China is cracking down on foreign companies and a British pharma exec is its latest target
By China’s ongoing investigations into corporate corruption and malfeasance have often focused first on foreign companies. Earlier this week, for example, Beijing handed out its largest fine ever for air pollution to a US joint venture.
But today China’s Ministry of Public Security took an even more dramatic step, accusing a British pharmaceutical executive of “ordering his subordinates to commit bribery.” This is the first high-profile bribery accusation against a foreign executive since 2009, when an Australian executive from mining group Rio Tinto was charged with accepting kickbacks for iron ore deliveries.
Since Mark Reilly, GlaxoSmithKline’s ex-China chief, took the top China post in 2009, the company made several billion yuan in revenue thanks to bribes, officials said, by paying hospitals and doctors to peddle its drugs at inflated prices. “Glaxo’s acts of bribery penetrated all aspects of the company’s business operation,” Gao Feng, a Ministry of Public Security official, told the Wall Street Journal. The case will now be handed to Chinese prosecutors.
The accusations cap a months-long probe by Chinese police into alleged wrongdoing by GSK, part of a broader investigation into China’s pharma industry, where bribery is rampant. China’s state-run healthcare system is so severely underfunded that hospitals rely on drug sales—and kickbacks from drug companies and medical suppliers—to stay afloat, as Quartz has previously reported.
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