PHILADELPHIA (CN) – Husband-and-wife anti-fraud experts claim in a federal complaint that they wound up in a Chinese prison after GlaxoSmithKline hired them to discredit a whistleblower.
A top download for Courthouse News on Nov. 17, the lawsuit against GlaxoSmithKline comes just over a month after the drugmaker reached a $20 million settlement with the Securities and Exchange Commission. The SEC says GSK’s China-based subsidiaries boosted sales their sales numbers by millions of dollars between 2010 and 2013 by bringing public officials.
In their Nov. 15 complaint, husband-and-wife Peter Humphrey and Yu Yingzeng say this is precisely the issue that GSK labeled a “smear campaign” in 2013 when it hired them to investigate emails that disgruntled former employee Vivian Shi had been disseminating.
GSK knew that Shi was telling the truth, the complaint says, but it hired Humphrey and Yu’s investigations company ChinaWhys to “discredit the whistleblower and cover up their illegal scheme.”
“Plaintiffs’ work for defendants, conducted based on defendants’ false statements, led to plaintiff Humphrey and Yu’s arrest, conviction and imprisonment in China, and the destruction of their business,” the complaint states.
GSK spokeswoman Sarah Spencer has not returned a request for comment.
Ahead of their investigation, Humphrey and Yu note that GSK already faced intense scrutiny related to its 2012 settlement with the Justice Department that carried $3 billion in penalties and damages.
Importantly, this deal included a carve-out for any GSK products marketed “to foreign customers,” according to the complaint.
Humphrey and Yu say this carve-out existed because the Justice Department and the Securities and Exchange Commission had been investigating GSK’s pharmaceutical sales practices in China and other nations since 2010 under the Foreign Corrupt Practices Act.
Another piece of context that GSK knew when it hired its whistleblower investigation, according to the complaint, was that Shi “had powerful unidentified allies within the Communist Party elite in Shanghai and that it was therefore extremely dangerous to investigate her.”
Humphrey and Yu say they launched “a discreet information search on Shi … and [to assess] the potential risks that she could pose to GSK if she were hostile.”
Within a week of GSK receiving the results of this investigation, according to the complaint, the Wall Street Journal reported that GSK was investigating an anonymous whistleblower’s allegations of bribery in China.
That June 12, 2013, article described the tipster as alleging that “Glaxo regularly gave cash to its sales staff in China” between 2004 and 2010, and that some of the money went directly to doctors at Chinese hospitals in return for agreeing to prescribe drugs to patients.
“Some sales staff then submitted fraudulent expenses to account for the funds,” the article continued, according to the complaint.
Police raided multiple GSK China offices on June 27 and June 28, the complaint says.
Humphrey says he met with Mark Reilly, the general manager of GSK China, in early July.
Reilly allegedly told Humphrey that Shi had “read your report and she will be coming after you.”