Suspects allegedly offered 'project sponsorships' to boost business

Senior executives from multinational pharmaceutical company GlaxoSmithKline are being investigated for suspected bribery and tax-related violations, Chinese police said on Thursday.

Police have questioned some suspects from GlaxoSmithKline (China) Investment Co Ltd, according to a statement from the Ministry of Public Security.

The statement described their suspected offenses as "serious economic crimes", adding that the ministry is directing police in Shanghai, as well as Central China's provinces of Hunan and Henan, in the probe.

The suspects are accused of offering large bribes to government officials, medical industry associations and foundations, hospitals and doctors to expand the company's market and raise the price of its medicine, the statement said.

The bribes were generally given through travel agencies or in the guise of "project sponsorships", the statement said.

GSK is also suspected of committing tax-related crimes, including falsely issuing exclusive value-added tax invoices to get cash and colluding with travel agencies to write false invoices and issue fake ones to finance their illegal activities, according to the ministry.

Moreover, some GSK senior executives are also suspected of using their positions to accept kickbacks and bribes from travel agencies.

The statement said some travel agency employees are being held as suspects and questioned by police.

The statement said police have obtained sufficient evidence, adding that the suspects have already confessed to the offenses.

GlaxoSmithKline (China) said on Thursday it will cooperate fully with the police investigation into several senior executives over allegations of bribery and tax offenses.

"We take all allegations of bribery and corruption seriously," the company said in a statement. "We continuously monitor our businesses to ensure they meet our strict compliance procedures.

"If evidence of such activity is provided, we will act swiftly on it."

Sun Bingting, a doctor at a hospital in Shandong province's Wulian county, said it has become a "hidden rule" for many pharmaceuticals salespeople to offer bribes to medics.

"The sellers usually give money to department directors of hospitals, and the directors will then require the doctors to prescribe their medicines more often," he said.

Several multinational pharmaceutical companies and medical equipment companies have been accused of bribery in China in recent years.

The Time Weekly reported four companies — Pfizer, Siemens, Johnson & Johnson and Biomet — have also been accused by the United States Securities and Exchange Commission of bribery overseas since 2011.

"Multinational companies are taking advantage of our imperfect market economy system and law system to expand their market shares in China," said Hu Min, of the economic department of Chinese Academy of Governance.

"Foreign companies have been equally treated in many aspects, and we should crack down on their criminal acts in the same way as we crack down on Chinese companies."

Xinhua and Wang Hongyi contributed to this story.