GSK: We Are Also A Victim Of China Graft

The boss of GlaxoSmithKline (Other OTC: GLAXF - news) has said that Britain's biggest drugs company was itself a victim of the alleged fraud, by four of its China based employees who are accused of bribing doctors with cash and sexual favours.

Speaking to journalists for the first time since details of the scandal emerged, Sir Andrew Witty said: "It appears that certain senior executives in the Chinese business have acted outside of our processes and controls to both defraud the company and the Chinese healthcare system."

"To see these allegations made about people working for GSK is shameful. For me personally they are deeply disappointing."

Four senior GSK executives were arrested by Chinese fraud investigators earlier this month who accused them of having orchestrated a network of middlemen and travel agencies to bribe doctors with 3bn yuan (£320m) and sexual favours to encourage them to prescribe GSK drugs to their patients.

The chief executive said that these allegations are different to those which were subject to an internal investigation earlier this year which found "no evidence of corruption or bribery".

He said it was "too early to tell" if criminal proceedings would be taken against GSK.

"We're working with the authorities. Their investigation is underway. It's too early to know what the outcome of that will be," he said.

His statements come shortly after the firm announced second quarter turnover rising by 2% to £6.61bn globally. It said it still plans to sell off its Lucozade and Ribena brands before the end of 2013.

Sir Andrew said that head office had no knowledge of the matter before being contacted by Chinese fraud investigations and that he had despatched GSK's head of emerging markets, Abbas Hussain, to Shanghai to assist with the investigation.

"Outside and inside the company, people rightly expect us to operate with integrity. To be crystal clear, we have zero tolerance for this type of behaviour," he said.

GSK has not revealed the identities of the accused executives however Chinese authorities say they also want to speak to the company's head of China, Mark Reilly, who left the country shortly before details of the scandal emerged.

Sir Andrew said "there are no allegations" against Mr Reilly and that he has been working to help them respond this situation.

He refused to be drawn on whether he would consider waiving any bonus awarded to him this year.

Separately, an editorial released by China's official news agency has hinted that more foreign and local pharmaceutical firms could soon be implicated in allegations of bribery.

The Xinhua news agency said the government was trying to tackle "rampant" malpractice in the pharmaceutical sector, including corruption.

Underscoring the rot in China's health sector, Xinhua said 1,000 doctors, nurses and administrators at 73 hospitals in Zhangzhou city in the southeastern province of Fujian had been found taking kickbacks but gave no further details.

"It will not be surprising if more pharmaceutical companies and hospitals, domestic or international, are to be involved in probes in the days to come," Xinhua said in an English-language commentary.

Chinese police have questioned local employees from another British drugmaker, AstraZeneca (NYSE: AZN - news) , which said it was not related to other investigations.

Authorities have also visited the offices of Belgian drugmaker UCB (Other OTC: UCBJY - news) .