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Sex tape was sent to Glaxo before start of China corruption probe

June 30, 2014, 3:12 PM UTC
Peter Parks/AFP—Getty Images

You might be forgiven that someone has been watching too many spy movies.

The scandal that has rocked the U.K.’s biggest drug company, GlaxoSmithKline Plc (GSK) took a bizarre turn at the weekend after it emerged that a video recording of Mark Reilly, GSK’s head of Chinese operations, having sex with his Chinese girlfriend, was sent to top company executives in what appears to be an attempt at blackmail. The incident appeared to have been filmed in Reilly’s Shanghai’s flat using a covert camera.

The Times of London reported that the tape was sent to 13 senior staff, including chief executive Sir Andrew Witty, as an attachment to an e-mail that alleged the company was bribing doctors in China to pay for drugs and healthcare products at inflated prices.

A spokesman for GSK Monday confirmed the existence of the tape but declined to give any further details. Reilly is separated from his wife.

The tapes were reportedly sent in April 2013, just before Chinese authorities launched a wide-ranging probe into suspected corruption at the company’s local operations. That probe has since led to the arrest of Reilly and two other GSK executives, as well as that of Peter Humphrey, a private investigator whom GSK reportedly hired to find out the source of the video. The charges carry a maximum sentence of life imprisonment.

The investigation has sent shockwaves through many companies operating in China, where many feel they have no option but to comply with demands for bribes to get access to a key growth market. China ranked 80th out of 177 countries in Transparency International’s last survey of corruption perceptions around the world. Only five of co-members of the G20 score worse.

Chinese officials claim to have established “a complete chain of bribery” from the company’s top management to doctors and other healthcare officials, and the Financial Times reported an official in the government’s economic crime investigation as saying that “all departments and pharmaceutical production subsidiaries of GSK (China) Investment across China were fully engaged” in the alleged bribery.

The UK’s Serious Fraud Office, meanwhile, has launched its own investigation into GSK, which has also faced claims of corruption in Iraq and Poland.

GSK said Monday that “the allegations that have been raised are deeply concerning to us. 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.”

It said it was “learning lessons from this situation” and  “determined to take all actions necessary as a result.”