GlaxoSmithKline admits 'senior executives' may have broken Chinese law

Police detain executives amid allegations that employees bribed doctors to prescribe their pharmaceutical products

Chinese police today accused GlaxoSmithKline of being the “ringleader” in a massive bribery scandal (Reuters)

British drug company GlaxoSmithKline is under investigation for claims its employees bribed doctors in China, as the president of its Asia-Pacific branch admitted executives “appear” to have broken the law.

Police say the company’s employees used travel agencies and consulting firms to hide a total of 3 billion yuan (£320 million), allowing them to evade GlaxoSmithKline’s internal anti-bribery controls. Investigators could not confirm how much of the funds had been paid to doctors.

The police ministry has said four employees of GSK's China unit, including a vice president, have been detained. The company says its finance director for China was not among them, but has been barred from leaving the country.

GSK’s president for Asia-Pacific and emerging markets, Abbas Hussain, said he met with members of the Chinese police force who are investigating whether or not employees bribed doctors and hospital administrators to prescribe its drugs.

Mr Hussain said: “Certain senior executives of GSK China who know our systems well appear to have acted outside of our processes and controls, which breaches Chinese law.”

The news came as British national Stephen Humphrey, an anti-fraud investigator who worked for GSK, was detained by police in Shanghai, according to the Financial Times.

The British Embassy in Beijing confirmed that a British national was detained on 10 July in Shanghai, but said it could give no other details.

Mr Hussain said the company was assisting the police in its investigation. He said: “I want to make it very clear that we share the desire of the Chinese authorities to root out corruption wherever it exists.”

He added: “We fully support the efforts of the Chinese authorities in their reforms of the medical sector and stand ready to work with them to make the changes for the benefit of patients in China. We will actively look at our business model to ensure we make a significant contribution to meeting the economic, healthcare and environmental needs of China and its citizens.“

The new Chinese leadership that came to power in November has promised to improve China's health system and to cut down on the surging costs of medicine and medical care that have become a major source of public frustration.

The Guardian reported on Monday morning that shares in GSK fell almost 1 per cent, down 17p at £16.97.