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US prosecutors add China bribery allegations to GSK probe

Friday, 6 Sep 2013 | 5:50 PM ET
Peter Parks | AFP | Getty Images

U.S. authorities are investigating British drugmaker GlaxoSmithKline for violations of U.S. anti-bribery laws in China after Chinese government officials accused the company of bribing doctors, a company spokesman confirmed on Friday.

The investigation is part of a wider probe of drugmakers' sales practices in China, said a source familiar with the investigation.

The Department of Justice has expanded a probe into GSK's business practices in other countries to include the Chinese bribery allegations, the source said.

Chinese police said in July they had detained four Chinese executives at GSK on allegations the executives funneled up to 3 billion yuan ($489.92 million) to travel agencies to facilitate bribes to doctors to boost the sale of its medicines.

The Justice Department's probe is focusing on whether GSK and other drugmakers violated the U.S. Foreign Corrupt Practices act, which forbids U.S. companies from engaging in bribery while doing business abroad.

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Although GSK is a British company, U.S. law enforcement officials have jurisdiction over it because its shares are listed on a U.S. stock exchange. GSK's American depository receipts trade on the New York Stock Exchange.

Justice Department officials have been investigating GSK's sales practices in other countries for at least three years, according to the company's corporate filings. Expanding the probe to include the China allegations is a routine step, experts said on Friday.

GSK, which has not yet been subpoenaed on the China case, has said some of its senior Chinese executives appear to have broken the law. The company said in July it believes the alleged corruption involved senior Chinese staff working around its systems to potentially defraud the company as well as cheating the Chinese healthcare system, adding that GSK's head office had had no knowledge of the situation.

"Since the investigation in China began we have proactively reached out to relevant regulators. This includes the DOJ, and we have been in an ongoing dialogue with them," said David Mawdsley, a spokesman for GSK in London.

Peter Carr, a spokesman for the Justice Department in Washington, declined to comment.

—By Reuters.

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