Foreign pharmaceutical firm stirred controversies when China fined drug maker GlaxoSmithKline over $490 million for bribery scandal on Friday. The Chinese court sentenced British executive and four Chinese employees to prison.
Due to the bribery scandal, GlaxoSmithKline was fined $492 million on Friday for ostensibly bribing doctors in China. The fine was said to be the largest penalty ever imposed by a Chinese court. The court also sentenced the company's former China manager and British executive Mark Reilly together with four Chinese co-defendants to prison. However, the court adjourned the sentences for two to four years, signifying they may never be served. The court said it approved lenience because the defendants confessed.
The record penalty follows accusations that GlaxoSmithKline paid out bribes to doctors and hospitals in order to have their products promoted. The Chinese court gave GSK's former head of Chinese operations, Mark Reilly, who was accused of operating a massive bribery network in May, a suspended three-year prison sentence and is set to be extradited.
According to the Xinhua News Agency, the guilty verdict was delivered after a one-day trial in Changsha Court. Chinese authorities first announced that they were investigating GlaxoSmithKline in July last year, in what has become the biggest and controversial corruption scandal to hit a foreign firm in years. The company was accused of having made an estimated $150 million in illegal profits.
GlaxoSmithKline said it had published a statement of apology to the Chinese government and its general public. However, experts say that the controversial scandal is a humiliating outcome for one of Britain's biggest companies.
GlaxoSmithKline chief executive Sir Andrew Witty stated in a statement that accomplishing an inference in the inquiry of our Chinese business is vital, but the controversy has been a deeply disappointing matter for the company. He also added that the company have and will continue to learn from the issue. GSK has been in China for close to a hundred years and stay fully committed to the country and its people. Sir Witty concluded by saying that GSK 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.
London's Edison Investment Research analyst Mick Cooper said that GlaxoSmithKline will hope that the controversial scandal will lure a line under events in China, but it will take time for its Chinese commercial operations to recuperate.
The drug giant, GlaxoSmithKline has also been fined £297m over the scandal which has recently seen a British private investigator it hired and his wife jailed for their activities digging into the affair of British executive Mark Reilly for his infamous sex tape smear.
The scandal had definitely struck GSK. Today, GlaxoSmithKline can start rebuilding its battered brand and severed image in China. GSK's case is an eye-opener to other foreign companies that need to keep a keen observation on China's fast changing administrative and governing weather if they are to burgeon or endure its auspicious but risky market.
In a separate case, Chinese authorities have also been investigating another foreign drug maker company, AstraZeneca and China's biggest drug distributor, Sinopharm Group Ltd.
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