GlaxoSmithKline still has questions to answer over bribery case in China

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GlaxoSmithKline has made a grovelling apology to "the Chinese government and the Chinese people" and will pay a fine of almost £300m for bribing doctors.

Humiliating stuff, especially for a FTSE 100 company whose chief executive, Sir Andrew Witty, preaches an ethical agenda.

But this case was never simply about GSK's wrongdoings, reputation or the size of the fine.

Far more important was the fate of its staff – in particular, Mark Reilly, the company's former head of Chinese operations, who GSK had regarded as wholly innocent of any acts of bribery committed by the local unit.

GSK had allowed Reilly to return "voluntarily" to China to try to clear his name and help the police investigation.

If, in these circumstances, Reilly had been imprisoned by a politically-controlled judiciary in a trial conducted behind closed doors, GSK's other failure would have been unforgivable lack of care towards to a trusted senior employee of 20 years' standing.

The good news, then, is that Reilly is not going to prison. He has received a suspended sentence but will be deported.

Four other GSK employees – Chinese nationals – have been found guilty and will also receive suspended sentences.

From a purely pragmatic point of view, and given the scale of the mess, this outcome is probably as good as GSK could have hoped for.

The Chinese police, calling press conferences and raising the stakes at every turn, had accused the company of acting like a "criminal godfather". The authorities were never going to drop the case.

GSK's primary task was to protect – as far as possible – any staff it regarded as innocent. The challenge was to keep them out of prison, so on that score GSK can count a minor success in this murky tale.

If Reilly had ended up in prison, with GSK still convinced of his innocence, the company's only principled response would have been to quit China altogether and damn the consequences. Employees rank ahead of shareholders.

As it is, GSK can now proclaim it is "fully committed to the country and its people".

Very nice, but the saga hardly ends there. Having accepted the verdict of the Changsha intermediate people's court, Witty will have to explain what went wrong with GSK's internal controls.

Everybody knows the underfunded Chinese healthcare system is riddled with corruption. Why were GSK precautions inadequate? If head office didn't know what was going on, should it have done?

"This has been a deeply disappointing matter. We have and will continue to learn from this," said Witty in a statement. A fuller explanation is needed.

In the meantime, GSK's pay committee will surely wish to revisit bonuses. Witty received £1.9m last year, with £245,000 deducted because he and the board were "mindful" of the impact of the Chinese scandal on the company's reputation.

Some £300m later, that looks generous. If anyone deserves a bonus it's the poor souls dispatched to fill Reilly's shoes and work in a country where allegations are not tested in open court.

Powered by Guardian.co.ukThis article was written by Nils Pratley, for The Guardian on Friday 19th September 2014 14.48 Europe/London

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