On 15 July 2013, Chinese authorities launched an extensive corruption and bribery investigation against GlaxoSmithKline. The charges allege that GlaxoSmithKline paid travel agencies up to 3 billion Yuan, approximately £303 million, for bribing Chinese officials and doctors.
GlaxoSmithKline’s former head of operations in China, Mark Reilly, stepped down in light of the scandal and remains in China to assist investigators. Meanwhile, several Chinese employees have been detained by authorities, including four senior managers. Chinese officials have also initiated cursory investigations of many other global pharmaceutical companies with offices in Beijing.
GlaxoSmithKline admits to some illegal activity by Chinese executives and is set to re-evaluate its business plan in order to manage the corruption and bribery risks.
The high profile of this case and the recent court appearance of the first defendants to be tried under the 2010 Bribery Act should encourage businesses to take note of potential bribery risks.
Bribery in the UK
The UK Serious Fraud Office (SFO) is ramping up its anti-bribery investigations.
During September 2013, the SFO brought its first case under the UK’s 2010 Bribery Act which came into force in 2011 against three Sustainable AgroEnergy executives. The charges include conspiracy to furnish false information and conspiracy to commit fraud by false representation in relation to biofuel investments.
As the SFO’s anti-bribery campaign is expected to be vigorous, both domestic and global firms will be affected and may be subject to additional scrutiny.
The Bribery Act is wide in scope so businesses should pay attention to high risk areas such as corporate hospitality.
Managing Potential Bribery Risks
Widespread anti-bribery measures are expected to drive up prices in the drug market which perhaps highlights the extent of the problem.
If there is any possibility that employees may be in position to offer or receive a bribe, i.e. employees in most businesses, firms should have transparent and thorough anti-bribery policies in place to reduce the risks and provide a potential defence in the event of prosecution. Policies should make clear that no employee may request, agree, receive, offer, promise, give, or accept bribes.
Procedures for reducing and managing corruption risks should be clearly laid out, as well as including formal internal investigation procedures for complaints.
Policies should also include rules for situations which may be less clear in terms of corruption or bribery. For instance, policies should advise employees on rules for accepting or offering hospitality and donations.
Contract negotiation can also present issues for employees and policies should provide guidance on acceptable negotiation tools and other standards of business conduct. Additionally, rules for preventing or managing conflicts of interest should be included.
Reviewing Anti-corruption Policies
Firms should regularly review their anti-bribery policies and ensure all employees are familiar and compliant with the rules.
A robust, clear anti-bribery policy will minimise risks and facilitate effective investigation of any complaints. For specialist advice contact Peter Gourri today by email PGourri@rollingsons.co.uk or telephone 0207 611 4848.
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