British watchdog launches criminal probe into GSK over bribery

The UK Serious Fraud Office (SFO) has launched a criminal investigation into drug giant GlaxoSmithKline (GSK) over alleged bribery in China and in other countries.

The SFO yesterday said that it had ''opened a criminal investigation into the commercial practices of GlaxoSmithKline and its subsidiaries.''

The probe follows recent allegations that GSK employees had bribed doctors to prescribe its products in China, Iraq, Poland, Jordan and Lebanon.

Early this month, Chinese police charged former China head of GSK Mark Reilly and two Chinese executives with corruption, after a probe found that the London-based firm bribed doctors and hospitals using billions of yuan generated through elaborate schemes. (See: GSK's former China head charged with bribery)

Reilly briefly left China when the scandal broke in July last year but voluntarily returned to cooperate with police and has since been barred from leaving the country.

The case is the biggest corruption scandal to hit a foreign company in China since the 2009 Rio Tinto affair, which resulted in four executives, including an Australian being sent to prison for periods ranging from seven to 14 years.

Although GSK had launched its own investigation in April, it had absurdly defended the allegations by saying that these bribery charges were similar to ones faced by its rivals.

''We publicly disclose all cases of misconduct identified in the company. Last year there were 161 violations relating to breaches of our sales and marketing polices, resulting in 48 dismissals and 113 written warnings. These numbers are very similar to those reported by other companies in our sector (See: GSK's statement on media reports on misconduct of employees)

The 2010 Bribery Act, gives the SFO powers to investigate and prosecute corruption at home or abroad. Companies need to alert the SFO, with evidence of wrong doing, to be considered for immunity.