On Wednesday June 17th, a British corporate investigator and his wife were deported from China after being released from jail over their role in a corruption case involving pharmaceutical giant GlaxoSmithKline (GSK). Peter Humphrey, a British national and his wife Yu Yingzeng, a naturalized US citizen, had been in jail for illegally obtaining personal information on Chinese citizens while working at the behest of GSK. Both were released from jail early with the Chinese citing health concerns related to Humphrey. This is but one part of a large corruption scandal which had plagued GSK China over the past several years.
In early 2013, GSK senior executives received a sex tape of then GSK China head, Mark Reilly. In addition they also received anonymous emails alleging corruption including bribery at the company. As a result ChinaWhys, an investigative company owned by Humphrey was hired by GSK in April 2013 to investigate and find the source of the sex tape and to look into a former senior GSK staff member, Vivian Shi Wen. Shi who has high connections in the Chinese government was suspected of being the whistleblower and of mounting a smear campaign against GSK. Humphrey was paid over $16,000 by GSK to find the source of the tape among other things. Humphrey later noted that he believed the allegations of bribery at GSK to be true and that he was kept in the dark about them by the company.
The technology industry has long been on the receiving end of billions of dollars in capital, but what's next for the industry? Greylock General Partner Sarah Guo joined Wall Street Journal reporter Zoe Thomas to talk about the future of tech investment. Q3 2021 hedge fund letters, conferences and more Seed Funding Thomas asked Guo Read More
In July of the same year, the Chinese government announced that it had launched its own investigation into GSK China. This investigation came as a result of a previous Chinese investigation of a Shanghai travel agency that was posting high profits despite having few bookings. From there, Chinese authorities uncovered the role of the travel agency as essentially a money-laundering shop for GSK bribery of doctors, government officials, hospitals, and others. GSK was accused of using bribery in a scheme that ultimately boosted drug sales and provided illegal revenue of over $150 million. This was done by channeling illicit kickbacks through travel agencies and pharmaceutical industry associations.
Somewhat out of the blue, Humphrey and his wife were arrested in August 2013 by Chinese authorities and charged with illegally obtaining private information on Chinese citizens. This private information included IDs, mobile phone numbers and travel records totaling 256 items of information. It was claimed that the couple illegally bought information from others while also obtaining information through secret photography and infiltration. Additionally, it was claimed that they sold private information to China-based multi-national corporations. Oddly though, there was no connection established between the bribery at GSK and the activities of the couple.
In July 2014, Humphrey and Yingzeng were indicted for illegally obtaining private information and a month later in August 2014, at the end of a one-day trial, Humphrey was sentenced to two and a half years in jail and Yingzeng to two years. Both rejected to appeal the courts decision to sentence them to prison. Humphrey blamed GSK for his situation at the time claiming that they concealed the full extent of the bribery allegations when they hired him.
In September 2014, a Chinese court fined GSK $490 million for bribery. Additionally, Reilly was ordered to be deported while four other GSK executives were sentenced to between two and four years in prison. The fine imposed on GSK is the largest in Chinese history and the entire case was an embarrassment for the company which not only pleaded guilty but delivered an official apology.
Allegations of Mistreatment
Now back in the UK, Humphrey has accused the Chinese government of attempting to force him into a confession concerning his role in the GSK scandal by withholding medical treatment for him. Humphrey has a prostate tumor and Ying has kidney disease and both claim the Chinese refused to offer them the medical attention they needed. The Chinese though deny these claims stating that they acted in accordance with the law. According to Humphrey, the Chinese were withholding medical care as he and his wife refused to sign a confession admitting to their crimes. It must be said though that only days after his initial arrest, Humphrey did admit wrongdoing on China Central Television.
The case involving GSK and that against Humphrey and his wife so the problems faced by foreign companies operating in China. Recently China has been making strides against corruption which is rampant in both the government and business sector. The problem faced by foreign companies operating in China is that they often are treated harsher by Chinese authorities as was seen here. Regardless, Humphrey and his wife are no longer holed up in a Chinese jail and hopefully, this will be the end of the GSK saga.