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* Three ex-GSK staff seek labour arbitration in Shanghai
* Panel to hear case on Thursday
* Plaintiffs seek payment of unpaid expenses used as bribes
By Li Hui and Adam Jourdan
BEIJING/SHANGHAI, July 16 (Reuters) - Three former Chineseemployees of GlaxoSmithKline PLC, which is embroiled ina long-running corruption probe in China, are seekingcompensation for illegal dismissal from their jobs, a lawyerrepresenting them told Reuters.
The plaintiffs are seeking two months' pay for each year oftheir employment from Britain's biggest drugmaker for dismissingthem between April and May for expenses that were "not compliantwith company regulation," Shanghai-based Liu Feng said.
They are also seeking reimbursement for unpaid expenses, thelawyer added. Some former sales staff at GSK were laid off withunpaid expenses, part of which were used to pay doctors andhospital staff with approval from their managers.
In some cases, the unpaid expenses were worth more than200,000 yuan ($32,200), according to Liu.
The labour dispute arbitration committee in Shanghai'sHuangpu district will hear the case on Thursday.
A similar labour arbitration case filed by a former GSKsalesperson was heard in the central province of Henan in May.That plaintiff, who did not want to be named, said by telephonethat the decision would be issued soon.
While any compensation GSK could end up paying will berelatively minor, it is another headache for the drugmaker andcould further tarnish its reputation in the Chinese market.
EXECUTIVES ARRESTED
Chinese police in May charged Briton Mark Reilly, the formerhead of GSK in China, and two Chinese executives for allegedly orchestrating a widespread network of bribery to promote salesin the biggest corruption scandal to hit a foreign firm in Chinasince 2009. Prosecutors are reviewing the case.
"The workers think the company is very dishonest and itsattitude abominable. They are very dissatisfied with thecompany's actions," Liu said in a telephone interview.
In an email to Reuters, a GSK spokesman in China declined tocomment on individual cases. But he said that a "single digit"number of Chinese ex-employees, who had been dismissed becauseof issues related to expenses, had brought cases against thefirm through labour arbitration channels.
"We have zero tolerance to expense fraud, and where we havefound potential issues, we have thoroughly reviewed them andtaken disciplinary action including dismissal whereappropriate," he said.
He declined to comment further on the allegations from theex-employees about GSK's conduct.
Liu said about two dozen other former GSK staff hadcontacted him about filing similar cases, but they were waitingto see the outcome of the Shanghai case.
"My expenses were approved by my manager ... but they aresaying it was a personal action not a company one," said one ofthe plaintiffs, speaking on condition of anonymity.
The same plaintiff added that, during recent dismissals, GSKurged some China employees to resign and told them that if theydid not, their contract would be terminated and the companywould give them a bad reference reflecting problematic expenses.
SMALL PROPORTION
GSK has declined to specify the number of staff that weredismissed as result of a crackdown on illegal expenses, but asource familiar with the matter told Reuters that it was a verysmall proportion of the company's total workforce in China ofaround 7,000.
GSK is facing the biggest corruption scandal to hit aforeign company in China since the Rio Tinto affair in 2009, which resulted in four executives, including anAustralian, being jailed for between seven and 14 years.
The allegations against GSK have damaged its reputation,thrown its China management team into turmoil and forced it tochange its China business model, although the firm says headoffice had no knowledge of the alleged wrongdoing.
China is a key growth market for large drugmakers, which arecounting on its swelling middle class to offset declining salesin Western countries.
China is set to be the second biggest pharmaceuticals marketbehind the United States within three years, according toconsultants IMS Health.
But bribery between sales staff and doctors is believed tobe rife in the world's second biggest economy, and it remains tobe seen whether the GSK case will be a one-off or the first of abroader campaign to clean up the Chinese health sector.
Other large international drugs manufacturers including NovoNordisk A/S, AstraZeneca Plc, Sanofi SA, Eli Lilly & Co and Bayer AG werealso visited by Chinese officials in 2013 as part of a broadinvestigation into the business. ($1 = 6.2035 Chinese Yuan) (Editing by Kazunori Takada and Mike Collett-White)
