Glaxo head blames corruption allegations in China on handful of managers
The head of drugs giant GlaxoSmithKline has sought to blame a handful of senior managers for corruption allegations it is facing in China and said the company itself had been a victim of their actions.
Sir Andrew Witty said bosses at the multinational pharmaceuticals company’s London headquarters knew nothing of the millions of pounds in bribes allegedly being paid to doctors and health officials to boost sales and raise prices.
The GSK chief executive said he was willing to travel to the country to address the multimillion-pound bribery allegations, which he described as “shameful”, though other top executives were handling the company’s response there.
He brushed off questions about whether he would accept any bonus this year in the light of the claims, saying it was too early to say what the consequences of the investigation would be, and maintained the company’s control and audit systems were “extremely robust”.
“Just as we see in all large organisations, unfortunately there is a risk that individuals can sometimes do inappropriate things,” Sir Andrew told reporters during a conference call as GSK published second quarter results.
“I remain strongly of the view that 99.99% of the people in this organisation are absolutely operating in the appropriate way and understand not just the rules but the values the company stands by.”
He added: “As far as headquarters, we had no sense of this issue.
“This seems to have been a number of senior managers all acting outside our processes.”
The chief executive admitted that the scandal would have an impact on the company’s performance in China.
It is claimed that senior managers at GSK funnelled money through travel agencies for “conference services”, with cash then kicked back to the managers and some of it used for bribes.
The scandal has seen a number of executives detained and Steve Nechelput, the company’s finance director in the country, banned from leaving – though he has not been held or questioned himself.
He admitted that the company had also been in contact with authorities in the UK and the US amid speculation that GSK could face criminal action under their laws as well as from the Chinese inquiry.
Sir Andrew was speaking as the company announced second quarter turnover to the end of June at £6.6 billion, up 2%, though pre-tax profits were down 16% to £1.3 billion from the same period last year.
Meanwhile, Sir Andrew said plans to sell drinks brands Lucozade and Ribena remained on track and agreement was expected to be reached by the end of the year.
