Glaxo engulfed by China crisis allegations of sex and bribery
GlaxoSmithKline has come under renewed scrutiny after the company admitted a sex tape is at the centre of the corruption scandal engulfing its Chinese business.
The pharmaceutical giant confirmed the existence of footage showing Mark Reilly – who ran the division until last year – having sex with his girlfriend in his Shanghai flat.
The tape was sent to senior Glaxo executives last March, including chief executive Andrew Witty, in an apparent attempt at blackmail. They then authorised Reilly to hire a private investigator to find out who had planted a camera in his bedroom.
This backfired, however, when the investigator, Peter Humphrey, ended up in prison after his Inquiries about a well-connected Chinese businesswoman – suspected of a smear campaign against Glaxo – led to his arrest by Shanghai police.
Chinese authorities then began their own investigation into Glaxo amid claims it funnelled up to three billion yuan (£284m) in cash, as well as offering "gifts", including prostitutes, to doctors and officials to boost sales.
The company is also facing claims that it acted improperly in Iraq and Poland. Shares in the company fell 7p to 1566.5p after the latest revelations.
In a statement, it said: "The issues relating to our China business are very difficult and complicated.
"The investigation by the Chinese authorities remains ongoing and we are co-operating fully with this investigation."