On September 30, 2016, the SEC reached a $20 million settlement with GlaxoSmithKline arising from the company’s business in China. The SEC alleged that between 2010 and 2013, sales and marketing managers of GlaxoSmithKline’s China subsidiary made corrupt payments to medical professionals to encourage more prescriptions for the company’s products. The purported corrupt payments included gifts, travel, entertainment, shopping, and cash but were recorded in GlaxoSmithKline’s books and records as legitimate marketing expenses, speaker fees, medical association payments, and travel and entertainment expenses. Because the medical professionals worked in government-owned hospitals, the SEC considered them to be foreign government officials under the FCPA, and charged the company with violations of the internal controls and recordkeeping provisions of the FCPA.
The $20 million dollar settlement with the SEC follows an almost $490 million sanction ordered in 2014 by a Chinese Court against GlaxoSmithKline’s Chinese subsidiary based on the same alleged bribery scheme. Five of GlaxoSmithKline’s managers were also convicted in that action in China and its former country manager was deported. FCPA Scorecard coverage of the Chinese Court order can be found here.