China's government is considering whether to slap an enormous fine on British-based drug maker GlaxoSmithKline for fostering an aggressive work culture that encouraged employees to create and coordinate a bribery network to boost sales.
"We should learn from the practice of other countries in imposing astronomical fines" in these cases, the South China Morning Post reported Wednesday, citing a statement the Public Security Ministry posted on its Web site.
Last year, GSK reached a settlement with the U.S. Justice Department in which it agreed to plead guilty and pay a $3 billion fine for unlawfully promoting certain prescription drugs and failing to report some safety data.
China's Public Security Ministry said Tuesday it was increasingly clear the alleged corrupt activity by GSK (China) Investment Co Ltd. was not the work of individual employees but instead was coordinated by top management.
The company is accused of spending some 3 billion yuan ($489 million) to bribe doctors and hospitals, as well as to evade taxes.
One of four GSK China executives arrested in July, Huang Hong, told police that corporate headquarters in Britain had set annual sales-growth targets of up to 25 percent.
To achieve those results, GSK China linked employee salaries to sales volumes, a policy under which workers could lose thousands of yuan per month if they did not meet their goals.
"With such unreasonable targets, if we do not resort to illegal measures, it's very difficult to achieve such high sales growth. Mark Reilly changed the company's objective to sales being king," Huang was quoted as saying by the daily, referring to the executive who headed GSK's China operations until July.
Payoffs to Chinese public health officials and doctors were disguised as spending on "conference services" and funneled through travel agencies, the ministry said.
The Public Security Ministry has not explicitly accused Reilly or GSK's London headquarters of corruption, the Hong Kong-based newspaper said.
"To avoid being prosecuted under the U.K. Bribery Act and (U.S. Foreign Corrupt Practices Act), GSK must show the corruption was limited to isolated acts by some bad apples working outside GSK's controls, which is how GSK CEO Andrew Witty has portrayed it," the paper said.
As a British, New York-listed firm, GSK is subject to Britain's Bribery Act and must comply with the FCPA. EFE