More accusations have emerged about GlaxoSmithKline's operations in China, with allegations of millions of dollars being paid to doctors being aired and talk of "sex bribes".
First up, the state-run Xinhua News Agency has reported that four senior executives from GSK are being held by Chinese police on suspicion of having committed serious economic crimes. They are operations manager Liang Hong, human resources director Zhang Guowei, legal affairs director Zhao Hongyan, and business development manager Huang Hong.
The news agency has run an interview with Mr Liang, which has also been shown on Chinese TV, who claimed that he was authorised to approve an annual budget up to hundreds of millions of yuan. Bribes to government officials, medical industry associations and foundations, hospitals and doctors in order to expand GSK's market share in China and raise the price of its drugs.
Most of the bribes are thought to have been arranged through travel agencies. Investigators told Xinhua that the case was not uncovered by a whistleblower but during the first half of this year, police found abnormalities with the operation of the Shanghai Linjiang International Travel Agency.
"It was only keeping contact with some pharmaceutical enterprises and hardly doing ordinary tourism business", a police officer told the news agency. He added that its turnover has surged from several million yuan at its start-up period in 2006 to one hundred times that figure at present.
Weng Jianyong, corporate representative of the Linjiang Travel Agency, told Xinhua that Mr Liang "tells me his bribery purposes over the phone and I prepare the money and deliver to the relevant person". The executives used the travel agency was using travel agencies to circumvent the company's strict internal financial regulations regarding expenses for business receptions and gifts, set at no more than 300 yuan per person.
Mr Weng said to his knowledge, his agency is not the only one having similar deals with GSK. Some of them offer "sex bribes" to GSK senior executives to maintain business contact.
GSK: 'Zero tolerance' over misconduct
GSK issued a statement saying that "we are deeply concerned and disappointed by these serious allegations of fraudulent behaviour and ethical misconduct by certain individuals at the company and third-party agencies". It adds that such behaviour would be a clear breach of governance procedures, values and standards and "GSK has zero tolerance for any behaviour of this nature".
The drugs giant added that it "shares the desire of the Chinese authorities to root out corruption. These allegations are shameful and we regret this has occurred". As well as cooperating fully with the Chinese authorities, GSK has put "an immediate stop on the use of travel agencies that have been identified so far in this investigation and we are conducting a thorough review of all historic transactions related to travel agency use".
The company concluded by saying that it will conduct a rigorous review of compliance procedures in China, stating that "we also fully support the efforts of the Chinese authorities in their reforms of the medical sector".
