GlaxoSmithKline to pay $500 million to Chinese government over the bribe case

On September 19 , a Chinese court issued a fine of $500 million to the British pharmaceutical giant GlaxoSmithKline for its involvement in a massive bribery and corruption case.

The Chinese court accused the company of criminal bribery to persuade health care facilities like hospitals and doctors to use and sell their own drugs to the patients, The New York Times reported.

The accusations also included using travel agencies to launder money and funnel bribes to medical associations, doctors, hospitals, foundations and government officials. The scheme helped the company to make more than $150,000 million, it said.

The director of the Center on China's Transnational Relations at the Hong Kong University of Science and Technology, David Zweig said to the Times, "It's very hard to do business in the Chinese healthcare and pharmaceutical sectors without doing payoffs. Everyone else pays bribes. Glaxo just got caught."

In a statement released on Friday, GSK said that the company "fully accepts the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities." The statement included an apology to Chinese patients, doctors and hospitals. The company also apologized to the Chinese government and the Chinese people.

China has been increasingly attractive to foreign investors within the last decade including global multinational corporations like the pharmaceutical company GlaxoSmithKline. But recently, their activities have been under growing scrutiny by the Chinese government, the Times reported.

For example, just a week ago, another fine of approximately $40 million was issued to the German auto manufacturer Volkswagen for violating a Chinese antitrust law.

Other multinational entities like car companies, technology companies and food manufacturers are also currently being investigated by the government of China.

Many critics claim that in the light of recent events, it is plausible to interpret the Chinese attitude towards foreign investors and multinational corporations as an effort to help Chinese companies compete.