GlaxoSmithKline bribery case details

The Ministry of Public Security recently announced that some senior executives of the GlaxoSmithKline (China) Investment Company have been investigated for alleged economic crimes such as serious commercial bribery. On June 27th, Liang Hong, vice president and general manager of business operations of GSK China, was taken away by the police for investigation. The same day he was taken away, Zhang Guowei, the vice president and director of the human resources department, and Zhao Hongyan, director of the legal department, were taken away. Huang Hong, general manager of business development business operations. These four people are known as the "four carriages" of GlaxoSmithKline China.

The survey found that an unknown travel agency - Shanghai Linjiang International Travel Agency, which was established in 2006, helped a number of pharmaceutical companies such as GlaxoSmithKline (China) Investment Corporation to illegally cash out more than 20 million yuan. Some of this money went into the pockets of executives. The other part is diverted downwards step by step, to the sales representatives at all levels and even to the grassroots medical representatives, and has become a source of funds for bribery to the relevant departments and units. Lin Jianyu, legal representative of Linjiang Travel Agency, said that since 2010, Liang Hong has received most of the meetings of Liang Hong's department under the “care”. As of this year, the total amount of reimbursement is about 30 million yuan. According to the “laws and regulations,” Liang Hong’s “benefit” has more than 2 million yuan. Some of these benefits were directly given to Liang Hong, and another part was placed on him for Liang Hong and his family to travel around and handle some of the expenses that their company could not make. Weng Jianhao confessed that Liang Hong had made it clear to him that these "unable to pay for expenses" was to send money or buy gifts to a competent department leader or expert.

There was no exact number of people attending the meeting, and the company’s financial department did not have exact verification methods or corresponding steps. In other words, as long as the invoice is in line with the standard, reimbursement to the financial department is easy to get through. The money that was reimbursed was refunded to both executives and travel agents. In addition to Linjiang Travel, GlaxoSmithKline China also maintains "cooperation" with a number of travel agencies. In order to undertake more business, Linjiang and other travel agencies not only provide cash, pay for tourism, and other means, individual travel agencies also resorted to sexual bribery, to provide long-term "beauty" to an executive to maintain relations.

The only source of income for GSK in China is drug sales, which means that the huge amount of “black gold” will be passed on to drug prices, and the patient will eventually pay the bill. The medicine costing only 30 yuan will eventually reach 300 yuan in the hands of patients, and the proportion of operating costs in medicine prices will account for two to three percent.

At present, the case is still under investigation. The person in charge of the relevant Ministry of Public Security stated that the case of GlaxoSmithKline only revealed the tip of the iceberg in the entire industry.

In recent years, China has become a hard-hit area for transnational corporations’ commercial bribery. In December last year, the global pharmaceutical giant Lilly was accused by the U.S. Securities Exchange Commission and bribed foreign government officials by providing improper payment methods to obtain business in Russia, Brazil, China, and Poland. Finally, Lilly agreed to pay nearly 30 million U.S. dollars for recovery payments. With allegations. In August of last year, the United States Securities Exchange said that Pfizer Pharmaceuticals had paid bribes to local officials, public officials such as doctors and medical staff in eight countries including China. In the end, Pfizer paid $60 million including fines. From the 1990s to the present, many well-known multinational companies, including Morgan Stanley, IBM, Lucent, Wal-Mart, Depp, have allegedly committed commercial bribery in China.

The Xinhua News Agency commented that according to the bribery, foreign pharmaceutical companies opened the door to the Chinese market and achieved a strong market position. This may stifle the living space of domestic small and medium-sized pharmaceutical companies. What's more, the huge bribery fees are ultimately reflected in high prices. In the cost of several times, several times the price of drugs, passed on to the majority of patients. Pharmaceutical companies with such behavior are not only the Geshi family. To do business in China, you must understand China's "water." Some drug companies know this well. This time, GlaxoSmithKline has revealed that the supervision and crackdown have tightened and is a profound warning to multinational companies or domestic companies.