Serious Fraud Office launches criminal investigation into GlaxoSmithKline

Dog Detective

Britain's Serious Fraud Office has launched a formal criminal investigation into GlaxoSmithKline's sales practices, piling further pressure on the drugmaker which is already being investigated by Chinese authorities and elsewhere amid allegations of bribery.

Britain's biggest pharmaceutical company, run by Sir Andrew Witty, said it had been informed on Tuesday that the SFO had "opened a formal criminal investigation into the group's commercial practices".

"GSK is committed to operating its business to the highest ethical standards and will continue to cooperate fully with the SFO," it added. A spokeswoman was unable to give further information. It is understood the SFO is looking at possible patterns across numerous global jurisdictions including China.

The Guardian reported last July that GSK had briefed criminal investigators from the SFO on its activities in China.

Under the 2010 Bribery Act, the SFO has powers to investigate and prosecute corruption at home or abroad. In some circumstances companies can be considered for immunity from prosecution if they can demonstrate they have been proactive and alerted SFO investigators to evidence of wrongdoing as soon as they found it.

Two weeks ago, China charged three GSK executives, including the former boss of its China business Mark Reilly, with corruption. Reilly, who is British, is accused of offences that carry a maximum sentence of life in prison. Police claimed that Reilly and two Chinese executives, Zhang Guowei and Zhao Hongyan, bribed doctors and hospital officials.

GSK first faced accusations from Chinese authorities last July of funnelling up to 3bn yuan (£285m) in bribes to encourage doctors to use its medicines in a case that the company described in 2013 as "shameful".

Since then allegations have surfaced in other countries. GSK is itself investigating claims that bribes were paid to doctors in Poland, Iraq, Jordan and Lebanon. While taking the claims seriously, the company has insisted these are isolated cases and there is nothing systemic about the problems.

Less than two years ago, GSK was fined almost £2bn in the US after it admitted bribing doctors and encouraging the prescription of unsuitable antidepressants to children. Witty promised a company-wide overhaul then to prevent a repeat of the "unacceptable mistakes".

Bribery of doctors is said to be rife in China, with tough sales targets and low doctor salaries creating a breeding ground for backhanders.

Last week local anti-corruption officials visited the offices of Swiss drugmaker Roche in the eastern city of Hangzhou, in another sign that Chinese authorities are stepping up their crackdown on bribery in the healthcare sector.

According to the 21st Century Business Herald newspaper, the city's health bureau has ordered local healthcare departments to carry out internal compliance investigations before the end of June and to report any kickbacks they had received.

A health bureau memo mentioned by the newspaper report named Britain's AstraZeneca, America's Eli Lilly and Denmark's Novo Nordisk as companies suspected of making kickbacks.

An AstraZeneca spokeswoman said: "To our knowledge, the Hangzhou Health Bureau has not verified this communication. And we have not received any official communication on this topic at this time."

She added: "AstraZeneca China cooperates with various Chinese authorities on a regular basis across a wide range of interactions and is committed to acting with integrity at all times, in all of our operations and customer interactions."

Last year Chinese authorities visited international drugmakers including Novo Nordisk, Novartis, AstraZeneca, Sanofi, Eli Lilly and Bayer as part of a broad investigation into the sector.

Powered by Guardian.co.ukThis article was written by Julia Kollewe, for The Guardian on Wednesday 28th May 2014 00.02 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

Best place to workThe Best Firm of the Last Decade is...

Register for Financial Markets News Alerts