China has yet to leverage any formal penalties on GlaxoSmithKline ($GSK) for the $489 million bribery scandal that broke there last summer. But punishment may be on the way from GSK's home base.
On Friday, Britain's Serious Fraud Office (SFO) told the South China Morning Post that it plans to prosecute or fine some companies for overseas bribery, and some say GSK is likely among them. "We assume this includes GlaxoSmithKline," Rob Elvin, managing partner of law firm Squire Sanders, told the newspaper.
According to the Post, a new SFO policy unveiled earlier this month will make it faster and easier to deal with overseas bribery cases. A deferred prosecution agreement policy, which allows companies to settle criminal allegations without being prosecuted and without formally admitting guilt, will be available for economic crimes starting Monday.
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| GSK CEO Andrew Witty |
Glaxo, though, has already admitted guilt in China, with emerging markets chief Abbas Hussain identifying "breaches" of Chinese law and offering price cuts as part of an apology to government officials for funneling doctor bribes through travel agencies. CEO Andrew Witty has acknowledged guilt, too, pinning it on "certain senior executives" at GSK China who acted "outside our process and controls."
Accordingly, Chinese authorities talked openly of imposing "astronomical" fines on the drugmaker back in September. But so far, an 18% pharmaceuticals and vaccines sales hit for 2013 in the country has been GSK's only monetary penalty, aside from the self-imposed price cuts. In November, Reuters reported that the British pharma giant would likely escape Chinese corruption charges, though its local executives probably wouldn't.
Aside from British and Chinese probes, Glaxo is currently subject to an investigation in the U.S., where its listed shares make it vulnerable to prosecution for violations of the Foreign Corrupt Practices Act. But Glaxo anticipated as much from the get-go: "Since the investigation in China began, we have proactively reached out to relevant regulators," spokesman David Mawdsley told Reuters in September. "This includes the DoJ, and we have been in an ongoing dialogue with them."
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