Updated Jun. 30, 2014 at 4:01 p.m.

Sunday Times: Sex tape ignited GSK's China scandal

Published: 2014-06-30 15:49:00
Updated: 2014-06-30 16:01:47

Did an investigation launched by GlaxoSmithKline (NYSE: GSK) to try to determine the origin of a sex tape involving the drug giant's senior China executive come back to sting the company?

In a story filled with sex, drugs, bribery and politics, The Sunday Times of London reported Sunday that the GSK investigation - code named Project Scorpion - and the video itself are at the heart of the bribery scandal,

Did senior Chinese officials respond to the GSK video investigation by lashing out at the company in retaliation?

"Revealed: sex tape blew open Glaxo’s China bribery scandal," the headline in the newspaper reads.

Noting that a copy of the video was sent to GSK Chief Executive Officer Andrew Witty, the newspaper's Fart east Correspondent Michael Sheridan wrote the "sex tape" was "the spark that set off the worst scandal in the pharmaceutical giant’s history."

WRAL TechWire coverage of GSK-China scandal:

The "covert" tape involved Mark Reilly, who ran GSK operations in China. He was ordered not to leave the country after the allegations of bribery against GSK erupted.

"The Sunday Times has learnt that the video, filmed clandestinely in Reilly’s Shanghai flat, was sent by email to senior Glaxo staff including the chief executive Sir Andrew Witty. Reilly was authorized to hire a British corporate investigator at Glaxo’s expense to discover who sent it — a probe code named Project Scorpion," Sheridan wrote.

However, Sheridan says the investigator "ended up in prison after his inquiries into a well-connected Chinese businesswoman suspected of a smear campaign against Glaxo led to his arrest by Shanghai police."

Reuters Confirms Tape

On Monday, the Reuters news service said GSK confirmed "the existence of an intimate recording" of Reilly.

However, the company "did not comment on how it related to the alleged bribery scandal."

Reuters also noted that it "was not independently able to verify the link between the tape and the bribery case."

The GSK bribery case erupted a year ago with Chinese officials alleging that nearly $500 million in bribes were paid to Chinese doctors and officials. Reilly faces corruption charges. 

GSK, which operates its North American headquarters in RTP, already has described the bribery allegations as "shameful."

GSK told Reuters that it is cooperating in the bribery investigation. 

Added GSK: "The issues relating to our China business are very difficult and complicated."





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