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China fines GlaxoSmithKline $487 million for bribery

The one-day secret trial in Changsa also convicted the company's former manager in China, Mark Reilly, and four other company managers.

By Ed Adamczyk
The British pharmaceutical firm was fined for bribery in China (GSK).
The British pharmaceutical firm was fined for bribery in China (GSK).

CHANGSA, China, Sept. 19 (UPI) -- The British pharmaceutical company GlaxoSmithKline was fined $487 million Friday after a bribery conviction in China.

The one-day secret trial in Changsa also convicted the company's former manager in China, Mark Reilly, and four other company managers. They received suspended sentences, and Reilly is expected to be deported.

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GlaxoSmithKline (GSK) issued a letter of apology. The trial is an indication of a tougher business climate for multinational firms eager to sell products to a potential market of 1.4 billion people, and the fine surpasses the $40.5 million fine against Audi, a division of Volkswagen, last week, and $200 million in fines to Japanese auto parts makers in August; each were convicted of antitrust violations.

The case was an example of the difficulty in doing business in a country with widespread corruption, although China's legal and regulatory systems have accelerated the pace of investigation of prosecution of foreign companies this year.

"It's very hard to do business in the Chinese health care and pharmaceutical sectors without doing payoffs," said David Zweig of the Hong Kong University of Science and Technology. "Everyone else pays bribes. Glaxo just got caught."

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Chinese police accused Reilly of masterminding a bribery network in which doctors were bribed to prescribe Glaxo products, and alleged the company covered up the actions.

An editorial comment by the state-run Xinhua news agency asked, "Which country's justice system can tolerate this kind of behavior when GSK bribes people, sabotages public interest and damages the market? As long as GSK can learn its lesson and run its business according to law, it will gain the trust back and the support of the Chinese government."

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