:
Combining detective skills with our understanding of business operations and financial management, we assist multinationals to prevent, detect or investigate fraud, employee corruption or other white-collar crime to protect their bottom line, reputation and regulatory integrity, as well as providing support for dispute resolution and other business crises.
The arrest of its Chinese executives is only the latest in a long string of problems GSK has had in China, as evidenced by the fact that the Big Pharma firm conducts as many as 20 internal audits in the country annually. In 2012, more than one-sixth of the 312 personnel fired worldwide for violations of policy were based in China, though the Asian giant only accounts for about 3 percent of GSK's $27 billion annual sales.
The Guardian also reported that the Chinese investigation may also have widened to other Western Big Pharma firms. AstraZeneca announced recently its Shanghai office had also been raided by Chinese police and that one employee had been detained for "questioning."
And last year, GSK paid out $3 billion in fines in the U.S. to "settle claims that it tricked and bribed doctors into prescribing dangerous antidepressants to children," the paper said.