Four senior GSK executives detained

Four senior Chinese executives from the multinational pharmaceutical company GlaxoSmithKline (GSK) have been held by police on bribery and tax-related charges.

The four executives, including two vice presidents of GSK China, a legal affair director and a business development manager, are among over 20 who have been detained, the Xinhua News Agency reported.

Police said the suspects are believed to have offered large bribes to officials, medical industry associations and foundations, hospitals and doctors, in a bid to boost sales in China.

In a statement to the Global Times Monday, GSK reaffirmed they will cooperate with police to root out corruption, saying they are deeply disappointed by the allegations of fraudulent behavior and ethical misconduct by some individuals at the company and third-party agencies.

"These allegations are shameful and we regret this has occurred," the company said, adding that they are reviewing all third-party agency relationships and their compliance procedures in China.

Liang Hong, vice president and operation manager of GSK's China branch, told Xinhua after being detained that bribes account for up to 30 percent of drug prices.

Western media cited Gao Feng, an investigator, as saying that police found over 3 billion yuan ($489 million) of transactions with evidence of illegal behavior since 2007. No information on the recipients of the bribes is available.

The Ministry of Public Security publicly announced the investigation on Thursday.

"In China if you want to sell new medicine you have to bribe everyone involved. The business environment contributes to such corruption," a medical representative with a US-based pharmaceutical firm told the Global Times on condition of anonymity.

Zuo Yuzeng, director of communications for the Pharmaceutical Association Committee, an organization of foreign pharmaceutical firms in China, said the environment is not that bad as the nation does have many anti-corruption regulations.

"It's more likely to be an internal scandal in the company," Zuo said, adding that how the case would influence the whole industrial environment is yet to be seen.

The police also held Weng Jianyong, a corporate representative of a Shanghai-based travel agency, who is suspected of money laundering for Liang.

The majority of his company's revenue came from arranging meetings and activities for GSK, the Beijing News reported Monday, adding that Liang helped Weng to win many bids to arrange activities while the latter offered bribes to officials in Liang's name.

Previous report show that the whistle-blower was an insider but police denied it as saying that Weng's company pointed the investigation toward GSK.

Some other travel agencies even offered "sex bribes" to GSK executives to maintain business contract with GSK.