SHANGHAI (Reuters)
— GlaxoSmithKline Plc executive Mark Reilly had little
inkling he would be charged with leading a network of corruption in
China's pharmaceutical industry, two sources with ties to the
businessman and knowledge of the investigation said.
The allegations against the Briton, who as GSK's China head was the
firm's legal representative in the country, are the most serious
charges ever laid against a foreign national for corporate
corruption in China, lawyers said.
Police said they had charged Reilly and two Chinese colleagues with
multiple offences on Wednesday, after a 10-month probe found the
firm made billions of yuan from schemes to bribe doctors and
hospitals.
"The fact that Mark's name was on the list of people charged was
definitely a surprise," said a source with direct knowledge of the
investigation. The source declined to be named because of the
sensitivity of the case.
Police findings are usually upheld in Chinese courts, meaning Reilly
and the other executives could face decades in jail.
GSK did not respond to requests for comment on Thursday.
Britain's biggest drugmaker said in a statement on Wednesday that
the allegations were "deeply concerning" and it hoped to "reach a
resolution" that would enable it to continue to operate in China, a
key growth market for Western pharmaceutical giants.
Reilly, a scientist and accountant who has been with GSK for over
two decades, briefly left China after the scandal broke in July last
year. He voluntarily returned to assist authorities with the probe,
with insiders saying the understanding was this would shield him
from charges.
"I've had regular contact with Mark over the past few months. I
would think that this state of affairs is a surprise to him. I don't
think he is prepared, or thought that he could be culpable," an
industry executive in China who has personal ties to Reilly said.
Attempts to reach Reilly were unsuccessful.
NEXT STEPS
The last major corruption scandal to hit a foreign company in China
involved miner Rio Tinto in 2009, which resulted in four
executives including a Chinese-born Australian being jailed for
between seven and 14 years.
Reilly and two Chinese executives, Zhang Guowei and Zhao Hongyan,
are charged with corporate bribery, bribing non-government officials
and bribing business units.
Officials gave no specific details on the amount of bribes paid or
how much the company had illegally earned, although previously they
accused the firm of funneling up to 3 billion yuan ($482 million) to
travel agencies to facilitate bribes to doctors and officials.
According to normal process, Reilly should have been detained as
soon as authorities laid charges against him.
Police could not be reached for comment and the British consulate
declined to comment on Reilly's whereabouts. The industry executive
said he believed the Briton was still in Shanghai.
Reilly had likely been barred from leaving China after his return to
help with the investigation, lawyers said.
WAKE-UP CALL
The prosecution will now examine the case before passing it to the
courts, which could take as little as a month or much longer if
further investigation is required, lawyers said.
GSK is the most prominent of a number of graft probes that have been
launched against global drug firms since last year, and authorities
are unlikely to risk the investigation being overturned in the
courts.
"For a sensitive and closely followed case like this, the police and
prosecutors will have consulted with each other already," said Leon
Liu, Shanghai-based partner at law firm MWE China.
Chinese officials visited other international drugmakers including
Novartis AG, AstraZeneca Plc, Sanofi SA, Eli Lilly & Co and Bayer AG
last year as part of a broad investigation into the sector, which is
rife with bribery between sales staff and doctors.
Legal experts said the GSK case was a wake-up call to foreign
companies that thought their top expatriate executives were immune
from criminal charges as authorities step up a crackdown on
corruption ordered by President Xi Jinping.
"There's a notion that only people of Chinese nationality are going
to go to jail here," said Steven Dickinson, Qingdao-based partner
with law firm Harris Moure.
"People always say they'll never put a Briton or an American in
jail. But they will, and this is just that example."
(Additional reporting by John Ruwitch in SHANGHAI; Editing by
Stephen Coates)
