*Earlier this year, the authorities here began looking into suspicious activity involving a Shanghai travel agency that was rumored to have huge revenue but few bookings.*
What they uncovered, they said Monday, was a conspiracy involving tens of millions of dollars, directed by senior executives at the British drug giant GlaxoSmithKline.
Investigators said that for years, high-ranking executives at the company's China operations used travel agencies as money-laundering shops to funnel bribes to doctors, hospitals, medical associations, foundations and government officials.
The payoffs, investigators said, helped bolster drug sales and allowed GlaxoSmithKline, also known as GSK, to sell its products for higher prices in China. At a news conference in Beijing on Monday, the authorities accused senior executives at the company's China operations of organizing fictitious conferences, overbilling for training sessions and in various other ways filing sham expenses for which the cooperating travel agencies would issue bogus receipts. That enabled the GSK executives to get reimbursed by their company with money they could use for bribes, investigators said, while the travel agencies skimmed off shares of the money for themselves.
The practice is said to be so common a form of money laundering, and so lucrative for travel agencies, that they would compete for the chance to take part. Sometimes they would induce GSK executives to throw the business their way by offering cash, luxury travel or even by hiring young women to engage in sexual activities — or "sexual bribery"— with GSK managers, Chinese officials said.
"It's like a criminal organization — there's always a boss," Gao Feng, head of the economic crime unit of the Chinese Ministry of Public Security, said at the news conference.
The revelations came just days after the police announced that several GSK executives had confessed to engaging in bribery and tax fraud.
The possible punishments or fines for GSK are unclear, experts said, but the investigation is almost certain to cause concern among the ranks of major multinational companies operating in China.
In recent weeks, regulators in China have stepped up their scrutiny of multinationals.
GSK is one of the world's leading pharmaceutical companies. Last year, it recorded nearly $40 billion in revenue worldwide by selling popular drugs like the antidepressant Paxil, the diabetes treatment Avandia and the ulcer medicine Zantac.
Although China still accounts for but a small portion of GSK's revenue — about $1.2 billion last year, out of nearly $40 billion over all — it is one of the company's fastest-growing markets and home to 6,000 employees as well as large manufacturing and research and development facilities.
On Monday, the government said four senior executives from GSK's China offices were being detained, including the head of the drug maker's legal department, the head of business development and two vice presidents. The four held are all Chinese nationals, the police said. Reported by Deccan Herald 8 hours ago.
What they uncovered, they said Monday, was a conspiracy involving tens of millions of dollars, directed by senior executives at the British drug giant GlaxoSmithKline.
Investigators said that for years, high-ranking executives at the company's China operations used travel agencies as money-laundering shops to funnel bribes to doctors, hospitals, medical associations, foundations and government officials.
The payoffs, investigators said, helped bolster drug sales and allowed GlaxoSmithKline, also known as GSK, to sell its products for higher prices in China. At a news conference in Beijing on Monday, the authorities accused senior executives at the company's China operations of organizing fictitious conferences, overbilling for training sessions and in various other ways filing sham expenses for which the cooperating travel agencies would issue bogus receipts. That enabled the GSK executives to get reimbursed by their company with money they could use for bribes, investigators said, while the travel agencies skimmed off shares of the money for themselves.
The practice is said to be so common a form of money laundering, and so lucrative for travel agencies, that they would compete for the chance to take part. Sometimes they would induce GSK executives to throw the business their way by offering cash, luxury travel or even by hiring young women to engage in sexual activities — or "sexual bribery"— with GSK managers, Chinese officials said.
"It's like a criminal organization — there's always a boss," Gao Feng, head of the economic crime unit of the Chinese Ministry of Public Security, said at the news conference.
The revelations came just days after the police announced that several GSK executives had confessed to engaging in bribery and tax fraud.
The possible punishments or fines for GSK are unclear, experts said, but the investigation is almost certain to cause concern among the ranks of major multinational companies operating in China.
In recent weeks, regulators in China have stepped up their scrutiny of multinationals.
GSK is one of the world's leading pharmaceutical companies. Last year, it recorded nearly $40 billion in revenue worldwide by selling popular drugs like the antidepressant Paxil, the diabetes treatment Avandia and the ulcer medicine Zantac.
Although China still accounts for but a small portion of GSK's revenue — about $1.2 billion last year, out of nearly $40 billion over all — it is one of the company's fastest-growing markets and home to 6,000 employees as well as large manufacturing and research and development facilities.
On Monday, the government said four senior executives from GSK's China offices were being detained, including the head of the drug maker's legal department, the head of business development and two vice presidents. The four held are all Chinese nationals, the police said. Reported by Deccan Herald 8 hours ago.