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British pharmaceutical giant GlaxoSmithKline (GSK) has instructed Chinese firm Jun He to represent it amidst investigations over several of its senior executives’ alleged bribery and tax violations.
A statement published by China’s Ministry of Public Security yesterday (11 July) confirmed that the police have started criminal investigations involving several senior executives in GSK’s offices in Changsha, Shanghai and Zhengzhou over bribery and tax allegations.
According to press reports, the UK company has hired a number of advisors, including Chinese firm Jun He, to advise it on the allegations.
Four people are currently being interviewed by police in connection with the allegations, including the company’s Chinese head of legal April Zhao. Zhao joined the company in 2007 to head up GSK’s China and Hong Kong legal department.
According to local Chinese media, five senior management members left the company in May, including the former head of compliance for China, whose name and the reasons of leaving are undisclosed.
The statement by the Ministry of Public Security said: “There is strong evidence suggesting the company has bribed certain government officials, industry associations, hospital and doctors to increase the prices of its products and market share.”
It also added: “The company has faked tax invoices to gain cash. There are many suspects, the illegal behaviour continued over a long time and its scale is huge. There is sufficient evidence demonstrating that several of the company’s senior executives and staff have severely violated anti-bribery and tax laws.”
GSK said in response to the allegations that it had found no evidence of bribery or corruption in China, but is willing to co-operate with the authorities in this inquiry.
The company released a statement, saying: ”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.”
Beijing-based Jun He is Asia Pacific’s 15th largest independent firm, ranked by The Lawyer Asia Pacific 150. The firm has over 480 lawyers, including 118 partners, in seven offices. Beijing-based corporate partner Feng Rui is one of the firm’s partners focusing on anti-bribery or corruption issues.