|Andy Vitalicio |||Sep 19, 2014 03:03 PM EDT|
(Photo : REUTERS) An employee walks inside a GlaxoSmithKline (GSK) office in Shanghai July 16, 2013.
China has fined British pharmaceuticals company GlaxoSmithKline (GSK) a record penalty of 3 billion yuan (US$490 million, GB£297 million), after a court in the southern city of Changsha found it guilty of bribing doctors and hospital administrators to have their products promoted.
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The sentence announced Friday ends a damaging chapter for the UK-based drugmaker and concludes the biggest corruption scandal to hit a foreign company in China since the Rio Tinto affair in 2009.
Friday's judgement took many by surprise as Chinese authorities did not make a public announcement of the date of the one-day trial in advance.
According to state-owned Xinhua news agency, the Changsha court also handed a suspended three-year jail sentence to Mark Reilly, former head of GSK in China, and four other former executives, whose sentences range from two to four years. The other four were identified as Zhang Guowei, Liang Hong, Zhao Hongyan and Huang Hong.
GSK's corruption case first came to light in July when Chinese authorities announced they have started investigating bribery allegations against the company. The company was accused of having made illegal profits estimated to be US$150 million.
Chinese police also traced some 3 billion yuan, the same amount as Friday's announced fine, that the company funnelled to travel agencies to facilitate the bribes to doctors and hospitals.
GSK said it had published a statement of apology to the Chinese government and its people.
"Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK," said chief executive Sir Andrew Witty. "We will also continue to invest directly in the country to support the government's health care reform agenda and long-term plans for economic growth."
British authorities are investigating other overseas practices by GSK.
In the United States, the company is being investigated under the Foreign Corrupt Practices Act, which prohibits bribery of public officials.
In addition to the Chinese case, GSK has also been accused of corrupt practices in Poland, Syria, Iraq, Jordan and Lebanon, although on a smaller scale.
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