Newspaper article International Herald Tribune

Glaxo Chief Speaks out on Inquiry in China ; Employees Suspected of Fraud Were Working outside System, He Says

Newspaper article International Herald Tribune

Glaxo Chief Speaks out on Inquiry in China ; Employees Suspected of Fraud Were Working outside System, He Says

Article excerpt

Andrew Witty revealed few new details about the bribery investigation of GlaxoSmithKline, but said the company was cooperating with the Chinese government.

Andrew Witty, chief executive of the British drug maker GlaxoSmithKline, said Wednesday that the claims of bribery and corruption his company is facing in China were "deeply disappointing," but said the drug maker's headquarters in London had not been aware of fraud and that the executives under scrutiny in China were working "outside of our system of controls."

The remarks, made during a conference call on the company's second-quarter earnings, were the most extensive Mr. Witty has made about the investigation in China, where the authorities have accused executives of using travel agenciesto funnel illegal payments to doctors and government officials.

"I am very personally disappointed with these allegations that have been made," Mr. Witty said. "Clearly, they are shameful allegations if they are true."

He revealed few new details about the investigation, but said that the company was working with the Chinese government and that it had "opened up channels" with the British and U.S. governments. The company disclosed in 2010 that the United States was investigating Glaxo for possible violations of its overseas anti-bribery laws.

Mr. Witty said the Chinese investigation was likely to affect sales in the country but said it was too early to know specifics. "We continue to see the country as a key place for further investment," he said.

The company posted second-quarter net profit of Pounds 1.05 billion, or $1.61 billion, on revenue of Pounds 6.62 billion. That was a decrease from profit of Pounds 1.24 billion in the quarter a year earlier, but sales were up from Pounds 6.46 billion last year.

Mr. Witty also sought to distance the company's London headquarters from the scandal, saying that the central office "knew nothing" about the alleged fraud and that the executives accused of wrongdoing operated outside the company's normal surveillance systems.

Since taking over as chief executive in 2008, Mr. Witty has tried to promote the company as a leader in ethical and transparent behavior. …

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