British national Peter Humphrey and his wife Yu Ying Zeng, an American national, have been charged with illegally obtaining private information in GSK China bribery case, Xinhua news agency said.
Peter Humphrey and Yu Ying Zeng were arrested in China in August 2013.
His company, ChinaWhys, was hired by GlaxoSmithKline China, which is embroiled in controversy over alleged systematic bribery of Chinese doctors.
Prosecutors say the couple “illegally trafficked a huge amount of personal information on Chinese citizens” for profit, Xinhua reported.
They obtained this information by “secret photography, infiltration or tailing after someone”, it said.
Peter Humphrey has been charged with illegally obtaining private information in GSK China bribery case
“Based on the information, the couple compiled so-called <<reports>> and sold them at high prices to their clients, most of which are China-based multinational corporations, including GSK China,” it said.
Local courts “will hold [a] hearing about the case soon”, the agency added.
In a statement earlier this month, GSK said that its China operation hired ChinaWhys in April 2013 “to conduct an investigation following a serious breach of privacy and security related to the company’s China general manager”.
This is understood to relate to a s** tape said to have shown the general manager, Mark Reilly, who said the footage was filmed without his knowledge or consent.
The video was sent to GSK’s London-based CEO Andrew Witty with an email accusing Mark Reilly of being behind systematic corruption in the company’s China operation.
Mark Reilly is currently being investigated by Chinese authorities, as are at least two other senior GSK China executives. He is alleged to have pressed his sales team to bribe doctors, hospital officials and health institutions to increase sales of GSK products.
He is currently effectively detained in China, and has made no recent comment.
GSK has described the allegations as “deeply concerning”.
“We are learning lessons from this situation and we are determined to take all actions necessary as a result,” it said in the statement.
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Allegations that GSK systematically bribed doctors in China are credible, says Peter Humphrey, an investigator hired by the pharmaceutical giant.
Peter Humphrey was hired only to investigate who was behind a suspected smear campaign against GSK.
After he finished his report, the investigator learned the details of further allegations against the company and told colleagues he believed they were true.
The allegations against GSK’s China operation first emerged in an email in January 2013 from an anonymous and self-styled whistleblower to the company.
The email alleges that GSK’s sales teams targeted influential doctors with expensive gifts and cash to win business.
Four senior executives and the former head of GSK China have been detained by Chinese police
It also alleges that some doctors were sent on all expenses-paid holidays masquerading as conferences. The payments were funneled as fictional expenses through a travel agent.
Peter Humphrey’s company, ChinaWhys, was hired to try to indentify who the anonymous whistleblower was. GSK China suspected a former senior staff member, Vivian Shi Wen, who was dismissed at the end of 2012.
Vivian Shi Wen has previously denied being the GSK whistleblower.
Since the case came to light, four senior GSK executives have been detained by Chinese police and the former head of GSK China, Mark Reilly, is also effectively detained. Peter Humphrey will stand trial later this year for illegally buying and selling private information.
What is notable about the documents is not just the scale of the allegations against the company, but also the detail within them. The whistleblower’s email alleges that the company’s aggressive marketing strategies “constitute bribery in the vast majority of cases”. It further alleges:
- GSK falsified its records to conceal illegal practices including bribery and promoting the use of drugs for not yet approved purposes
- The practice of giving cash to doctors to sell products was common
- GSK fabricated an internal “compliance” scheme which effectively covered up widespread corruption
- GSK failed to investigate its entire sales team
The email names specific doctors and hospitals and also quotes individual GSK executives and their private email accounts.
GSK said in a statement that its own investigation had not found evidence to back the claims in the email.
“Our China business is now subject to an ongoing investigation by the Chinese authorities with which we are fully cooperating. We have also hired an external law firm, Ropes and Gray, to conduct an independent review into what happened in our China business during this period,” the statement said.
Bribery is widely believed to be endemic in China’s pharmaceutical sector, which has witnessed explosive growth in recent years.
While GSK has accepted that individual employees in China may have behaved inappropriately in China, it has consistently denied they acted on instructions of the company. If the company were found to be liable, it could face enormous fines from UK and US authorities who have fierce anti-bribery regulations.
British GSK executive Mark Reilly has been accused by the Chinese police of ordering staff to bribe hospital officials to use its medical products.
Mark Reilly and two other colleagues are also suspected of bribing government officials in Beijing and Shanghai, they said.
Police have handed the case over to prosecutors, officials said.
GlaxoSmithKline said it took the allegations “very seriously” and would co-operate with the authorities over the matter.
Mark Reilly is alleged to have pressed his sales team to pay doctors, hospital officials and health institutions to use GSK products
Chinese authorities announced in July last year that they were investigating GSK, detaining four Chinese GSK executives.
The police ministry accused Mark Reilly, the company’s former head of China operations, of personally running a “massive bribery network”.
He is alleged to have pressed his sales team to pay doctors, hospital officials and health institutions to use GSK products, resulting in the “illegal revenue” of hundreds of millions of dollars.
At a news conference, the investigators took pains to explain how the cost of the alleged bribes was passed directly on to Chinese consumers.
They said the cost of the drugs sold by GSK in China was much higher than that of similar drugs sold by the company in other countries – sometimes up to seven times higher.
The investigators also said that while the company itself had been “very responsible and has given us their full support”, the firm’s operation in China “tried to pay bribes” in order to “obstruct” their efforts “in exposing their bribery behaviors”.
Mark Reilly had briefly left China when the investigation was launched last July, but returned to help with the inquiry. A police investigator was believed to still be in China.
The Chinese operation of GSK was accused by the Chinese authorities, when the probe first began, of using travel agencies and consultancies to transfer bribes over several years.
GSK has already apologized for employees apparently acting outside of its internal controls, but denies the sums of money are anything like as high as those alleged to have been paid.
The pharmaceutical giant is also facing a criminal investigation into similar allegations in Poland.