GlaxoSmithKline has agreed to pay $20 million to resolve U.S. regulators’ allegations that the pharmaceutical giant’s China operations bribed officials to boost drug sales.

The Securities and Exchange Commission announced the settlement of civil charges on Friday with the British-based company,.

GSK maintains a large operation in the Triangle for both research and manufacturing.

The company neither admitted nor denied the allegations of violating the Foreign Corrupt Practices Act, which prohibits bribery of foreign government officials or company executives to secure or retain business.

The SEC said that between 2010 and 2013, employees of GSK’s China-based subsidiary and a joint venture in the country channeled money and gifts to officials, including health care professionals. The bribes generated millions of dollars of increased drug sales to China’s state-run health institutions, the agency said.

The company sells medicines and health care products in at least 150 countries.

Under the settlement, GSK also agreed to provide reports to the SEC for two years on the actions it takes to ensure compliance with the anti-corruption law. The SEC said the company failed to institute and maintain an adequate system of accounting controls and that it lacked an effective anti-corruption compliance program. The improper payments in China weren’t accurately recorded on GSK’s books, the regulators said.

Highlights: SEC Summary of case

Summary

  • A. These proceedings arise out of GSK’s violations of the internal controls and recordkeeping provisions of the Foreign Corrupt Practices Act of 1977 (the “FCPA”) [15 U.S.C. § 78dd].
  • B. Between at least 2010 and June 2013, employees and agents of GSK’s China-based subsidiary and a China-based joint-venture engaged in various transactions and schemes to provide things of value to foreign officials, including healthcare professionals (“HCPs”), in order to improperly influence them and increase sales of GSK products in China.
  • C. This misconduct was facilitated in part by the use of collusive third parties that ostensibly provided legitimate travel and other services. The funds used for the improper inducements were frequently obtained under the guise of, and falsely recorded in GSK’s books and records as, legitimate travel and entertainment expense, marketing expense, speaker payments, medical associations payments, and promotion expense. Throughout this period GSK failed to devise and maintain a sufficient system of internal accounting controls and lacked an effective anticorruption compliance program.
  • D. The deficiencies in GSK’s internal accounting controls and compliance program also led to instances of similar improper conduct in connection with sales in other countries in which GSK operates.

Read the full filing at:

https://www.sec.gov/litigation/admin/2016/34-79005.pdf

Source: SEC