Chinese authorities charge country’s former GlaxoSmithKline chief with bribery
FORTUNE — Chinese authorities have accused GlaxoSmithKline’s former China chief, Mark Reilly, of ramping up drug sales by bribing doctors and healthcare organizations.
Gao Feng, deputy director of China’s Ministry of Public Security’s economic crimes unit, said Reilly operated a “massive bribery network.”
Under Reilly, revenue in China rose from 3.9 billion yuan in 2009 to 6.9 billion in 2012, according to the news agency Xinhua. “GSK’s bribery activities ran through its entire operations in China,” Gao said.
In order to fund the bribery, Glaxo (GSK) allegedly bumped up drug costs, charging as much as seven times more than in other countries.
“We take the allegations that have been raised very seriously,” Glaxo said in a statement in response to the accusation. “They are deeply concerning to us and contrary to the values of GlaxoSmithKline. We will continue to fully co-operate with the authorities in this matter.”
The action signals China’s plans to take aggressive action against corruption by foreign executives. The country has recently taken a tougher stance on corruption by its own political leaders and local executives, but corruption remains a huge problem.
Along with Reilly, who left Glaxo in July 2013, Chinese officials accused fellow executives Zhang Guowei and Zhao Hongyan, of bribing officials in Beijing and Shanhai, Xinhua said. An additional 46 others have been implicated in the case, which began last June.
Gao said that Glaxo also had tried to disrupt the law enforcement investigation. It’s unclear what kind of punishment Reilly faces or when he will be formally indicted, if at all.