|Bianca Ortega |||May 14, 2014 09:41 AM EDT|
(Photo : International Business Times) Chinese employees walk into a GlaxoSmithKline (GSK) office in Beijing.
Chinese police announced on Wednesday that they had charged the former head of GlaxoSmithKline (GSK) PLC China and other fellow executives with corruption after an investigation revealed the company had made billions from bribing physicians and hospitals.
GSK British former exec Mark Reilly and two of his Chinese colleagues, Zhao Hongyan and Zhang Guowei, were also suspected of bribing industry and commerce authorities in Beijing and Shanghai, according to a Xinhua report cited by Reuters.
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This is the biggest corruption scandal involving a foreign firm in China since the Rio Tinto issue erupted in 2009. The latter resulted in the imprisonment of four executives for a period between seven and 14 years.
During a press conference held in Beijing, an official from the Ministry of Public Security said GSK bribed hospitals, doctors, and important personnel to increase its sales and managed to pocket billions of yuan as a result.
The bribery and corruption charges carry a maximum sentence of life imprisonment. Many industry insiders and foreign executives in China think this punishment is harsher than it should be.
The exact amount of bribes given and the amount of GSK's illegal earnings have not been detailed by officials. However, the firm has been previously accused of channeling a maximum of $482 million (CNY3 billion) to travel agencies as part of the bribes to doctors and other personnel.
Reilly had exited China for a short period when the corruption scandal surfaced in July 2013. He later came back voluntarily to cooperate with the Chinese police.
The accusations have dented the reputation of the British drugmaker and forced its management team to alter its business model in the Asian country. The company, however, maintains that its head office did not have anything to do with the bribery acts.
Large pharmaceutical firms consider China as a key growth market and depend on the country's growing middle class to make up for their plunging sales in Western nations.
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