The first major catch of the UK Bribery Act
In recent years, companies have fundamentally changed the procedures for bribery, fraud and corruption (BFC) compliance, marketing and selling in the US to ensure that they operate with high standards of integrity and that the business activities are open and transparent.
The UK drug firm, GlaxoSmithKline has not admitted any wrongdoing in the part of a £320m bribery network but has briefed criminal investigators from the Serious Fraud Office (SFO) on its activities in China and prepares to face questions over bribery and corruption allegations in one of the its fastest growing markets.
GSK with the traditional explanation: These allegations are shameful and we regret this has occurred.
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 pro-active and alerted SFO investigators to evidence of wrongdoing immediately they learned of it.
The allegation is that GSK is at the heart of an £320m bribery network, siphoning payments and perks to health officials and doctors through more than 700 "travel agencies", tasked with organising conferences for doctors. Some reports over the weekend suggested the substantive allegations centred on as few as 25 such agencies.
GSK was described by Chinese officials as playing a "godfather" role at the centre of these agent companies. The GSK's compliance team in China has been challenged by the scale of his company's growth there. Keeping track of the activities of all agents has been tough and he has already instigated a review of "all third party relationships".
Sales in China grew 20% to £1bn last year. Controlling operations in China is "not a trivial proposition".
A British national and nine others – all working for a corporate intelligence firm – were reported over the weekend to have been arrested as part of the investigation into GSK.
Police had previously arrested four Chinese GSK executives and have raised concerns about the timing of a flight out of the country taken by the drug firm's regional boss shortly after the corruption inquiry was announced.
Last year the company reached a $3bn deal with criminal prosecutors in the US and GSK pleaded guilty to a raft of offences linked to the illegal promotion of its drugs in America. Many of the allegations related to extravagant travel provided to doctors whose business GSK was courting.
At the 7th annual GRC Summit, a Chinese lawyer Luka Lu will explain the above case in details
