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Another fraud probe hits GSK

Wednesday, May 28, 2014 - 01:37

May.28 - Britain's fraud office has launched a criminal investigation into GlaxoSmithKline, posing a new challenge to the drugmaker. As Ciara Sutton reports it's already facing claims of bribery in China and four other countries.

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Another criminal investigation for GlaxoSmithKline. The UK drugmaker is now being probed by Britain's fraud office over alleged bribery. Richard Hunter is from Hargreaves Landsdown. (SOUNDBITE) (English) HEAD OF EQUITIES AT HARGREAVES LANSDOWN, RICHARD HUNTER, SAYING: "Share price down about 1 and a half percent. That will be factoring an element of uncertainty until such time investors know what the outcome of the investigation is going to be." It comes less than two weeks after Chinese police charged senior managers from GSK's China business with corruption - former British boss Mark Reilly was among them. Chinese police allege GSK staff bribed doctors, hospitals and officials with a total of $480 million. The case is the biggest corruption scandal to hit a foreign company in China since the Rio Tinto affair in 2009 - that resulted in four executives being jailed. But allegations of similar behaviour have also surfaced in Poland, Iraq, Jordan and Lebanon - GSK says it's investigating. So too are U.S. authorities. But GSK still insists it doesn't have a "systemic issue with unethical behaviour". And in a bid to move on it's rolling out a new sales model. GSK wants to become the first in the industry to stop paying doctors to promote its products. It will no longer pay medics to attend conferences either. The new investigation wasn't unexpected - the trouble overseas was always likely to expose GSK to charges under the UK Bribery Act. But it will be another blow to the reputation of the world's 6th largest pharmaceutical company.

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Another fraud probe hits GSK

Wednesday, May 28, 2014 - 01:37