GlaxoSmithKline has agreed to pay a nearly $500 million fine to the Chinese government after an investigation found a subsidiary of the British pharmaceutical giant offered bribes to non-government personnel.
As a result of a court ruling in China, the company’s subsidiary, called GSK China Investment Co., will pay a fine of £297 million ($487 million) to the Chinese government. The penalty is the largest ever corporate fine in China, The Wall Street Journal reported, citing official Chinese news agency Xinhua.
“Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK,” said Chief Executive Sir Andrew Witty in a statement. “We have and will continue to learn from this.”
The court found that GlaxoSmithKline’s subsidiary had offered money or property to non-government personnel in order to obtain improper commercial gains, according to the drug maker’s statement, and had been found guilty of bribing individuals in China.
GlaxoSmithKline said as a result of the bribing incident, it has changed its incentive program for its salesforce and expanded processes for review and monitoring of invoicing and payments, among other preventative measures to halt future bribery. The company intends to pay the fine through existing cash resources and claims associated costs and charges will be included in the company’s third-quarter results.