Andrew Witty is expected to announce GlaxoSmithKline’s latest quarterly earnings report on Wednesday morning. Don’t be surprised if he also doesn’t have more than a few things to say about China and be pressed by journalists on the still-unfolding scandal.

The heat is on Witty as the sex, bribes and drug case that could have been a plot for a hit movie threatens to grow into an incident that could threaten much more than the giant’s future in one of its largest potential markets.  Chinese investigators have described a $489 million web of “spurious travel and meeting expenses, and trade in sexual favors,” according to Bloomberg news.

GSK (NYSE: GSK) also may face legal problems at home with the U.K. government looking into the case for possible corporate bribery, according to the U.K. Guardian.

“Under the 2010 Bribery Act, the [Serious Fraud Office] has powers to investigate and prosecute corruption at home or abroad,” the newspaper said. “In some circumstances companies can be considered for immunity from prosecution if they can demonstrate they have been pro-active and alerted SFO investigators to evidence of wrongdoing immediately they learned of it.” (The U.S. government frowns on foreign bribery, too.)

Scandals, unfortunately, are not new for GSK (NYSE: GSK).

Just one year ago, Witty said the following:

“I want to express our regret and reiterate that we have learnt from the mistakes that were made.”

Incidents in the settlement involving how the asthma drug Advair was marketed between 2001-2010 led to a $3 billion settlement with the U.S. Justice Department. It set a record no company would want: The largest healthcare fraud settlement.

However, Witty pointed out that the settlement involved practices tracing their origins to “a different era for the company.” He acknowledged, however, that “they cannot and will not be ignored.”

Then there is the entire diabetes drug Avandia debacle. And payments to doctors for research.

GSK was already being beaten up in China over a research scandal that erupted in June.

A complaint was filed against GSK in the U.K. in April for alleged efforts to delay competing drugs from entering the market.

On His Watch

Witty became CEO in 2008. Based on what is known at this point, his predecessors can’t be blamed for this new China flap.

As more information comes out about the investigation of GSK for the China abuses, the worse the damage appears to be for GSK. Witty has sent executives to Beijing to exercise damage control. But he is likely to have to address tough questions about corporate behavior that occurred on his watch.

To Witty’s lasting credit, he is making numerous attempts to change the culture at GSK, making it more open. He has committed to cheaper drugs for developing countries. He has opened up patents for researchers.

Unfortunately for him and the company, the China news once again casts a cloud over the company.

Two statements from GSK itself point to the great degree of embarrassment for the company.

Monday’s Statement:

After meeting with the Chinese Ministry of Public Security, Abbas Hussain, president International – Europe, Japan, Emerging Markets & Asia Pacific, said:

“We have had a very constructive meeting with the Ministry of Public Security, and we are very grateful for their time. GSK is taking this situation extremely seriously and that is why we are here.

“Certain senior executives of GSK China who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law. We have zero tolerance for any behaviour of this nature.

“I want to make it very clear that we share the desire of the Chinese authorities to root out corruption wherever it exists. We will continue to work together with the MPS and we will take all necessary actions required as this investigation progresses.

“We fully support the efforts of the Chinese authorities in their reforms of the medical sector and stand ready to work with them to make the changes for the benefit of patients in China. We will actively look at our business model to ensure we make a significant contribution to meeting the economic, healthcare and environmental needs of China and its citizens.

“In addition, savings made as a result of proposed changes to our operational model will be passed on in the form of price reductions, ensuring our medicines are more affordable to Chinese patients.”

Last Week’s Statement:

“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.

“Such behaviour would be a clear breach of GSK’s systems, governance procedures, values and standards. GSK has zero tolerance for any behaviour of this nature.GSK shares the desire of the Chinese authorities to root out corruption.

“These allegations are shameful and we regret this has occurred.We will cooperate fully with the Chinese authorities in the investigation of these new allegations. We will take all necessary action required by the outcome of this investigation.In the meantime, we are taking a number of immediate actions.

“We are reviewing all third party agency relationships. We have 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. We also intend to conduct a rigorous review of our compliance procedures in China.

“GSK fully respects the laws and regulations in China and expects all staff to abide by them.We also fully support the efforts of the Chinese authorities in their reforms of the medical sector and stand ready to work with them to make the necessary changes for the benefit of patients in China.”

As the statements make clear, GSK knows it is in trouble in China – and in the world of public opinion.

How will Witty work his way out of this sticky wicket?

[GSK ARCHIVE: Check out more than a decade of GSK stories as reported in WRAL Tech Wire.]