GSK China hit with record fine, says sorry

FAIR TRIAL

As a matter of procedure, the court statement noted that the British Embassy in China was kept informed of the investigation throughout, and that both prosecutors and the court provided British national Reilly with translators during the entire process to ensure that he thoroughly and accurately understood his legal rights and interests. Reilly appointed two Chinese lawyers to represent him during the trial.

The people's procuratorate in Changsha first tabled the case to the court on Sept. 4 and the court approved GSKCI's wish to have the case heard behind closed doors on the grounds of business confidentiality.

The court found that from 2009, Reilly, then head of GSK China, advocated a "sales-led" philosophy in the company, which bred a thirst for sales expansion in an ambience of ignorance with regard to Chinese laws and regulations. The company employed a large number of salespersons, restructured its departments and allowed its employees to bribe hospital staff.

Departments of human resources, finance, compliance, and IT support were encouraged to support the policy and the company's legal affairs department helped cover up the activities.

Marketing personnel of the company bribed medical staff by inviting them to meetings sponsored by the company both in China and abroad and making payments to them in the name of traveling expenses or lecture fees. Bribes also included free trips.

The bribes were accounted for as "conference fees", "reception fees" or "promotion fees".

GSK revenue in China increased from about 3.9 billion yuan in 2009 to 6.98 billion yuan in 2012.

"The investigation was an unprecedented, arduous and complicated battle for us," said Chen Yaosong, a police investigator in Changsha. Investigators have travelled to more than 10 provincial-level regions across China and collected more than 100,000 pieces of evidence.

Procuratorial agencies sent prosecutors with the investigation team to ensure the probe was carried out in accordance with law.

In June and August, prosecutors rejected the case twice on the basis of insufficient evidence, according to prosecutor Li Fenglei.

Prosecutors provided all the evidence in digital form to the defendants' lawyers and other judicial documents were provided with English translations, Li said. Translation was also available for Reilly throughout the trial.

RULE OF LAW

"The verdict is a warning," said Lu Yiwen, a Changsha citizen. "It will help remove the underhand practices that plague China's medical sector."

"The sentence is by no means a signal of a worsening investment environment in China," said Chen Jing, a local legislator in Changsha. "It indicates that China will be more vigorous in fighting corruption and improve market conditions."

"The investment environment must be protected by the rule of law, and rule of law is a guarantee of the market economy," said Wang Feiyue, a law professor at Changsha's Central South University.