China fines GSK $492M, jails managers for bribery

A Chinese court fined British drugmaker GlaxoSmithKline (GSK) $492 million and sentenced a British executive and others to prison on Friday for bribing doctors and hospitals to use its products, the state-owned Xinhua News Agency reported.

The fine was the biggest ever imposed by a Chinese court, according to Xinhua, and comes amid sweeping efforts by Beijing to weed out corruption in the nation's ruling class and businesses. Chinese economist Andy Xie Guozhong told Al Jazeera that corruption costs the Chinese economy 10 percent of its gross domestic product annually. 

The GSK case, which was first publicized in mid-2013, highlighted the widespread use of payments to doctors and hospitals by sellers of drugs and medical equipment in a poorly funded health system, which Chinese leaders have pledged to improve.

Mark Reilly, GSK's former China manager, and others were sentenced to two to four years in prison by a court in the central city of Changsha, Xinhua said.

The Xinhua report offered no details of the prosecution's case and didn't say exactly how many people were sentenced.

The Police Ministry said in May that Reilly was accused of operating a "massive bribery network." It said investigators believed he ordered his salespeople beginning in January 2009 to pay doctors, hospital officials and health institutions to use GSK's products. Authorities said that resulted in hundreds of millions of dollars in illegal revenue for the drug producer.

Police previously identified four Chinese employees of GSK who they said confessed to bribery. Officials said GSK employees funneled as much as $490 million through travel agencies and consulting firms, which kicked back some of that money for use as bribes. Police have not made clear how much was paid out in bribes.

Investigators said the scheme appeared to be aimed at evading GSK's internal controls meant to prevent bribery. GSK said it opposes bribery and cooperated with the investigation.

Other bribery allegations against the company include claims that it paid government employees in Iraq and doctors in Poland to supply local hospitals with the company's products and prescribe GSK drugs to their patients, raking in millions in allegedly illegal profits.

A second foreign drugmaker, AstraZeneca, said in July 2013 that police in Shanghai were investigating one of its salespeople for bribery.

Al Jazeera and The Associated Press