GSK China (investment) CO, LTD in China, commercial bribery
case analysis.
Bribery of multinational pharmaceutical companies in
China has a long history. Glaxo Smith Kline China Investment
Co. Ltd. As one of the largest multinational pharmaceutical
enterprises in China, the company's business covers four fields:
prescription drugs, non-prescription drugs, vaccines and
consumer health products. However, in July 2013, some senior
executives of GSK China were investigated by the police
(hereinafter referred to as the "GSK China case") for economic
crimes including embezzlement and bribery of non-state staff.
In the first half of 2013, the public security department found in
their work that several travel agencies, including Shanghai
Linjiang International Travel Service (hereinafter referred to as
"Linjiang Travel Service"), hardly engaged in tourism business,
but frequently contacted with some pharmaceutical companies.
Linjiang travel agency, for example, in the absence of tourism
business, its annual turnover soared from the beginning of the
establishment of a few million to hundreds of millions of yuan
before the case. The incident has drawn the attention of the
public security organs. According to the police investigation,
some senior executives of GSK China and some senior
personnel of relevant travel agencies are suspected of serious
commercial bribery and tax-related crimes. [1]
specifically, part of GSK, led by Lianghong, executives and
Linjiang agencies, and other "cooperation", by the travel
agency to undertake part of GSK China meeting, training and
other project (the project on suspicion of false), again by the
travel agency by over-invoicing project, cost, the measures of
the falsely making out invoice from GSK China taking cash, and
then returned to GSK some executives in China. Some of the
money went to executives, while others were used to pay
bribes to government officials, pharmaceutical associations,
foundations, hospitals, doctors and others. The main reason for
the trouble was to avoid GSK's internal financial management.
According to JIN MOU, director of GSK's Shared financial
services center in China: "GSK's internal financial management
system is very strict, such as the company's normal entertaining,
gifts, single standard not more than 300 yuan, and very strict
audit, so if you want to bribe outsiders, the book is not to go. [2]
however, such an audit is only an audit of the authenticity of
the invoice, that is, as long as the invoice is standardized, the
financial department will not examine the source of the invoice.
This has become a system gap for some senior executives of
GSK China and third-party travel agencies to take risks. On the
other hand, those false invoices, after being approved by the
financial department, will be converted into the administrative
costs of the enterprise, and finally the consumers will pay the
bill. Liang Hong, a senior GSK executive in China, confirmed
that this would account for about 20-30 per cent of the drug's
price. [3] In this case, GSK China bribed not only government
officials,
but
also
pharmaceutical
industry
associations,
foundations, hospitals and other units, as well as company and
enterprise personnel, such as doctors. Therefore, GSK China is
involved in bribery crimes against units, bribery crimes against
units, bribery crimes against companies and enterprise
personnel. Through this case, China's enterprises should cause
enough attention to the legal issues, such as commercial
bribery, and through the check list and external scrutiny to
compliance audit related issues, avoid or prevent enterprise
content appear such problem, when this aspect of the problem,
also can do it too late, too late, a greater negative impact and
losses.
[1] China's
ministry
of
public
security
website:
http://www.mps.gov.cn/n16/n1237/n1342/n803715/3841211.h
tml
[2] Xinhuanet
http://news.xinhuanet.com/fortune/2013-07/14/c_125005871_
2.htm
[3] Wall street journal
http://cn.wsj.com/gb/20130717/bch104540.asp