China hands drugmaker GSK record $489 million fine for paying bribes

(Reuters) - China fined GlaxoSmithKline Plc (GSK.L) a record 3 billion yuan ($489 million) on Friday for paying bribes to doctors to use its drugs, underlining the risks of doing business there while also ending a damaging chapter for the British drugmaker.

A court in the southern city of Changsha handed suspended jail sentences to Mark Reilly, the former head of GSK in China, and four other GSK executives of between two and four years, according to state news agency Xinhua.

Briton Reilly, shown on state television wearing a suit and looking tired during the trial, will be deported, a source with direct knowledge of the case said.

The verdict, handed out behind closed doors in a single-day trial, highlights how Chinese regulators are increasingly cracking down on corporate malpractice.

However, it also offers GSK a potential way forward in the fast-growing Chinese pharmaceutical market, a magnet for foreign firms who are attracted by a healthcare bill that McKinsey & Co estimates will hit $1 trillion by 2020.

"If GSK China can learn a profound lesson and carry out its business according to the rule of law, then it can once again win the trust of China's government and people," Xinhua said in a commentary. Xinhua closely reflects China's official government view.

The fine, equivalent to around 4 percent of GSK's 2013 operating profits, was less than some investors had feared. GSK will take a charge in the third quarter and pay the penalty from existing cash resources.

COMMITTED TO CHINA

GSK said it remained committed to China and promised to become a "model for reform in China's healthcare industry".

"GSK Plc has reflected deeply and learned from its mistakes, has taken steps to comprehensively rectify the issues identified at the operations of GSKCI, and must work hard to regain the trust of the Chinese people," GSK said in a written apology.

Future commitments include investment in Chinese science and improved access to medicines across the country through greater expansion of production and flexible pricing, it said.

Roche Chief Executive Severin Schwan told Reuters in an interview this week: "I remain very bullish about China, even though currently the market has slowed down and pricing pressure has increased."

GSK also faces investigations into its overseas practices by U.S. and British authorities. Those investigations continue and could result in further penalties for the group.

"The SFO criminal investigation into the commercial practices of GlaxoSmithKline Plc and its subsidiaries continues," a spokeswoman at Britain's Serious Fraud Office said in an email.

In the United States, GSK is being investigated under the Foreign Corrupt Practices Act, which prohibits bribery of public officials.

In addition to the high-profile Chinese case, GSK has been accused of corrupt practices, on a smaller scale, in Poland, Syria, Iraq, Jordan and Lebanon.

GSK said the activities by the firm's China unit were a "clear breach" of GSK's governance and compliance procedures.

Chinese police first accused GSK of bribery in July last year when it said that the firm had funneled up to 3 billion yuan, exactly the same amount as the fine, to travel agencies to facilitate bribes to doctors and officials.

"Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this," GSK CEO, Andrew Witty, said in a statement.

SURPRISE ANNOUNCEMENT

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 for between seven and 14 years.

The judgment on Friday took many people by surprise, partly because Chinese authorities did not make the date of the trial public in advance.

The ruling from the Changsha Intermediate People's Court means China has charged GSK's China unit with bribery as well as the individual executives. Apart from Reilly, the other four - Zhang Guowei, Liang Hong, Zhao Hongyan and Huang Hong - are Chinese former company officials.

Under Chinese criminal law, bribery by a corporate unit can lead to a large fine and jail sentence for the unit's head.

Reilly's China-based lawyer declined to comment on Friday.

A spokesman for the British Consulate General in Shanghai said that Britain had "continually called for a just conclusion to this case", but declined to comment further while the case was open for appeal.

Shares in the company rose 1 percent as investors took comfort from the manageable size of the fine and the removal of an uncertainty overhanging the stock. GSK has also struggled this year with poor sales in the United States.

"GlaxoSmithKline will hope that this will draw a line under events in China, but it will take time for its Chinese commercial operations to recover," said Mick Cooper, analyst at Edison Investment Research in London.

(1 US dollar = 6.1403 Chinese yuan)

New Zealand election: John Key leads National to overwhelming victory (19.09.2014, Reuters)

Prime minister John Key has led his National party to a likely historic single-party majority with the bulk of votes counted

The re-elected prime minister, John Key, celebrates on stage after delivering his victory speech on Saturday. Photograph: Phil Walter/Getty Images

The John Key-led National party will return to power in New Zealand for a third consecutive term, having survived waves of scandal during a volatile and antagonistic election campaign to secure an overwhelming victory.

