Jump to content Jump to menu
Why Register?

Shearman FCPA Website: Cases Logo Shearman & Sterling LLP FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act

In the Matter of GlaxoSmithKline plc

 
:
GlaxoSmithKline plc
:
SEC Civil
:
September 30, 2016
:
In the Matter of GlaxoSmithKline plc
:
In the Matter of GlaxoSmithKline plc, Admin. Proc. File No. 3-17606 (2016)
:
In September 2014, Chinese authorities fined GSK $490 million following a conviction for bribery and GSK’s former head of China operations, Mark Reilly, was deported.
:
Healthcare-Pharmaceutical
:
China
:
2010; 2011; 2012; 2013
:
Employees of Chinese state-owned and state-controlled healthcare facilities.
:
GlaxoSmithKline plc (“GSK”) is a corporation organized in the United Kingdom with headquarters in Middlesex, United Kingdom. GSK is a global provider of pharmaceutical and consumer health products. GSK maintains operations in at least 150 countries, including China. GSK’s common stock is registered with the Commission under Section 12(b) of the Securities Exchange Act and trades on the New York Stock Exchanges.

According to the SEC, from at least 2010 until June 2013, employees of GSK’s Chinese subsidiary, GlaxoSmithKline (China) Investment Co Ltd (“GSKCT”), and a public-private joint venture called Sino-American Tianjin Smith Kline & French Laboratories Ltd (“TSKF”) of which GSK owned a 55 percent interest, engaged in a scheme to improperly influence Chinese foreign officials in exchange for increased pharmaceutical sales. Specifically, employees of GSKCT and TSKF allegedly made payments to employees of Chinese state-owned and state-controlled healthcare facilities by way of gifts, improper travel and entertainment with no or little educational purpose, shopping excursions, family and home visits, and cash. The SEC claims that the costs associated with these payments were recorded in GSK’s books and records as legitimate expenses, such as medical association sponsorships, employee expenses, conferences, speaker fees, and marketing costs.

The SEC also alleges that the improper practices were pervasive at GSKCI and TSKF and were condoned by regional and district managers. Moreover, local internal audits and compliance reviews allegedly identified controls deficiencies concerning GSKCI and TSKF’s sales and promotional practices, however, the results of these internal audits and reviews were allegedly treated as isolated incidents rather than signs of a larger problem.

On September 30, 2016, the SEC announced that it had settled an enforcement action against GSK for violations of the FCPA’s books-and-records and internal controls provisions. According to the cease-and-desist order, GSK agreed to pay a total sanction of $20 million. The DOJ separately announced that it had concluded its investigation into GSK and would decline to take further action against the company.
:
Books and records (Issuer), Internal controls (Issuer)
:
Cease and Desist, Civil penalty
:
$20,000,000 civil penalty.
:
20,000,000
:
0
:
Issuer
:
Foreign
:
United Kingdom
:
Contract Procurement/Retention
:
Not stated.
:
Cash, Entertainment, Gifts, Goods/Services, Meals, Travel
:
Joint Venture, Subsidiary Company
:
Not stated.
:
China
:
No
:
No
:
China