Police in China have charged the former head of drug company GlaxoSmithKline (GSK) in that country with bribery and fraud. Mark Reilly is accused of creating a "massive bribery network" that aimed to increase drug prices, generating $150 million in illegal sales. The elaborate network bribed doctors and hospitals, as well as industry officials in Beijing and Shanghai. Along with Reilly, who is a British citizen, two Chinese executives Zhang Guowei and Zhao Hongyan are also suspected of being kingpins in the network.
GSK is Britain's largest drug maker, and this case is the biggest corporate corruption scandal in China since 2009. (The Rio Tinto case.) The Ministry of Public Security held a press conference about the matter in Beijing, blatantly stating that GSK "departments offered bribes to hospitals and doctors as well as personnel to boost their sales. The money involved was in the billions of yuan." The exact bribes have not been disclosed, but in the past, GSK was accused of funneling $482 million through travel agencies, which would then pay out to doctors and officials.
As for the charges, China has a maximum sentence of life in prison for bribery. Chinese officials have said 46 people have been implicated in this network since the investigation began last June. At this time, GSK is cooperating with authorities to deal with the charges as efficiently and privately as possible.
GSK issued this statement: "We take the allegations that have been raised very seriously. They are deeply concerning to us and contrary to the values of GSK. We want to reach a resolution that will enable the company to continue to make an important contribution to the health and welfare of China and its citizens." Reilly stepped down as the head of GSK in China last year.
As for how effective the network was, under Reilly's leadership, GSK's revenue in China increased from 3.9 billion Yuan to 6.9 billion Yuan.