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China fines GSK

September 19, 2014

A Chinese court has slapped the country's biggest ever fine on GlaxoSmithKline (GSK) after finding the British drug maker guilty of bribing hospital staff. Several of the company's managers were also sent to jail.

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China Wirtschaft GlaxoSmithKline Logo mit Geldscheine
Image: picture-alliance/dpa

British pharmaceuticals company GlaxoSmithKline (GSK) was fined 3 billion yuan (379 million euros, $488.8 million) for paying bribes in China, state news agency Xinhua said on Friday.

In addition, the Changsha Intermediate Court in central China's Hunan province sentenced GSK's former head in China, Mark Reilly, and an unspecified number of other GSK executives to between two and four years in jail, Xinhua said.

The verdict, handed out behind closed doors in a single-day trial according to Xinhua, followed two years of investigations into graft charges against the UK-based company.

In May this year, Chinese police said that Reilly was accused of operating a "massive bribery network" which had funneled up to 3 billion yuan to travel agencies to facilitate bribes to doctors and officials. Investigators said the wrongdoings began in 2009, when GSK salespeople started paying doctors, hospital officials and health institutions in China for using GSK's products. The practice reportedly led to several billion yuan in illegal revenue for the drug maker.

GSK said in a statement on their website Friday that the activities by the firm's China unit were a "clear breach" of GSK's governance and compliance procedures.

"Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this," GSK Chief Executive Andrew Witty said in the statement.

The case is the biggest corruption scandal to hit a foreign company in China since the Rio Tinto affair in 2009. Court proceedings against the global mining company resulted in four executives, including an Australian, being jailed for between seven and 14 years.

uhe/nz (AP, AFP, Reuters)