(Adds GSK declining to comment, UK Serious Fraud Office)
By Adam Jourdan and Kazunori Takada
SHANGHAI, May 15 (Reuters) - GlaxoSmithKline Plc executive Mark Reilly had little inkling he would be chargedwith leading a network of corruption in China's pharmaceuticalindustry, two sources with ties to the businessman and knowledgeof the investigation said.
The allegations against the Briton, who as GSK's China headwas the firm's legal representative in the country, are the mostserious charges ever laid against a foreign national forcorporate corruption in China, lawyers said.
Police said they had charged Reilly and two Chinesecolleagues with multiple offences on Wednesday after a 10-monthprobe found the firm made billions of yuan from schemes to bribedoctors and hospitals.
"The fact that Mark's name was on the list of people chargedwas definitely a surprise," said a source with direct knowledgeof the investigation. The source declined to be named because ofthe sensitivity of the case.
Police findings are usually upheld in Chinese courts,meaning Reilly and the other executives could face decades injail.
GSK's China-based spokeswoman declined to comment onThursday.
Britain's biggest drugmaker said in a statement on Wednesdaythat the allegations were "deeply concerning" and it hoped to"reach a resolution" that would enable it to continue to operatein China, a key growth market for Western pharmaceutical giants.
Reilly, a scientist and accountant who has been with GSK forover two decades, briefly left China after the scandal broke inJuly last year. He voluntarily returned to assist authoritieswith the probe, with insiders saying the understanding was thiswould shield him from charges.
"I've had regular contact with Mark over the past fewmonths. I would think that this state of affairs is a surpriseto him. I don't think he is prepared or thought that he could beculpable," an industry executive in China who has personal tiesto Reilly said.
Attempts to reach Reilly were unsuccessful.
NEXT STEPS
The last major corruption scandal to hit a foreign companyin China involved miner Rio Tinto in 2009,which resulted in four executives including a Chinese-bornAustralian being jailed for between seven and 14 years.
Reilly and two Chinese executives, Zhang Guowei and ZhaoHongyan, are charged with corporate bribery, bribingnon-government officials and bribing business units.
Officials gave no specific details on the amount of bribespaid or how much the company had illegally earned, althoughpreviously they accused the firm of funnelling up to 3 billionyuan ($482 million) to travel agencies to facilitate bribes todoctors and officials.
According to normal process, Reilly should have beendetained as soon as authorities laid charges against him.
Police could not be reached for comment, and the Britishconsulate declined to comment on Reilly's whereabouts. Theindustry executive said he believed the Briton was still inShanghai.
Reilly has probably been barred from leaving China after hisreturn to help with the investigation, lawyers said.
He and other executives, as well as the company itself,could also face charges in U.S. and British courts.
Sources have told Reuters that U.S. authorities areinvestigating GSK for violations of U.S. anti-bribery laws,which forbid U.S. companies from engaging in bribery while doingbusiness abroad. GSK is also under U.S. legal jurisdictionbecause its shares are listed on a U.S. stock exchange.
A spokesman at Britain's Serious Fraud Office said they wereaware of the charges in China.
"But I'm afraid we really can't comment further than that aswe can't comment on potential cooperation with overseas or otherauthorities," he said.
WAKE-UP CALL
The prosecution will now examine the case before passing itto the courts, which could take as little as a month or muchlonger if further investigation is required, lawyers said.
The GSK case is the most prominent of a number of graftprobes that have been launched against global drug firms sincelast year, and authorities are unlikely to risk theinvestigation being overturned in the courts.
"For a sensitive and closely followed case like this, thepolice and prosecutors will have consulted with each otheralready," said Leon Liu, a Shanghai-based partner at law firmMWE China.
Chinese officials visited other international drugmakersincluding Novartis AG, AstraZeneca Plc, SanofiSA, Eli Lilly & C o and Bayer AG last year as part of a broad investigation into the sector,which is rife with bribery between sales staff and doctors.
Legal experts said the GSK case was a wake-up call toforeign companies that thought their top expatriate executiveswere immune from criminal charges as authorities step up acrackdown on corruption ordered by President Xi Jinping.
"There's a notion that only people of Chinese nationalityare going to go to jail here," said Steven Dickinson, aQingdao-based partner with law firm Harris Moure.
"People always say they'll never put a Briton or an Americanin jail. But they will, and this is just that example." (Additional reporting by John Ruwitch in SHANGHAI, KirstinRidley and Ben Hirschler in LONDON; Editing by Stephen Coatesand Jane Baird)
Glaxosmithkline (GSK)
