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Chinese police have recommended prosecution¹ for bribery³ by UK pharmaceutical⁴ firm GlaxoSmithKline. After a 10 month investigation⁵, police found that William Mark Reilly, a British national and executive of GSK China, had ordered his subordinates to commit bribery.

The biggest corruption⁶ scandal to hit a foreign company in China in many years. And the man in the heart of the storm is William Mark Reilley, former executive of GSK China.

"Reilley thought it was key that we build close relationships with the hospitals. In order to improve the sale of GSK drugs, they first need to be allowed to enter the hospitals. That’s why he decided⁷ to set up a special big clients unit." GSK China Operations manager Huang Hong said.

Reilley allegedly pressed his sales teams to bribe² hospitals, doctors and health institutions through all means possible. In return, GSK sales soared from 3.9 billion yuan in 2009 to 6.9 billion in 2012.

"If the doctors prescribed more of our drugs, they would be rewarded accordingly. We would treat them to dinners or buy gifts for their families. Sometimes, it’s even more direct. We just gave supermarket gift cards or cash during holidays." GSK China sales manager said.

To fund the bribes⁸, GSK inflated⁹ drug prices by declaring high costs at China’s customs. Police found GSK was selling its medications at prices far exceeding those of the same products in other countries, sometimes as much as eight times.

"In 2012, 20 million yuan was spent on recruitment alone. That reflects just how fast GSK was expanding here in China. That 20 million was paid for by hikes in drug prices." Guo Jianhua with human resources dept., GSK China, said.

GSK also allegedly set up a special unit to fend¹⁰ off bribery investigations¹¹, he said. Employees had obstructed¹² previous inquiries¹³ into possible misconduct by bribing¹⁴ officials.

The case highlighted the widespread use of payments to doctors and hospitals by sellers of drug and medical equipment in a health system that the Chinese government has promised to improve.