* British finance chief banned from leaving since end-June
* Nechelput still working, has not been arrested or detained
* GSK has hired Ernst & Young to review its China operations- source
* Numerous pharmaceutical rivals say not been contacted byChina authorities
By Ben Hirschler
LONDON, July 17 (Reuters) - Chinese authoritiesinvestigating the alleged bribery of doctors and officials byGlaxoSmithKline have stopped the drugmaker's head offinance for China, a British citizen, from leaving the country,a company spokesman said on Wednesday.
The travel restriction on Steve Nechelput was imposed at theend of June, but he has continued to work and remains free tomove around China. Nechelput has not been questioned, arrestedor detained by police, the spokesman said.
GSK has hired auditors Ernst & Young to carry out anindependent review of its systems in China in the wake of thescandal, according to a person familiar with the situation.
It has also sent internal auditors to China as part of aneffort to get to the bottom of what happened, the source added.
On Monday, Chinese police accused GSK of bribing officialsand doctors to boost sales and raise the price of its medicinesin China. They said GSK transferred up to 3 billion yuan ($489million) to 700 travel agencies and consultancies over six yearsto facilitate the bribes.
Britain's biggest drugmaker said it was deeply concerned bythe developments, which it called "shameful".
The action against Nechelput underscores the pressure onGSK, which has come attack in Chinese state media this week.
The British Foreign Ministry said it stood ready to provideconsular assistance to Nechelput.
Asked if London was concerned about the travel restriction,a spokesman said: "If there's an inquiry under way then that's amatter for the Chinese authorities."
Nechelput's boss Mark Reilly, GSK's general manager forChina, left the country for Britain on July 5 to attend what aseparate source familiar with the situation said were routinemeetings.
Police have detained four senior Chinese executives fromGSK, including vice president and operations manager Liang Hong,who told state television this week he had funnelled moneythrough travel agencies by arranging conferences, some of whichwere never held. That money was then used to pay bribes.
With investigations focused on malpractice by a certainnumber of GSK's Chinese employees, one industry insider said itwas likely China wanted Nechelput to remain in the country toprovide financial information, if needed, as inquiries progress.
As a British company, GSK could also face prosecution underBritain's Bribery Act, which came into force in 2011.
The Wall Street Journal, citing people familiar with thematter, said the UK Serious Fraud Office (SFO) was reviewing thebribery allegations GSK faces in China. An SFO spokeswomandeclined to confirm or deny the report.
CULTURE OF PAYMENTS
China has long been known for a culture in which drugcompanies make payments to doctors, since physicians rely onrewards for writing prescriptions to offset meagre salaries.
Those practices, however, are increasingly at odds with acrackdown on corruption under President Xi Jinping, leavingcompanies struggling to toe the line while not losing businessin a highly competitive market.
Similar money transfers to those seen at GSK had been madeby other multinational pharmaceutical companies in China, GaoFeng, head of the economic crimes investigation unit at theMinistry of Public Security, said on Monday.
He did not name any other foreign companies.
When asked, the following major drugmakers said they had notbeen contacted by Chinese authorities in connection with similarbribery allegations: Novartis, Roche, Abbott, Eli Lilly, Bayer, Novo Nordisk, Takeda, Astellas, AbbVie,Merck & Co, Johnson & Johnson and Pfizer.
China is increasingly important for big drug groups, whichrely on growth in emerging markets to offset slower sales inWestern countries where many former top-selling medicines havelost patent protection.
IMS Health, which tracks pharmaceutical industry trends,expects China to overtake Japan as the world's second-biggestdrugs market behind the United States by 2016.
But the industry has come under the spotlight from Chineseregulators.
China announced a nationwide crackdown on the sale ofillegal medicine on Wednesday and said it would tighten industryregulation.
The State Food and Drug Administration said the six-monthcampaign would also target illegal online drug sales and thesale of fake traditional Chinese medicine. It gave no details onpossible changes to regulation.
Separately, GSK said its chief executive Andrew Witty wasstepping down from his role on the board of the UK government'sdepartment for business at the end of 2013, as had been planned.
"His decision is not related in any way to the currentissues the company is facing in China," GSK said.
Glaxosmithkline (GSK)