Updated on 5 September 2013
Meanwhile, the Chinese police left no stone unturned in sealing the case off. Mr Gao Feng, head, Economic Crimes Investigations Unit, Public Security Ministry revealed to the press in Beijing on July 16, that GSK was involved in economic crimes involving $489 million of spurious travel, meeting expenses and trade in sexual favors. He further informed that they had found proof against other drug makers operating in the country and they too would come under scrutiny soon. "From our investigation we have also found some clues of illegal money transfers involving other foreign companies. Whether they have been involved in these allegations we are not so sure now," he had said then. But in days to come, firms like AstraZeneca and UCB would come under the scanner and employees from these firms would be probed too.
Meanwhile, the authorities in China made another revelation into the scandal: GSK sales representatives had allegedly paid out upto $489 million in bribes. As an immediate reaction, GSK released a statement explaining that the allegations made against the senior executives of the company are ‘shameful'. "We are deeply concerned and disappointed by these serious allegations of fraudulent behavior and ethical misconduct by certain individuals at the company and third-party agencies. Such behavior would be a clear breach of GSK's systems, governance procedures, values and standards. GSK has zero tolerance for any behavior of this nature. These allegations are shameful and we regret this has occurred," the statement said.
This seemed to be only the start. GSK China's vice president and operations manager (and one of the accused) appeared on national television that evening to publicly accept bribery charges. The 49-year-old VP, appearing to be speaking from his detention cell, said, "Having spent time reflecting over the past couple of days, I think the money we spent to run our business was too much. All of these costs (of our bribery) were included in the price of the drugs. The money we spent running the business accounted for about 20 to 30 percent of the drug price."
The Chinese ministry soon stated that GSK's executives had ‘violated China's laws and damaged markets by engaging in bribery to raise drug prices, expand sales and reap inappropriate profits. The police also raised concerns about GSK's China operations head, Mr Mark Reilly's absence from the country, in spite of the ongoing investigations. Mr Reilly had left the country on June 27, merely days after the Changsha police in China announced investigations into the bribery case. The police further placed a travel ban on Mr Steve Nechelput, GSK's finance chief who tried to fly out of the country.
At the same time, the British drug maker sent its head of emerging markets Mr Abbas Hussain as a damage control move. In his first public statement Mr Hussain apologized to the Chinese authorities. He further promised that the company was taking the charges ‘extremely seriously.'