Healthy Skepticism
Join us to help reduce harm from misleading health information.
Increase font size   Decrease font size   Print-friendly view   Print
Register Log in

Healthy Skepticism Library item: 20574

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.


Publication type: news

Yan A, Han Shih T
Shanghai travel agent's revenue surge led to arrests in GSK bribery case
South China Post 2013 July 16


British drugmaker GlaxoSmithKline used travel agencies and consultancies as vehicles to bribe Chinese officials and doctors to illegally boost the sales prices of its medicines in China, police said on Monday.

Full text:

The “abnormal” business activities of an obscure Shanghai travel agency provided the first clue to a bribery scheme that has resulted in the detention of several senior executives of GlaxoSmithKline, authorities said yesterday.

The company, Shanghai Linjiang International Travel Agency, had seen a sudden explosion in revenue – nearly all of it from pharmaceutical companies like the British drug giant.

Police investigations discovered that agency was one of numerous firms being used by GSK to funnel nearly three billion yuan (HK$3.8 billion) in kickbacks to doctors, hospitals and other groups, who prescribed their drugs, authorities said.

In turn, GSK managers also took kickbacks from the travel agencies, including hiring women to provide “sexual bribery” to managers at the drug maker, authorities said.

GSK has been transferring money to more than 700 travel agencies and consulting firms since 2007,” said Gao Feng , head of economic crime investigations for the Ministry of Public Security. “We have plenty of reasons to suspect that these money operating activities were illegal.

“Several travel agencies … used not only money to bribe GSK executives, but also pretty women to bribe them,” Gao said.

Xinhua said that at least four executives from GSK’s Chinese subsidiary had been detained, including vice-president and business operations general manager, Liang Hong ; vice-president and human resources supervisor, Zhang Guowei ; legal affairs supervisor, Zhao Hongyan ; and business development general manager Huang Hong .

The company issued a statement from its London headquarters yesterday, saying it would co-operate fully with Chinese authorities in the investigation.

“We will take all necessary action required by the outcome of this investigation,” the spokesman said. “We have put an immediate stop on the use of travel agencies identified so far in this investigation and we are conducting a thorough review of all historic transactions related to travel agency use.”

Despite the investigation in China, GSK’s share price in New York rose to US$52.72 yesterday from US$49.06 on June 24. Its London shares rose to 1,739 pence yesterday from less than 1,600 pence on June 24.

Founded in 2006, Shanghai Linjiang first raised eyebrows after its annual revenue rose to more than 100 million yuan last year, Xinhua reported. Police said the firm barely offered any tour services aside from its work for pharmaceutical companies.

“We have been engaged in investigating this case for half a year and we initiated the investigation, rather than it being sparked by a tip-off as has been speculated by the public,” Gao said.

The travel agency’s legal representative Weng Jianyong , who is also under detention, was quoted by Xinhua as confirming that the company had organised numerous conferences and training events for GSK since 2009. He admitted that the company had sent kickbacks of more than 20 million yuan “through various channels” to GSK executives.

The announcement follows the detention of numerous GSK managers and police raids on several travel agencies in Shanghai, Changsha and Zhengzhou . In a statement last week, the ministry said some executives at a GSK mainland unit had used false tax receipts to get cash for bribe activities.


  Healthy Skepticism on RSS   Healthy Skepticism on Facebook   Healthy Skepticism on Twitter

Click to Register

(read more)

Click to Log in
for free access to more features of this website.

Forgot your username or password?

You are invited to
apply for membership
of Healthy Skepticism,
if you support our aims.

Pay a subscription

Support our work with a donation

Buy Healthy Skepticism T Shirts

If there is something you don't like, please tell us. If you like our work, please tell others.

Email a Friend

As an advertising man, I can assure you that advertising which does not work does not continue to run. If experience did not show beyond doubt that the great majority of doctors are splendidly responsive to current [prescription drug] advertising, new techniques would be devised in short order. And if, indeed, candor, accuracy, scientific completeness, and a permanent ban on cartoons came to be essential for the successful promotion of [prescription] drugs, advertising would have no choice but to comply.
- Pierre R. Garai (advertising executive) 1963