Two former corporate private eyes have accused GlaxoSmithKline of hiring them under false pretenses to investigate a whistleblower in China and that the move led to their imprisonment, according to a lawsuit filed in federal court.
In their complaint, Peter Humphrey and Yu Yingzeng alleged the drug maker lied about its reasons for hiring the couple in 2013. At that time, Glaxo executives in China asked them to investigate a former employee, Vivian Shi, who was suspected of becoming a whistleblower and disclosing a widespread bribery scheme. Someone already sent details to the Chinese government and Glaxo management in the UK.
However, Humphrey and Yu contend that Glaxo was actually trying to discredit the former employee and cover up the bribery scheme. One reason: In 2012, the company paid a $3 billion fine to US authorities for various illegal marketing activities, but remained under investigation for fraudulent sales practices in China and elsewhere, and could have faced criminal prosecution, according to the lawsuit.
The lawsuit is the latest twist in a long-running saga that sullied the drug maker’s reputation and generated significant attention on the business practices of the pharmaceutical industry in far-flung countries. Glaxo later paid a $492 million fine for a wide-ranging bribery scheme that was designed to boost sales of various medicines.
The couple filed their suit after being convicted in a Chinese court two years ago for illegally purchasing personal information about Chinese citizens, but argue that they were set up by Glaxo. A Glaxo spokeswoman wrote us that “we do not believe this case has any merit and will vigorously defend against the allegations.”
The private eyes, who are married and specialized in probing bribery allegations, claimed that Glaxo officials in China maintained the whistleblower allegations were investigated but unfounded. They offered to investigate the assertions but were refused. Instead, the Glaxo executives expressed concern that Shi was trying to extort and smear the company, and they sought details about her activities.
For instance, Glaxo officials suggested Shi, who headed government affairs in China, had sent a video of Mark Reilly, who was the Glaxo chief executive in China at the time, having sex with his girlfriend to company officials in the UK. The couple, however, charged that Glaxo officials “knew that Shi had powerful, unidentified allies within the Communist Party elite in Shanghai and that it was, therefore, extremely dangerous to investigate her.”
By June 2013, media reports about Glaxo bribes prompted Chinese officials to accelerate their own probe. Humphrey and Yu charged that Glaxo officials asked them to also investigate Chinese government officials, but the couple refused. By July, Reilly warned Humphrey that Shi had “read your report and she will be coming after you.” The lawsuit does explain how Shi received his report about her. It was later determined Shi was not the whistleblower.
In any event, Reilly fled the country the next day, and Chinese authorities raided the couple’s offices. They were arrested in August 2013 in retaliation for the campaign that Glaxo pursued against Shi, according to the lawsuit. In effect, the couple charges they were fall guys for Glaxo and suffered while in jail, where Humphrey developed prostate cancer that worsened due to lack of treatment.
The lawsuit alleges that the couple was treated improperly during their nearly two years of imprisonment. Humphrey, for instance, claimed that he was pressured to sign a confession in order to gain certain privileges and avoid solitary confinement, and both maintained that they were not fed properly.
By comparison, Reilly got off lightly. He later returned to China, was convicted for his role in the bribery scheme, and sentenced to three years in prison, but with a four-year reprieve and ordered deported. Four Chinese nationals who worked for Glaxo were also given prison sentences along with reprieves. Besides paying the $492 million fine to the Chinese government, Glaxo also issued a public apology.
Meanwhile, Glaxo agreed two months ago to pay $20 million to settle charges of violating the Foreign Corrupt Practices Act for what authorities called a pay-to-prescribe scheme in China. As part of the scheme, Glaxo employees allegedly funneled kickbacks through trade groups and travel agencies that planned events.
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