Police closes investigation on GSK China's bribery case

Police finished their investigation on the suspected bribery case of GlaxoSmithKline (GSK) China and handed it over to prosecutors, local police said in Changsha on Wednesday.

Prosecutors have started their examination of the case, said the police of Changsha, capital of central China's Hunan Province, in a statement.

The case involves a total of 46 suspects, with William Mark Reilly, a British national and manager of GSK China, among them. After ten months of investigation, police found that Reilly had ordered his subordinates to commit bribery.

Reilly allegedly pressed his sales teams to bribe hospitals, doctors, other medical institutions and organizations through various means and gained illegal revenue worth billions.

Reilly assumed the office of general manager of the prescription drug division of GSK China in January 2009.

He and two other executives, Zhang Guowei and Zhao Hongyan, were also suspected of bribing officials in the industry and commerce departments of Beijing and Shanghai to escape investigation.

Investigations confirmed that GSK China intentionally raised the price of its drugs in the Chinese market by declaring higher prices to Chinese customs.

According to the police, in the most extreme case, the price for the Chinese market was seven times that for others.

The company's high profits and bribery expenses contributed to price floating, police said.

GSK China's revenue in China increased from about 3.9 billion yuan in 2009 to 6.9 billion yuan in 2012.

According to police, Reilly and his colleagues disguised the illegal revenue in the Chinese market by forging financial accounts. They faked transactions between GSK China and several foreign companies of GSK, making the revenue look like funds they received to purchase raw material in China, they added.

The company sponsored its sales representatives in committing bribery and also deployed a highly stressful promotion policy for its sales team, forcing its employees to bribe to achieve soaring sales targets, according to the police.

Reilly and other senior managers tried every effort to cover the illegal sale practice during regular checks by regulatory authorities, the police said.

In terms of sales of prescription drugs and vaccines, police found that all pharmaceutical factories and departments of GSK China nationwide had been involved in commercial bribery.

Last July, police detained four senior executives of GSK China on suspicion of commercial bribery. They were identified as vice president and operation manager Liang Hong, vice president and human resources director Zhang Guowei, legal affairs director Zhao Hongyan, and business development manager Huang Hong. Reilly was not among them.