GlaxoSmithKline exec blindsided by Chinese bribery charges: Reuters

The GlaxoSmithKline ($GSK) executive charged with masterminding a Chinese bribery network didn't think he'd face those official accusations, Reuters reports. And no wonder: They're the most serious allegations ever leveled against a foreigner for corporate corruption in the country.

Just consider the fact that the company's former China chief, Mark Reilly, was back in Britain when the bribery allegations first surfaced--and then returned to China to cooperate with the investigation. Now, he's probably barred from leaving the country, lawyers say.

"The fact that Mark's name was on the list of people charged was definitely a surprise," one source told Reuters. "I don't think he is prepared, or thought that he could be culpable," another source told the news service.

Chinese police say that Reilly organized a bribery campaign, instructed employees to pay off doctors and other officials, and took steps to make sure company higher-ups and Chinese auditors wouldn't find out, China Daily reports. Reilly also set "artificially high prices," authorities say, generating billions of yuan in illegal revenue. And the company set up an internal team to stymie investigators probing the potential bribery, they say.

The British consulate is working with Reilly and GSK on the case, and Glaxo says it is continuing to cooperate with police. Experts are saying that, given Reilly and GSK's willingness to work with authorities, the former country chief might escape the harshest punishment. He hasn't been arrested or detained, one source told The Wall Street Journal, which could be a good sign.

Minimum sentences for commercial bribery include three years in prison, the WSJ says, with maximum penalties of 10 years for each charge of "official bribery that threatens state interests." Other sources have said the maximum sentence would be life in prison.

Beyond the personal ramifications for Reilly, his facing of official charges is a wake-up call to multinational companies in China. The general feeling had been that only Chinese nationals might face prison time. "People always say they'll never put a Briton or an American in jail," China-based lawyer Steven Dickinson, with the law firm Harris Moure, told Reuters. "But they will, and this is just that example."

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- read the Reuters coverage
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