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.
Pharmaceutical company Eli Lilly has said it is “deeply concerned” by claims that it bribed Chinese doctors to prescribe its drugs.
Chinese paper 21st Century Business Herald cited a former staff, identified by a pseudonym, as saying Eli Lilly paid out 30 million yuan ($4.9 million).
The claims come at a time when China is investigating some drugs firms over similar bribery allegations.
Eli Lilly said it had launched an internal probe last year after a former manager made similar allegations against it.
“At the time of the allegations, we did an exhaustive investigation to search for any evidence of kickbacks,” the company said in a statement.
“Although we have not been able to verify these allegations, we take them seriously and we are continuing our investigation.”
The drugmaker said it interviewed employees, monitored emails and audited expense reports as part of its internal probe.
Eli Lilly has said it is “deeply concerned” by claims that it bribed Chinese doctors to prescribe its drugs
However, it said it had not employed any sales managers by the name of Wang Wei, who was mentioned in the 21st Century Business Herald report.
Eli Lilly is the latest foreign drugmaker to be engulfed by such claims in China.
Earlier this week, a British risk consultant, Peter Humphrey, was formally arrested by Chinese authorities amid a continuing probe into pharmaceutical companies.
One of the companies being probed, GlaxoSmithKline (GSK), is reportedly a former client of Peter Humphrey’s firm, ChinaWhys.
Chinese authorities have accused GSK of directing up to $500 million through travel agencies to facilitate bribes to doctors and officials.
GSK has said that some senior executives in its China office appeared to have broken the law and several GSK employees have also been detained over the last few weeks.
In July, Chinese police had visited the Shanghai office of AstraZeneca and took an employee in for questioning.