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GSK China Boss Replaced in Wake of Scandal

GlaxoSmithKline has replaced the British head of its Chinese operations, which are at the centre of a pounds 320m cash and sexual bribery scandal.

Britain's biggest drug company said Mark Reilly, who left China for London before the police arrested four of his senior subordinates, has been replaced by Herve Gisserot, the drug company's vice president for Europe.
 
GSK refused to state if Reilly, who has been head of its Chinese operations since 2009, has been replaced over fears he may be arrested if he returns to Shanghai.
 
A GSK spokesman said the company understands there are "no allegations of wrongdoing" against Reilly and said he is "very willing to help the authorities with their investigation".
 
The spokesman said Reilly will "remain an active member of the senior management team managing the issue [bribery scandal]", but refused to say whether or not Reilly will ever return to Shanghai.
 
GSK said it understands that the Chinese have lifted a travel ban preventing Steve Nechelput, the British finance director of GSK China, from leaving the country. Nechelput will continue in his current role.
 
Gisserot, who is leaving for China immediately, will take over the day-to-day management of GSK China while Reilly works exclusively on handling the bribery crisis.
 
GSK last week dispatched Abbas Hussain, the drug maker's head of emerging markets, to Shanghai to oversee the crisis. Hussain, the brother of former England cricket captain Nasser Hussain, has met Chinese officials to apologise for the scandal, in which GSK executives are accused of acting as the "godfathers" of a criminal scam, bribing doctors with cash and sexual favours worth pounds 320m via a network of 700 middlemen and travel agencies.
 
Sir Andrew Witty, chief executive of GSK, said on Wednesday that he was "absolutely willing and ready" to go to China to take charge of the investigation into the "shameful" and "deeply disappointing" scandal.
 
Witty, who was paid pounds 3.9m last year, said: "It appears that certain senior executives in the Chinese business have acted outside of our processes and our controls to both defraud the company and the Chinese healthcare system."
 
He refused to provide details of how the alleged fraud operated, but said the Chinese police investigation is focused on the four Chinese nationals already detained by the police.
 
He said they appear to have been "potentially defrauding GSK and also at the same time allegedly doing some things in the market which are clearly inappropriate and illegal".
 
GSK has appointed US law firm Ropes & Gray to carry out an independent review into alleged corruption, which Witty warned will have "some impact" on GSK's future performance in China.

Posted: July 2013


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