Executives from GlaxoSmithKline, the British drug giant, has admitted to using bribes, kickbacks and other fraudulent means to bolster drug sales in China.   The Ministry of Public Security said people working for the drug maker had bribed doctors, hospitals and government officials and funneled illicit payoffs through travel agencies, pharmaceutical industry associations and project financing. http://www.nytimes.com/2013/07/12/business/global/china-accuses-glaxosmithkline-of-corruption.html?ref=world The announcement came about a week after the authorities raided offices and detained people working for GlaxoSmithKline in three different cities, including Shanghai. The investigation appears to be part of a broad government crackdown on fraud and corruption involving foreign companies.
The government findings released Thursday were unexpected because executives at GlaxoSmithKline had said just last week that an internal investigation of its China operations found no evidence of bribery or corrupt activities.
A whistle-blower at the company came forward this year with accusations of wrongdoing in the China operation.
Glaxo has been investing significantly in China and other emerging markets, seeking to capitalize on a growing middle class that can increasingly afford to pay for prescription drugs.
China still accounts for a small fraction of Glaxo’s business, sales in the country grew 17 percent in 2012, to $1.2 billion.
Earlier this year, The Wall Street Journal reported that a whistle-blower had shared some information with the newspaper and claimed that executives at the company had bribed doctors and hospitals.
In 2012, the American drug maker Eli Lilly agreed to pay $29 million to settle accusations of making improper payments to government officials and physicians in Brazil, China, Poland and Russia. In the Eli Lilly case, employees from the company’s China subsidiary had “falsified expense reports in order to provide gifts and cash payments to government-employed physicians.”    Among other things, the company’s sales representatives used reimbursements to provide doctors with meals, card games and “visits to bath houses.”
The China subsidiary of GlaxoSmithKline “committed crimes” by writing special bills related to the value-added tax and issued fake invoices through travel agencies.
The government also said the company’s senior executives had confessed to many of the crimes, including taking kickbacks from business meetings and accepting commission fees through travel agencies.
GlaxoSmithKline’s problems in China deepened this month when the company fired the head of its research and development center in Shanghai for misrepresenting data in a paper he co-wrote