Out-Law News 1 min. read
17 Jul 2013, 4:28 pm
Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, said that the allegations could also spark the interest of UK law enforcement authorities, such as the Serious Fraud Office (SFO). The UK's Bribery Act criminalises acts of bribery by UK companies wherever they take place.
The Financial Times has reported that Chinese authorities have promised to "stand firmly against any form of commercial bribery" and will enforce the law against any foreign or domestic companies found to be breaking it. China's Ministry of Public Security has arrested four senior GSK executives and has accused the firm of using travel agencies and consultancies to bribe doctors and lawyers in order to boost sales, according to the report.
GSK has said that it is "deeply concerned and disappointed" by the "serious allegations of fraudulent behaviour and ethical misconduct by certain individuals at the company and third-party agencies", and that it will "cooperate fully with the Chinese authorities".
"Such behaviour would be a clear breach of GSK's systems, governance procedures, values and standards," the company said in a statement. "These allegations are shameful and we regret this has occurred."
"GSK fully respects the laws and regulations in China and expects all staff to abide by them. We also fully support the efforts of the Chinese authorities in their reforms of the medical sector and stand ready to work with them to make the necessary changes for the benefit of patients in China," it said.
The UK's Bribery Act came into force in July 2011 and, broadly speaking, states that companies with a presence in the UK can face prosecution for bribery and/or failure to prevent bribery regardless of where the alleged activity has taken place.
Importantly a company can also be responsible for bribery carried out by its employees or third-party agents without its knowledge or consent. Companies can be found guilty of failing to prevent bribery by people working for or on behalf of a business, unless the company can show that they have "adequate procedures" designed to prevent bribery in place.
Pinsent Masons' Barry Vitou said that regardless of whether the SFO took any action against GSK in the UK, "any assumption that overseas bribery is tolerated has been scotched by the Chinese, who initiated their own investigations".
"The pharmaceutical sector was singled out by the US law enforcement agencies some time ago, and the former SFO Director also warned the industry," he said.
"Reports say that other pharmaceutical companies are being investigated in this latest Chinese probe. Companies selling in China would be well advised to double check they are confident about local compliance," he said.
