* SFO opens criminal investigation into GSK and subsidiaries
* Action follows bribery claims in China and other countries
* UK Bribery Act prohibits bribes in overseas markets
(Adds SFO statement, detail on Bribery Act, background)
By Ben Hirschler
LONDON, May 27 Britain's fraud office has
launched a formal criminal investigation into GlaxoSmithKline
, 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 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.
"GSK is committed to operating its business to the highest
ethical standards and will continue to cooperate fully with the
SFO," Britain's biggest drugmaker said.
Neither the SFO nor GSK gave any further details about the
case, and a company spokesman declined to elaborate.
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 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.
The new act, like the long-established U.S. Foreign Corrupt
Practices Act, prohibits payments to government officials,
including state-employed doctors, to obtain business overseas.
U.S. authorities are already investigating British drugmaker
for possible violations of U.S. anti-bribery laws in China,
sources familiar with the matter told Reuters last September.
CHINA ALLEGATIONS "SHAMEFUL"
Authorities in China first accused GSK last July of
funnelling up to 3 billion yuan ($480 million) in bribes to
encourage doctors to use its medicines in a case that the
company described in 2013 as "shameful".
Since then allegations have surfaced in other countries and
GSK is now investigating claims that bribes were also paid to
doctors in Poland, Iraq, Jordan and Lebanon.
The allegations that bribes were paid in Poland could be
particularly damaging, according to some lawyers, since the
country belongs to the European Union and GSK would be expected
to uphold the same standards there as in any other EU state.
Despite the barrage of bribery reports, GSK has insisted it
does not have a "systemic issue with unethical behaviour" and
says it has a clear system for dealing with violations, which
resulted in 48 dismissals and 113 written warnings last year.
In a bid to try and put the problems behind it, GSK is
rolling out a new sales model designed to eliminate sharp
The firm aims to become the first in the industry to stop
paying outside doctors to promote its products, end payments for
medics to attend conferences and delink incentives for sales
representatives from individual sales targets.
($1 = 6.2486 Chinese Yuan)
(Additional reporting by Andy Bruce, editing by David Milliken
and David Evans)