On Monday 14 May BBC Panorama aired a programme about UK Corporate companies and the way they dodge paying tax.
Unsurprisingly, pharmaceutical giants GlaxoSmithKline were named and shamed by the BBC for using a tax haven at the heart of Europe to save millions in tax.
Glaxo, of course, deny any wrong-doing:
“GSK is very disappointed with this programme which was extremely misleading and lacking in context. Specifically, the programme’s selective use of facts led to a misrepresentation of GSK’s actions and a failure to recognize GSK’s significant UK tax contribution.
"GSK strongly refutes any allegation of wrongdoing. At all times the company proactively disclosed its tax transactions to the relevant authorities and both the UK and Luxembourg tax authorities are agreed that GSK paid all the taxes due."
A short video of the BBC show has surfaced on YouTube, whereas the full half hour exposé can be viewed by UK viewers on the BBC IPlayer located HERE - Sadly, due to contractual obligations, the BBC cannot show this documentary to other countries.
The Global Tax News website has picked up on this story and write:
GSK used interest payments paid on loans from Luxembourg subsidiaries, which, it was said, was effectively taxed at less than 1%, to reduce its UK income tax bill by GBP34m (USD54m). Narrator, Donal McIntrye, added, "The company puts its money into Luxembourg and borrows it back. It just sends money round in a circle and picks up a tax break on the way,"
It's unknown if GSK plan to sue the BBC, one would have thought that if they [GSK] were so cocksure that they had done no wrong then the BBC should be held accountable for what was broadcast.
This isn't the first time GlaxoSmithKline have been involved with allegations of financial shenanigans.
1996: Price Fixing
Fifteen big drug companies formally agreed yesterday to pay more than $408 million to settle a class action lawsuit charging them with conspiring to illegally fix prices that they charged to thousands of independent pharmacies. In the settlement, which is subject to approval by a Federal district judge in Chicago, the 15 companies agreed to pay more than $388 million in cash. One of the defendants, SmithKline Beecham P.L.C. of London, agreed to supply the plaintiffs with a generic version of cimetidine, SmithKline's Tagamet brand ulcer treatment, valued at $20 million, as well as $30 million in cash. [LINK]
1996: Medicad Fraud
In the latest big settlement by a clinical laboratory company of Federal Medicare fraud charges, SmithKline Beecham P.L.C. expects to pay the Government about $300 million this year, without admitting any wrongdoing. [LINK]
1997: Overbilling Private Insurance Companies
SmithKline Beecham P.L.C. has been sued by 37 private health insurers contending that the company's clinical laboratory division overbilled them by hundreds of millions of dollars. [LINK]
2002: Illegally Inflating Prices
The state attorney general sued 18 drug makers and marketers, accusing them of illegally inflating prices and costing the state and consumers tens of millions of dollars. The scheme hurt taxpayers because they finance the Medicaid and Medicare programs that were forced to pay the exaggerated drug prices, Attorney General Mike McGrath, left, said. The lawsuit names Abbott Laboratories; American Home Products; Amgen; AstraZeneca; Aventis Pharma and Hoechst Marion Roussel, both owned by Aventis; Baxter Pharmaceutical Products; Bristol-Myers Squibb; Eli Lilly; Chiron; Dey; GlaxoSmithKline and SmithKline Beecham, which have merged [LINK]
SmithKline Beecham, which merged with Glaxo to become Glaxo SmithKline, has become embroiled in a criminal investigation into the alleged bribing of more than 1,000 German doctors in order to secure orders for the drugs it manufactured in the late 1990s. [LINK]
2003: Payments To Doctors
New York plans to sue two major pharmaceutical companies today, accusing them essentially of paying doctors and pharmacists to choose the companies' drugs over competing medicines.
GSK, of course disputes the claim. But let’s recall, this is the company that has already settled $3.4 billion over transfer pricing issues with the IRS in 2006 (the biggest tax settlement ever), and remains in conflict with HM Revenue & Customs on the same issue for all periods since 1994. [LINK]
...And don't even get me started on Paxil and Avandia!