GSK Sued by Former Private Investigators
Two former private investigators, the British-Chinese husband and wife team of Peter Humphrey and Yu Yingzeng, have filed suit against GlaxoSmithKline (GSK) in a US district court. They claim the UK’s largest drugmaker hired them in 2013 to investigate a whistleblower who had accused them of bribery, but misled them. A string of misinformation, they said, ultimately led to their conviction in a Chinese court on charges of illegally obtaining private records of Chinese citizens.
Humphrey and Yu said they were arrested by authorities in a raid on their Shanghai home, during which all of their files were confiscated, and later in detainment were subjected to a harsh interrogation. In 2014, they were found guilty and spent two years in prison before being deported. The couple are seeking damages of an undisclosed amount for lost business and for physical and emotional stress suffered while in the Chinese prison, where they claim to have been denied fresh air and proper medical treatment. They allege also that the conviction destroyed their profitable China due diligence business.
A GSK spokesman told US news media the company believes the case has no merit and said it plans to “vigorously defend against the allegations.” According to the former investigators, GSK wanted them to dig up compromising information on a suspected whistleblower, Vivian Shi, who was fired from her job as the drugmaker’s government relations officer in 2012.
In the lawsuit, the couple contend they were hired even though the company knew the charges against Shi were false. They said the former GSK manager – who was later rehired – had ties to the Chinese communist party and that the investigation of her put them in the spotlight. Humphrey and Yu claim they were also asked by GSK to track down the source of a sex video involving the company’s former China head, Mark Reilly. The video had been sent to authorities along with allegations that the drugmaker “pitched drugs for unapproved uses.”
To settle charges that it gave kickbacks to doctors and hospital workers who prescribed its drugs, GSK paid nearly $500 million.
A Chinese court also sentenced Reilly and four other senior executives to two to four years in prison, but the former head of the Chinese business was given a suspended sentence and deported. He no longer is employed by GSK. Last month, the UK drugmaker agreed to pay $20 million to settle civil charges brought by the US stock market regulatory authority Securities and Exchange Commission that alleged it disguised bribes to foreign officials in China as legitimate travel, entertainment and marketing expenses.
The US has jurisdiction in such matters as it subjects major pharmaceutical producers to the Foreign Corrupt Practices Act, barring companies from bribing foreign officials to gain or retain business. Since the Chinese affair, the British drugmaker has revised its global marketing organization, implementing reforms such as eliminating quotas for sales managers. The company has even won rewards for corporate responsibility.