Pharma giant in bribery scandal

GSK executives handed out bribes to doctors and took cash rake-offs

Senior executives at Britain's largest drugmaker, GlaxoSmithKline, allegedly accepted cash rake-offs and paid bribes to officials and doctors to boost sales and prices of its drugs in China, police said on Monday.

The company allegedly used at least four travel agencies to funnel more than 3 billion yuan ($489 million) in bribes since 2007, said Gao Feng, an economic crimes investigator with the Ministry of Public Security.

Some travel agencies had offered sexual services to senior executives in GSK for four years to maintain business contacts, police said.

This case, a focal event of the industry, is believed by insiders to act as an wake-up call for China's pharmaceuticals sector.

The company said in a statement on Monday it was "deeply concerned and disappointed by these serious allegations of fraudulent behavior and ethical misconduct by certain individuals at the company and third-party agencies.

"GSK has zero tolerance for any behavior of this nature. GSK shares the desire of the Chinese authorities to root out corruption. These allegations are shameful and we regret this has occurred."

It pledged to "cooperate fully" with Chinese investigating authorities and said it had stopped using the travel agencies that have been identified so far.

Executives confess

More than 20 employees from GSK (China) Investment Co and travel agencies have been investigated by police, including four senior Chinese executives at the pharmaceuticals giant who have been detained.

They are vice-president and general operations manager Liang Hong, vice-president and human resources director Zhang Guowei, legal affairs director Zhao Hongyan, and business development manager Huang Hong.

The executives have confessed to bribery and tax-related violations, the ministry said, adding that the case involved a large number of staff and a huge sum of money over an extended period of time.

Police are probing other officials and hospitals that may be involved.

The case emerged after police found the annual turnover of Shanghai Linjiang International Travel Service had surged from millions of yuan to hundreds of millions of yuan in recent years with little travel business, and later discovered its cooperation with GSK since 2007.