In the Matter of GlaxoSmithKline plc (2016)

• Case Name
• In the Matter of GlaxoSmithKline plc (2016)

• Date Filed
• 09/30/2016

• Enforcement Agency
• SEC

• Countries
• China

• Foreign Official
• Employees of Chinese state-owned and state-controlled healthcare facilities

• Date of Conduct
• 2010 to 2013

• Nature of Business
• GlaxoSmithKline plc (“GSK”), headquartered in Middlesex, United Kingdom, is a global provider of pharmaceutical and consumer health products with operations in at least 150 countries, including China.  GSK’s common stock is registered with the SEC under Section 12(b) of the Securities Exchange Act and trades on the New York Stock Exchange.

• Influence to be Obtained
• According to the SEC, from at least 2010 until June 2013, employees of GSK’s Chinese subsidiary, GlaxoSmithKline (China) Investment Co Ltd (“GSKCI”), and a public-private joint venture called Sino-American Tianjin Smith Kline & French Laboratories Ltd (“TSKF”), of which GSK owned a 55% interest, engaged in a scheme to improperly influence Chinese foreign officials in exchange for increased pharmaceutical sales.  Specifically, employees of GSKCI and TSKF allegedly made payments to employees of Chinese state-owned and state-controlled healthcare facilities by way of gifts, improper travel, entertainment with little educational purpose, shopping excursions, family and home visits, and cash.  The SEC claims that the costs associated with these payments were recorded in GSK’s books and records as legitimate expenses, such as medical association sponsorships, employee expenses, conferences, speaker fees, and marketing costs.
  
  The SEC also alleges that the improper practices were pervasive at GSKCI and TSKF and were condoned by regional and district managers.  Moreover, local internal audits and compliance reviews allegedly identified controls deficiencies concerning GSKCI’s and TSKF’s sales and promotional practices, but the results of these internal audits and reviews were allegedly treated as isolated incidents rather than signs of a larger problem.

• Enforcement
• On September 30, 2016, the SEC announced that it had settled an enforcement action against GSK for violations of the FCPA’s books-and-records and internal controls provisions.  According to the cease-and-desist order, GSK agreed to pay a total sanction of $20 million.  The DOJ separately informed GSK that it had concluded its investigation into the matter and would decline to take further action against the company.

• Amount of the Value
• Not Stated

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• Joint Venture; Subsidiary.

• Citizenship of Parent Entity
• United Kingdom

• Total Sanction
• $ 20,000,000

• Compliance Monitor
• No

• Reporting Requirements
• Yes (2 Years)

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 20,000,000

GlaxoSmithKline plc

• Citation
• In the Matter of GlaxoSmithKline plc, Admin. Proc. File No. 3-17606 (Sept. 30, 2016).

• Date Filed
• 09/30/2016

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United Kingdom