British ex-GSK executive charged in China bribery case

Written By limadu on Rabu, 14 Mei 2014 | 15.30

HONG KONG (CNNMoney)

The charges against Mark Reilly, a British national, were revealed Wednesday by police in China's central Hunan Province and reported by state media. Two other GSK executives, Zhang Guowei and Zhao Hongyan, were accused of bribing government officials.

The charges are the latest development in a year-long crackdown on pharmaceutical companies operating in China.

GSK has previously been accused by China of using a network of more than 700 travel agencies and other firms to channel bribes to health officials since 2007.

The British company's sales in China have suffered greatly as a result of the crackdown. Investors have largely shrugged off the losses as the company's China business constitutes a small percentage of overall revenue.

GSK (GSK) did not immediately respond to a request for comment. The company previously admitted that some of its executives may have broken the law, and promised to change its business practices

Reilly's whereabouts were not immediately known. The executive had been allowed to leave China early in the investigation, but he is believed to have returned to the country.

Related: Banned! 7 things you won't find in China

Last year, four other senior GSK executives were detained by authorities. State television aired an apparent confession by one of the four, Liang Hong, explaining how the scheme worked, including the use of fake conferences and travel agencies to create receipts for services that were never performed. The surplus funds were allegedly then used to pay bribes.

Medical workers are thought to be particularly susceptible to bribery in China because their salaries often lag behind other fields -- even though extensive education is required to enter the profession.

The pharmaceutical industry is also a place where the interests of the government clash with private enterprise.

The state finances medical care for many Chinese, making the government one of the drug companies' biggest customers. As a consequence, regulators often work to keep costs low through the implementation of price ceilings. To top of page

First Published: May 14, 2014: 2:07 AM ET


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