LONDON (Alliance News) - GlaxoSmithKline PLC has sometimes withheld incentive payments to staff in China when it has found potential issues with expenses claims, and has increased its monitoring and checking of claims in the country following bribery investigations by Chinese authorities, a spokesman for the company confirmed Friday.
The company routinely evaluates expense claims to ensure they adhere to Glaxo's policies, and "where we have found potential issues, we are thoroughly reviewing them and have withheld incentive payments where appropriate," the spokesman said.
The company is being probed by Chinese authorities following allegations that senior Glaxo executives had been involved in payments of up to USD500 million to doctors and hospital executives over the past six years. The allegations have led to the arrest of four Glaxo managers, with several more under house arrest. At the time of reporting its full year results Glaxo reiterated that it was too early to estimate the financial hit from the investigations.
After the start of this investigation, Glaxo increased its monitoring of expense claims in China, the spokesperson said.
"We are determined to ensure our processes are being properly followed and will thoroughly investigate where our monitoring has raised potential issues," the spokesperson said.
The staff involved have continued to be paid base salaries. "We are conducting this process with respect for the employees and they are able to discuss their individual financial circumstances with us. If following investigation we find no issue, the incentive payment will be made," the spokesperson said.
The Wall Street Journal, citing a person familiar with the matter, Friday reported that the pharmaceutical giant was cutting employees in China, although it was unclear how many employees have been let go.
Glaxo's Chief Executive Andrew Witty took a hit to his annual bonus for 2013 as a result of the China investigations, although his total pay for the year still rose 63%.
"The ongoing investigation by authorities in China was also considered by the Committee," Chairman of the Remuneration Committee Tom de Swan said in the company's annual report in March. "Both Sir Andrew and the Board are mindful of the impact this issue has had on the reputation of the company. As a result, the bonuses awarded for 2013 were lower than they otherwise might have been."
The scandal led to Glaxo introducing changes to its sales and marketing practices last December, dropping individual targets for its sales representatives. The new practices were brought in to "further align the company's activities with the interests of patients."
Shares in Glaxo were trading up 0.2% at 1,581.97 pence Friday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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