UK fraud office probes GSK after claims of foreign bribery

Wed May 28, 2014 9:45am EDT
 
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By Ben Hirschler

LONDON (Reuters) - Britain's fraud office has launched a formal criminal investigation into GlaxoSmithKline (GSK.L: Quote), posing a new challenge to the drugmaker, which already faces claims of bribery in China and four other countries.

The Serious Fraud Office (SFO) said late on Tuesday that its director had "opened a criminal investigation into the commercial practices of GlaxoSmithKline and its subsidiaries", confirming an earlier brief statement from the company.

Shares in the company - Britain's biggest drugmaker and the sixth-largest pharmaceuticals group in the world by sales - fell 1.5 percent by 1315 GMT on Wednesday on the news.

"GSK is committed to operating its business to the highest ethical standards and will continue to cooperate fully with the SFO," the company said.

Neither the SFO nor GSK gave any further details about the case, and a company spokesman declined to elaborate. However, one person familiar with the matter said the SFO was investigating GSK's practices in "numerous" jurisdictions.

The SFO action comes less than two weeks after Chinese police announced on May 14 that they had charged the former British boss of GSK's China business and other colleagues with corruption, after an investigation there found evidence of an elaborate scheme to bribe doctors and hospitals.

The case is the biggest corruption scandal to hit a foreign company in China since the Rio Tinto (RIO.L: Quote) (RIO.AX: Quote) affair in 2009, which resulted in four executives, including an Australian, being jailed.

The decision by the British fraud office does not come as a complete surprise, since lawyers and industry analysts had pointed out that allegations against GSK in overseas markets could expose it to charges under the UK Bribery Act.   Continued...

 
A British Airways airplane flies past a signage for pharmaceutical giant GlaxoSmithKline (GSK) in London April 22, 2014.  REUTERS/Luke MacGregor