Zak Mir – GlaxoSmithkline: Who Cares About Bribery, Corruption and Kickbacks In A One Party State?
I suppose that there were a couple of ways that Glaxo could have played the allegations of bribery in China game in recent days. In fact, it would appear that in the end, both strategies have been dragged out and proved forlorn. The first approach was to simply deny any wrongdoing and let China provide evidence of the multinational’s wrong doing, relying on the excuse that it was simply trumped by material typical of a One Party State.
However, the latest from the drugs giant is that it appears to have caved in to the allegations of bribery, corruption and kickbacks, no doubt on the basis that if it were prevented from doing business in China, it would be on the outside looking in as far as one of the largest and possibly most lucrative markets yet to emerge in the world was concerned.
Therefore, it would appear that once again principles of freedom and democracy have had to take a backseat to more practical concerns such as making money. Indeed, it is just as well that I am not CEO of Glaxo as my response in defence of the allegations would have been “when in Rome do as the Romans do”!
Clearl in China, as in many other countries with somewhat rather more esoteric versions of the rule of law that we have in the UK; bribery, corruption, and kickbacks are just a way of life, not just of course in the drugs industry, but especially in the most lucrative business of all… defence contracts.
If the law can be an ass even in the UK, on occasion, and where democracy has held sway for hundreds of years, what legs do the unelected Politburo in Beijing feel they have to stand on in terms of the “law breaking” tactics of institutions such as Glaxo, and who exist to improve the life of millions – at a price of course?
However, it would appear that Glaxo will not be the great crusader in terms of breaking this taboo and will simply squirm like a toad, pay the relevant fines / sacrifice an executive or two and generally apologise to the Chinese authorities in the most demeaning way possible. The problem is though that in the long run, this approach may simply be counter-productive in the sense that it is obvious that the Chinese want to muscle in on their own drugs market for their own domestic pharmaceutical companies, hence nobbling the foreign opposition is their way forward.
What companies like Glaxo, and given the latest developments, Astrazeneca (AZN) are forgetting, is that the emerging markets need them as much, if not more than they do, and a less spineless approach going forward would probably be best for both parties.
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