I've recently finished reading, for the second time, John Grisham's excellent, 'The King of Torts', a novel that highlights underhand tactics used by the pharmaceutical industry.
In 'Torts' we are introduced to a character who goes by many names. To keep this simple I'll just be referring to him as 'Max Pace.' Pace is hired by pharmaceutical companies to douse the flames when it arises that a drug that has been on the market has serious and life-threatening side effects. The information is purposely leaked by the pharmaceutical companies via Max Pace whose job it is to target prosecuting attorneys in the hopes of a quick and cheap settlement. Pace describes himself as a fireman, someone whose job it is to 'put out the fire.'
The character reminded me a great deal of Peter Humphrey, the outsider who was brought in by GSK China to douse the flames of a whistleblower who, at the time, was threatening to spill the beans on GSK China's illegal activities which included, but weren't limited to:
- Bribing Mark Reily, GSK's head of China Operations, in the form of 'sexual relations' in return for maximizing business for China Comfort Travel (“CCT”). - CCT was an important part of the GSK bribery and promotion scheme because it facilitated a money laundering operation in connection with the bribing of hospitals and doctors who prescribe GSK drugs to patients.
- Funneling 3 billion yuan (US$482 million) through this network to recipients. Receipts were forged for purchases and transactions that never took place, including fake conferences.
- Bribing doctors and other medical staff were to sell GSK products, the cost of those bribes was added to the price of the products that consumers paid for.
Enter the fray Peter Humphrey and his wife Yu Yingzeng who were hired by GSK China to investigate a whistleblower whom they believed was behind a series of emails sent to the company big-wigs, including the then CEO of GSK UK, Andrew Witty. Humphrey and Yu operated ChinaWhys, an International Business Risk Advisory Firm.
Humphrey and Yu were told by GSK China that they believed Vivian Shi, then the company’s government relations head in China, was the whistleblower but they needed proof. The allegations made by the anonymous whistleblower did not concern them.
In a nutshell, it was the job of Humphrey and Yu to create a report on Shi to frame her as a vindictive former employee.
The Sex Tape
Whilst in talks with GSK China, Humphrey, and his wife learned of a sex tape that the anonymous whistleblower had sent in via an email attachment. The sex tape showed Mark Reily and an unnamed woman and was sent to GSK executives along with the corruption allegations. A further 23 emails were sent to Chinese governmental entities throughout China.
GSK told Humphrey and his wife that the allegations had previously been investigated and were false.
According to a court document, during an April 15, 2013, meeting, Humphrey asked GSK officials for copies of the anonymous whistleblower allegations, but GSK refused to provide them. Instead, the document claims, GSK officials stressed that GSK had improved its compliance mechanisms following earlier corruption and other illegal activities that led a DOJ settlement in 2012 ($3 Billion to resolve fraud allegations and failure to report safety data)
The court document. PETER HUMPHREY; YU YINGZENG; CHINAWHYS COMPANY LTD Vs GLAXOSMITHKLINE PLC; GLAXOSMITHKLINE LLC, was filed in United States Court of Appeals for the Third Circuit on 1st January 2018.
More on this 'appeal' later.
In essence, GSK was playing down the allegations, even though they knew them to be true, and using Humphrey and Yu into advancing GSK’s efforts to conceal its bribery activities.
The court document, which I have a copy of, also states:
On June 26, 2013, a GSK employee finally sent two of the whistleblower emails to Humphrey while he was in the United States.
Over the next two days, police raided multiple GSK China offices. Following those raids, GSK senior legal counsel Jennifer Huang asked ChinaWhys to investigate the Public Security Bureau (PSB) and to “prepare an Organic analysis ASAP on the Chinese political regime, particularly on Chinese Communist Party Regime, PSB, and state council with official’s name identified.”
Humphrey and Huang had a phone call that same day, while Humphrey and Yu were in the United States. Huang said she wanted to investigate the PSB “to find out who’s who in the investigation.” At that point, Humphrey became concerned that GSK was seeking now to obstruct the investigation by Chinese authorities and replied that he could not do anything that could be deemed as violating state secrets and thus could only use public information for his research.
On July 1, while Humphrey and Yu were still in the United States, GSK China’s head of business development, Leslie Chang, asked Humphrey to investigate various government organs. Humphrey refused. Then, after returning to China, Humphrey met again with Mark Reilly (the head of GSK China) in a hotel room as Reilly was preparing to flee the country. At that time, Humphrey advised Reilly that ChinaWhys could no longer provide service to GSK.On July 10, 2013, ChinaWhys was raided by the police who told Humphrey, “This was ordered from above. This is related to GSK.”
Around the same time, four senior GSK China executives were also arrested. In response to those arrests, GSK’s global CEO, Sir Andrew Witty, claimed that GSK’s head office in London lacked knowledge of the whistleblower’s allegations and “had no sense of this issue.” This, according to the court document, was untrue.
