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GlaxoSmithKline under Chinese scrutiny for 'economic crimes'

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Chinese authorities are investigating whether GlaxoSmithKline's management team are involved in "economic crimes."

The British pharmaceutical giant's executives are cooperating with Chinese police, although the firm does not know the true nature of the investigation. However, the situation may be related to a recent Wall Street Journal report which claims a whistleblower sent information to GlaxoSmithKline's board, claiming that Chinese sales staff have engaged in the "widespread bribery of doctors to prescribe drugs" from 2004 to 2010.

In 2010, the U.S. Justice Department and the Securities and Exchange Commission contacted the firm over possible violations of the Foreign Corrupt Practices Act within its Chinese business. These "discussions" are continuing.

The Foreign Corrupt Practices Act prevents the bribery of foreign officials in order to do or omit to do an act in violation of duty, or to secure advantages in obtaining or retaining business.

The drug giant says it has investigated the whistleblower's claims and found no merit in them. However, there is corruption in other areas -- this month, GlaxoSmithKline fired the head of the Shanghai research and development center for misrepresenting data in a drug-related scientific paper. Three employees were put on leave and another resigned following the investigation.

Chinese police detained several employees from Shanghai, Beijing and Changsha offices over the weekend, including a senior foreign finance executive, according to the South China Morning Post.

Read More: New York Times

Image credit: Flickr

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— By on July 1, 2013, 8:58 PM PST

Charlie Osborne

Contributing Editor

Charlie Osborne is a freelance journalist and photographer based in London. In addition to SmartPlanet, she also writes for business technology website ZDNet and consumer technology site CNET. She holds a degree in medical anthropology from the University of Kent. Follow her on Twitter. Disclosure