GlaxoSmithKline Slapped with US$489M Fine for Bribing Doctors in China

British pharmaceutical company GlaxoSmithKline Plc has been slapped with a record 3 billion yuan (US$489 million) on Friday for bribing Chinese doctors to use its drugs.

The case is the biggest corruption scandal to hit a foreign company in China since the Rio Tinto affair in 2009.

The fine, equivalent to around 4 percent of GSK's 2013 operating profits, was less than some investors had feared. GSK will take a charge in the third quarter and pay the penalty from existing cash resources, according to Reuters.

Shares in the company rose 1 percent as investors took comfort from the manageable size of the fine and the removal of an uncertainty overhanging the stock.

The Changsha Intermediate People's Court also handed suspended jail sentences to Mark Reilly, the former head of GSK in China, and four other GSK executives of between two and four years, says Reuters, citing news agency Xinhua. Reilly will be deported.

Chinese police first accused GSK of bribery in July last year when it said that the firm had funneled up to 3 billion yuan, exactly the same amount as the fine, to travel agencies to facilitate bribes to doctors and officials.

"GSK Plc has reflected deeply and learned from its mistakes, has taken steps to comprehensively rectify the issues identified at the operations of GSKCI, and must work hard to regain the trust of the Chinese people," GSK said in a written apology.

GSK is also being investigated by U.S. and British authorities for anomalous practices and could result in further penalties for the group.


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