Sex tape adds to murk of GSK China scandal

The Chinese corruption scandal surrounding GlaxoSmithKline grew murkier on Sunday when it said senior executives had been sent a secretly-filmed sex tape of the company's top manager in China shortly before Beijing opened its investigation into alleged bribery of doctors.

GSK confirmed the existence of a video of Mark Reilly with his Chinese girlfriend apparently filmed in the bedroom of his Shanghai flat using a covert camera installed without his knowledge.

It was sent anonymously by email to several senior GSK executives, including chief executive Sir Andrew Witty, in March 2013 along with allegations that the company was paying kickbacks to doctors and officials for using GSK drugs, according to people familiar with the situation.

The revelation adds another layer of intrigue to a saga that has roiled GSK for more than a year, badly damaging its China business and posing broader legal and reputational risks for the UK drugmaker.

Mr Reilly, a Briton and long-time GSK executive, was among 46 company employees identified by Chinese police in May as suspects when they handed evidence of "massive and systemic bribery" to prosecutors after a 10-month investigation.

GSK authorised Mr Reilly to hire Peter Humphrey, a British private detective based in China, to investigate the origin of the video in April 2013, according to people familiar with the matter, which was viewed by the company as a serious security breach. Mr Humpreys did not establish who planted a camera in Mr Reilly's bedroom. A separate internal company investigation was already under way into the bribery allegations that had first been made by a whistleblower in January.

Mr Humphrey was arrested by Chinese police in July 2013, together with his wife and business partner, Yu Yingzeng, a US citizen, and charged with illegally acquiring personal information about Chinese citizens. He made a televised confession in August and remains in custody.

It had already been widely reported that Mr Humphrey was working for GSK but the circumstances of his hiring and the existence of the sex video was first revealed over the weekend by The Sunday Times.

The newspaper said Mr Humphrey's investigation had focused on Vivian Shi, the politically well-connected former head of government affairs for GSK in China, who left the company in 2012. She could not be reached for comment on Sunday but has previously denied being the whistleblower behind the bribery allegations against GSK.

Mr Reilly remains in China and, although he is not in custody, he is not allowed to leave the country, according to people familiar with the matter. He is still a GSK employee but has been replaced as China head.

The UK's Serious Fraud Office in May opened its own investigation into GSK, raising the possibility that GSK could face criminal sanctions in the UK and possibly the US as well as China if bribery is proven.

In a statement on Sunday, GSK said "the issues relating to our China business are very difficult and complicated", while the bribery allegations were "deeply concerning".

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GSK had "zero tolerance for any kind of corruption" and had many policies in place to monitor compliance and take action against breaches, the company added.

"We have committed significant resources to find out what happened in China, including an independent legal review. We also continue to make fundamental changes to our business in China.

"We are learning lessons from this situation and we are determined to take all actions necessary as a result."

The company declined to comment on potential motivations for the sex tape or its role in the scandal.



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