GSK secret surveillance scares expat managers in China

A Chinese national flag is seen in front of a GlaxoSmithKline office building in Shanghai. Photograph: Aly Song/Reuters

A Chinese national flag is seen in front of a GlaxoSmithKline office building in Shanghai. Photograph: Aly Song/Reuters

Tue, Jul 8, 2014, 01:05

Confirmation last week from British drug-maker GlaxoSmithKline that it had received a secretly filmed sex tape of its former China chief, Mark Reilly, in March last year, prompted anxiety among foreign executives working here.

The Chinese government accuses GSK of ordering staff to bribe doctors and hospital officials to use GSK products, even offering sexual favours, and using up to three billion yuan (€350 million) channelled through travel agencies.

Chinese police filed formal corruption charges against Mr Reilly last month.

The spooky element is that there are no clues about who shot the video of Mr Reilly and his Chinese girlfriend in his Shanghai bedroom, or with what motivation, although it was shot without his knowledge and mailed to senior executives at the company. Reilly is barred from leaving China and his whereabouts are unknown.

Foreign managers in China are deeply worried they could be arbitrarily jailed and have asked their lawyers if they should temporarily leave the country, or even for good.

Crackdown

What is making expatriate workers for foreign pharmaceutical companies, and other sensitive sectors, deeply uneasy about working in China is they fear falling foul of political campaigns, such as president Xi Jinping’s crackdown on corruption.

No-one is contesting the basis for the investigation itself – if GSK or any other company, domestic or foreign, is shown to have been using bribery to sell products and thereby contributing to vastly inflated healthcare costs, then it should be punished under the law.

The secretive nature of investigations into corrupt practices, with suspects disappearing for weeks into custody without any charges being laid, is however deeply unsettling.

The arrest last year of the British corporate investigator Peter Humphrey and his American wife Yu Yingzeng is also shocking.

Humphrey – a former colleague of mine at the Reuters news agency – and Yu were supposedly investigating the origin of the Reilly sex tape.

The couple has been accused of selling personal information about people to clients through research companies.

In one horrifying moment last year, Humphrey was paraded on Chinese television in prison uniform, apologising for his transgressions.

The details of the couple’s trial, which is reportedly due to take place in August, are being kept a total secret, even from the couple’s son, Harvey.

The couple’s lawyers have been apparently required to sign non-disclosure agreements.

This lack of transparency is what has some foreign managers considering an exit strategy.

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