National is on the brink of securing the first single-party parliamentary majority since New Zealand moved to its Mixed Member Proportional electoral system in 1996.

The result is a disaster for the main opposition Labour party, while the Mana-Internet party experiment, backed by Kim Dotcom, has spectacularly backfired, failing to win so much as a single seat.

Arriving at the party’s headquarters on the Auckland waterfront to chants of “three more years”, Key said the result signalled a “victory for the people, the policies, the unity and the vision that National will bring to government for the next three years”.

Describing himself as “humble and at the same time energised”, Key pledged to “continue to provide the strong and stable government that is working for New Zealand”.

“We are the finest little nation on the planet, I truly believe that. Our future as a country is bright, our opportunities are unlimited.”

The provisional final count saw National win 48% of the party vote, which determines the composition of parliament under New Zealand’s proportional system, enough to gain them 61 seats in a 121 seat chamber. The Labour party trailed on 25%, with the Green party on 10% and the New Zealand First Party, which had been picked as a likely kingmaker, on 9%.

The rightwing family-values Conservative party, funded by the millions of its leader Colin Craig, finished the night on 4%, failing to reach the crucial 5% threshold that is required to enter parliament by any party without an electorate seat.

Dotcom, currently being sought for extradition from New Zealand by the US to face copyright and money laundering charges, brokered and bankrolled to the tune of an estimated NZ $4 million the strategic alliance of the Internet Party with leftwing Maori-focused Mana party with the express purpose of removing John Key’s government.

The party’s success hinged on the Mana leader, Hone Harawira, winning his seat, Te Tai Tokerau, to bring other MPs in with him. He was defeated in the Maori electorate by Labour’s Kelvin Davis, however, with National and New Zealand First both having urged their supporters to vote to support Davis and scupper the Dotcom project.

The German entrepreneur blamed himself for the result, acknowledging “the brand Dotcom was poison”.

Even if the final numbers, following special votes, allow National to form a single-party majority government, Key will seek support from the Maori Party, ACT and United Future, which between them won four seats, the same group of parties with which he was previously allied.

Key said he intended to “talk to other leaders of political parties, with a view to putting together a broader majority and to ensure a durable and strong government”.

Labour had hoped it might build a government encompassing Greens and NZ First, but the party, beleaguered by infighting in the lead-up to the campaign, are left facing a period of introspection, with a number of high-profile MPs losing their seats.

Speaking to the party faithful in west Auckland, Cunliffe said he intended to continue as leader, while acknowledging he would go through the selection process required under party rules. The the “rebuild of the party and the campaign for the next election” would begin immediately, he said.

He lamented “a campaign beset by dirty politics and sideshows, involving potential abuses of power at the highest level that will still take months and months to unravel”, but which had “distracted from the issues that are more core to the future of our country”.

Cunliffe added that the results on the night “clearly stated that wealthy individuals cannot buy politics, be they Kim Dotcom or Colin Craig”.

Conventional policy arguments have been squeezed to the edges of the campaign, with two major controversies dominating headlines and putting Key on the defensive. The release of a book by Nicky Hager, Dirty Politics, described links between senior figures in the National Party and the rightwing attack-blog Whale Oil.

Further fuel was added to the fire with the repeated release of hacked online correspondence, upon which the book had drawn, by a mysterious character called “Rawshark”. The revelations led ultimately to the resignation of the justice minister.

Just as the campaign was beginning to regain some normalcy, another intervention stole the spotlight. Hosted by Dotcom, journalist Glenn Greenwald’s arrived in New Zealand promising to disprove Key’s denial that mass surveillance was undertaken by local intelligence agencies. Key denied the claim, dismissing Greenwald a conspiracy theorist, a “henchman” for Dotcom, and even a “loser”.

The controversy culminated in an event billed by Dotcom as “the Moment of Truth” at the Auckland Town Hall on Monday night, with Greenwald joined on the big screen by NSA whistleblower Edward Snowden and WikiLeaks founder Julian Assange.

The revelations from Snowden and Greenwald were muddied, however, by Dotcom’s failure to provide the evidence he had promised to unveil showing that John Key had colluded with Hollywood lobbyists in planning for his extradition

Дата добавления: 2015-11-14