Britain: Corporate Bribery Probe: Glaxo link to probe

Drugs giant GlaxoSmithKline publishes second quarter results on Wednesday as a tangled web of allegations linked to a bribery probe by Chinese authorities continues to hang over the UK-based company.

It comes shortly after a British investigator and his American wife who were hired by the company learned they were to face trial in the country charged with illegally obtaining and selling private information.

The arrest of Peter Humphrey and Yingzeng Yu last year coincided with a Chinese probe into allegations that Glaxo staff had funnelled hundreds of millions of pounds through travel agencies to bribe doctors and health officials.

The couple's firm ChinaWhys had been asked to look into the origin of a sex tape involving Glaxo's China manager Mark Reilly, who has himself been accused by Chinese authorities in relation to the bribery case.

Glaxo has said it asked the investigators to look into a "serious breach of privacy and security" relating to Mr Reilly but that the firm was not hired "to investigate the substance of allegations of misconduct" made by a whistleblower.

In May, the pharmaceuticals firm disclosed that its commercial practices had come under "formal criminal investigation" by Britain's Serious Fraud Office.

Sheridan Adams, investment research manager at The Share Centre, said: "Although Chinese revenues only account for less than 5% of the global total, negative press coverage will not be welcomed and investors may want to hear from management on the matter."

Glaxo's second quarter update is the first since the takeover frenzy over US rival Pfizer's ultimately unsuccessful bid to swallow up Britain's AstraZeneca for £69 million amid a public outcry.

The merger spotlight in the sector has since fallen on Hampshire-based Shire and its American suitor AbbVie.
Glaxo has kept out of any speculation around such deals, after unveiling a complex three-part transaction with Novartis in May.

It will see the two firms create a £6.5 billion consumer healthcare powerhouse from its Aquafresh and Beechams together with antiseptic range Savlon and cough and cold brand Tixylix from Novartis.

The deal also saw Glaxo sell its oncology portfolio from Novartis and buy the Swiss firm's vaccines business.

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