Chinese Police Insist GSK Paid Bribes

British drugmaker, GlaxoSmithKline Plc channelled bribes to Chinese officials and doctors through travel agencies for six years to illegally boost sales and to raise the price of its medicines in China, police said on Monday.

Four senior Chinese executives from GlaxoSmithKline had been detained, said Gao Feng, head of the economic crimes investigation unit at the Ministry of Public Security.

Since 2007 the company had transferred as much as 3 billion yuan (323.5 million pounds) to more than 700 travel agencies and consultancies, Gao told a news conference. He did not make clear how much of this money was spent bribing officials and doctors.

Last week the Ministry of Public Security said GSK executives in China had confessed to bribery and tax violations.

Until Monday, Chinese authorities had released few details on the probe into Britain's biggest drugmaker, one of a string of investigations into foreign firms and their pricing practices in the world's second-biggest economy, reports Reuters.

"We have sufficient reason to suspect that these transfers were conducted illegally," Gao said.

"You could say the travel agencies and GSK were criminal partners. Among the partners, GSK was mainly responsible. In a criminal organisation there is always a leader."

GSK officials were not immediately available for comment on Monday. The company has previously said it had found no evidence of bribery or corruption in China, but added it would cooperate with the authorities. It has said it was only told about the investigation in early July.

The detained executives include Liang Hong, vice president and operations manager of GSK (China) Investment Co Ltd and Zhang Guowei, the company's vice president and human resources director, the official Xinhua news agency reported.

It was unclear if any of the executives had legal representation.

Chinais an increasingly important country for international drugmakers, which are relying on growth in emerging markets to offset slower sales in Western markets where many former top-selling medicines have lost patent protection.

IMS Health, which tracks pharmaceutical industry trends, expects China to overtake Japan as the world's second biggest drugs market behind the United States by 2016.

The charges of bribery make the GSK case the highest profile corporate investigation in China since four executives from mining giant Rio Tinto Plc were jailed in March 2010 for taking bribes and stealing commercial secrets.

Gao gave no specific examples of how the bribery involving the GSK executives worked in practice. He said there were also instances of "sexual bribery", although he did not elaborate.

The official People's Daily newspaper said GSK collaborated with travel agencies to funnel bribes to doctors and officials by creating fake "conference services" as expenditure for GSK in order to misappropriate funds, some of which would then be spent on bribes.

GSK supplies key products such as vaccines in China, as well as drugs for lung disease and cancer.

dailytimes