Some GlaxoSmithKline (NYSE:GSK) executives have admitted to corruption in China, after authorities found evidence of serious commercial bribery and tax-related crimes, the government said.
GSK employees are accused of paying “large bribes” laundered through travel agencies to doctors, hospitals and others to “to open new sales channels and increase drug revenues,” said a Public Security Ministry announcement. It said the scheme “lasted a long time” but gave no details.
They also are suspected of tax offenses involving collusion with travel agencies to issue false invoices, the ministry said. It identified the employees only as “high officials” of Britain-based GSK and gave no details of the size of payments or who received them.
“After questioning, the suspects confessed to the crime,” the statement said.
GSK said it would cooperate with the authorities but said Thursday’s announcement was the first official communication it has received about the investigation.
“Corruption has no place in our business,” said a company statement. “If evidence of such activity is provided we would of course act swiftly on it.”
The government statement marks the first time it has given details of corruption allegations against GSK that surfaced last month. Public security officials in the city of Changsha were investigating senior executives at GSK China on suspicion of economic crimes, the city’s police said on its official blog on June 28, without elaborating.
GSK said July 8 that it was probing a complaint about how employees in China sell Botox to doctors, and its inquiries had found no evidence of bribery or corruption in relation to sales of the wrinkle treatment. The company found no evidence of wrongdoing after completing a four-month investigation into a whistle-blower’s claims of corruption and bribery at its China business, the drugmaker said June 13.
The suspected executives from GSK and officials from relevant travel agencies confessed to the crimes in a preliminary interrogation, according to the ministry’s statement on its website. The ministry didn’t identify the individuals or travel companies.
“We are willing to cooperate with the authorities in this inquiry,” GSK said in Thursday’s statement. “But this is the first official communication GSK has received from the PSB in relation to the specific nature of its investigation,” the company said, referring to China’s Public Security Bureau.
GSK takes all bribery and corruption allegations seriously and continually monitors its businesses to ensure they meet the company’s compliance procedures, according to the statement.
GlaxoSmithKline PLC is headquartered in London but has a large presence in the United States and makes its U.S. headquarters in Research Triangle Park, which could make it liable to penalties under U.S. anti-bribery laws.
Last week, state media reported the government was investigating production costs for 60 foreign and domestic drug companies in a possible first step toward changing state-set maximum prices. The announcement gave no indication any companies were suspected of wrongdoing.
(Bloomberg News and The Associated Press contributed to this report)