Mon, 22nd Jul 2013
The head of emerging markets at GlaxoSmithKline, Abbas Hussain, has issued a statement admitting that employees had acted in breach of Chinese Law and stating that the company will review the way it operated in China, amidst a corruption and bribery scandal.
GlaxoSmithKline's troubles in China worsened on Monday morning. The company has been accused of economic crimes which involved several of their most senior executives. Hussain said in a statement that executives at GSK China appear to have taken actions "outside of our processes and controls" and that those actions were in breach of Chinese law.
Police in China are investigating deals worth around £320 million. A fraud and corruption investigator from Britain has apparently been detained in Shanghai in relation to the probe.
Sir Andrew Witty, the chief executive at GlaxoSmithKline, will be releasing the company's interim results on Wednesday. During the announcement it is expected that he will answer questions over the fraud allegations. Analysts expect that he will tell investors that it was difficult for the company to monitor the compliance of agents in China because of the rapid growth of the Chinese arm of the company. Over the last year, sales in China have grown by 20 percent for GlaxoSmithKline, reaching the 1 billion mark. Witty had already mentioned the difficulty of controlling the Chinese arm of the company back in February. Many investors took his statement as being a flippant joke, but in light of recent events it appears that there was a lot of truth to his statement.