Humphrey and Yu were arrested for illegally buying and selling private information and detained for almost a year before their trial. During this year of detention and whilst awaiting trial, GSK stated that its China business “hired ChinaWhys in April 2013 to conduct an investigation following a serious breach of privacy and security” (the Reilly sex tape) but that ChinaWhys was “not hired to investigate the substance of the allegations of misconduct made by the whistleblower.” This, according to the 2018 court document, was a misleading statement by GSK and prolonged Humphrey and Yu’s incarceration because British diplomats attempting to intervene on Humphrey and Yu’s behalf did not have accurate information about what had led to their arrest.
One British official involved in those efforts to intervene on behalf of Yu and Humphrey claimed,“GSK were really cagey. They just kept saying it was routine work and kept the information deliberately vague. When we went to the Chinese we were arguing with one hand tied behind our backs.”
On September 19, 2014, GSK PLC issued a Statement of Apology to the People of China in which it announced that “GSK China Investment Co. Ltd (GSKCI) has been identified according to Chinese law to have offered money or property to non-government personnel in order to obtain improper commercial gains, and has been found guilty of bribing non-government personnel.” GSK was fined $492 million for its bribery activities in China in the biggest such penalty ever imposed by a Chinese
court. The then GSK CEO, Andrew Witty, stated that “Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK.” In addition, Mark Reilly, the head of GSK China, was convicted for his part in the bribery scheme. He was sentenced to three years prison with a four-year reprieve and ordered deported, meaning he will never serve his sentence.
Humphrey and Yu. however, were treated less favorably. In August 2013 they were both convicted and imprisoned in China under harsh conditions for almost two years in squalid conditions and crowded jail cells. They were both denied urgent medical attention and were separated from each other Humphrey developed prostate cancer, for which he did not receive proper treatment and as a result, the cancer became life-threatening.
In June 2015, the couple was released from prison.
Humphrey watched the TV coverage of the GSK trial from his Shanghai prison cell. He was shocked by the contrast between his punishment and theirs.
"Suspended jail sentences for three or four of the main culprits when I and my wife had been sentenced to years in prison," he says, adding, "Someone asked me recently why someone like Mark Reilly (GSK China's boss) could be set free and we were in jail. I think it's very simple, we don't have half a billion dollars. That story was about money from the beginning. Money got them into trouble and money got him out."
In November 2016, Humphrey and his wife filed suit against GSK where they sort to seek damages from GSK relating to the loss of their business (ChinaWhys), compensation for the emotional and physical harm and damage to their reputation.
Almost one year later, U.S. District Judge Nitza Quinones Alejandro, threw out the case claiming that a U.S. Supreme Court ruling barred lawsuits filed under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) over injuries that occur entirely outside the United States such as this one involving incidents in China.
“For this reason", he said, "Plaintiffs lack standing to assert civil RICO claims, and these claims are dismissed."
Undeterred, Humphrey and Yu have now appealed this decision, hence the Jan 1, 2018, filing. They are requesting that the United States Court of Appeals reverses the order of the District Court dismissing the Complaint for failure to plead a “domestic injury”.
I covered the Chinagate scandal in great depth when news broke back in 2013. A chronological list of the blogs can be seen below. To date, it's some of the most rewarding research and reporting I've ever done on this old blog of mine.
Remarkably, GSK re-hired the services of Vivian Shi, whom they thought was the whistleblower. Reily, according to MalayMail Online, became part of GSK's senior executive team in London
Bob Fiddaman
BACK STORIES:
Glaxo - The Sex Tape Scandal
GSK's Mark Reilly Accused of Running a "massive bribery network"
I'm Just a Blogger - Here's GSK Served on Prawn Crackers
GSK Hiked Product Prices to Fund Bribery Scam
GSK's Sales Reps Want Their Money Back
GSK's Private Investigator [The Video]
Peter Humphrey's 2012 Presentation - Pharma Bribery
GSK's Chinese Whispers and David Cameron
“GSK were really cagey", Claims Whitehall Official.
Glaxo Hire Ropes & Gray to Delve Into its Chinese Operations.
GSK CHINA - Bribery was Rife 13 Years Ago
Witty Plays Down China Scandal
Witty Witty Bang Wang. The Glaxo Gangbang...Allegedly
Book Your Holidays With GSK Travel
Andrew Witty... I know narrrrrrrrthing
Glaxo - The Sex Tape Scandal
GSK's Private Investigator [The Video]
Peter Humphrey's 2012 Presentation - Pharma Bribery
GSK's Chinese Whispers and David Cameron
"GSK were really cagey", Claims Whitehall Official
Glaxo Hire Ropes & Gray to Delve Into its Chinese Operations
GSK CHINA - Bribery was Rife 13 Years Ago
GSK's Hired Detectives - Day One, As It Happened
So, What Do You Think, Mr Harvey Humphrey?
GSK Plead Guilty For Being "Very Decent"
Glaxo's PI Released From Prison
The Penny Drops for GSK's Private Investigator
GSK's Mark Reilly and the Word, 'Opaque'
Glaxo and Former Whistleblower Suspect Reunite
GSK China Bought Patient’s Silence for $9,000
Lawsuit Alleges GSK's Witty Lied to the Media - Part I
ChinaWhys Vs GSK - The Claims - Part 2
More Woes for GSK as Peter Humphrey Files Suit
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