GlaxoSmithKline recently announced in a securities filing that the Justice Department and SEC asked for information about third-party advisers the company hired in China during a corruption investigation there.
As some may recall, GSK was ensconced in a very public corruption scandal in 2013, when Chinese authorities raided company offices in China, arrested multiple China-business senior managers, including the country manager. The company was convicted in 2014 and assessed a criminal penalty of approximately $498 million. Four China unit executives were found guilty and were either deported or sent to jail.
The U.K. Serious Fraud Office opened an investigation in 2014 but never resolved the matter. In the United States, the SEC assessed the company a fine of $20 million in 2016, and the Justice Department closed its investigation without bringing charges.
The case was filled with salacious allegations, multiple bribery schemes, and interesting characters. One of the company’s mechanisms for paying bribes was through what are called in China ‘travel agents.’ These are not travel professionals who help book trips to exotic locales, but rather third-party event planners who stage large conferences and other professional events where GSK engaged in over-the-top entertaining and travel.
The latest announcement by GSK raises several questions for The Man From FCPA: Why has GSK never been prosecuted by the U.K. authorities simply based on the public information or the information that arose during the Chinese investigation? The same question could then be asked of the SEC and Justice Department. It may be that U.K. and U.S. authorities thought the company had been sanctioned enough by the Chinese authorities, but the SFO, SEC, and Justice Department could have said so.
Finally, GSK’s (alleged) use of third parties to facilitate bribery was well-known in 2013. Why is it being investigated in 2018?