By Sarah N. Lynch
WASHINGTON (Reuters) – GlaxoSmithKline Plc <GSK.L> will pay $20 million to settle civil charges that it masked bribes to foreign officials in China by disguising them as legitimate travel, entertainment and marketing expenses, U.S. regulators said on Friday.
The pharmaceutical company agreed to settle the case with the Securities and Exchange Commission without admitting or denying any wrongdoing.
In a statement, the company said it had cooperated with the SEC and it had received credit for taking steps to improve its operations, such as changing how sales representatives are paid and stopping the practice of paying healthcare professionals to speak to doctors about the company’s products.
It also said the U.S. Justice Department, which had opened a parallel criminal investigation into the matter, was closing its probe without any action against the company.
The SEC’s $20 million civil settlement with GlaxoSmithKline resolves the latest case to emerge from an industry-wide sweep that started in 2010.
Since then, a number of other companies including Novartis AG <NOVN.S> and AstraZeneca Plc <AZN.L> have also settled similar charges with the SEC.
In the case of GlaxoSmithKline, the SEC alleged that the company’s China-based subsidiary and a China-based joint venture violated internal controls and record-keeping provisions of the Foreign Corrupt Practices Act.
From 2010 through June 2013, the company’s employees and agents bribed officials in order to boost its sales through increases in prescriptions and purchases by hospitals, the SEC said.
The payments came in the form of gifts, travel, shopping excursions and cash, among other things, it added.
“The costs associated with these payments were recorded in GSK’s books and records as legitimate business expenses, such as medical association sponsorships, employee expenses, conferences, speaker fees and marketing costs,” the SEC said.
(Reporting by Sarah N. Lynch; editing by Diane Craft)