In re GlaxoSmithKline plc

 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 79005 / September 30, 2016 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 3810 / September 30, 2016 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-17606 
 
In the Matter of 
 
GlaxoSmithKline plc,  
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-DESIST 
PROCEEDINGS, PURSUANT TO SECTION 
21C OF THE SECURITIES EXCHANGE ACT 
OF 1934, MAKING FINDINGS, AND 
IMPOSING REMEDIAL SANCTIONS AND A 
CEASE-AND-DESIST ORDER 
   
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against GlaxoSmithKline plc (“Respondent”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings  
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings, Pursuant to 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth 
below. 
  

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that  
 
Summary 
  
A. These proceedings arise out of GSK’s violations of the internal controls and 
recordkeeping provisions of the Foreign Corrupt Practices Act of 1977 (the “FCPA”) [15 U.S.C. § 
78dd]. 
 
B. Between at least 2010 and June 2013, employees and agents of GSK’s China-based 
subsidiary and a China-based joint-venture engaged in various transactions and schemes to provide 
things of value to foreign officials, including healthcare professionals (“HCPs”), in order to 
improperly influence them and increase sales of GSK products in China.   
 
C. This misconduct was facilitated in part by the use of collusive third parties that 
ostensibly provided legitimate travel and other services.  The funds used for the improper 
inducements were frequently obtained under the guise of, and falsely recorded in GSK’s books and 
records as, legitimate travel and entertainment expense, marketing expense, speaker payments, 
medical associations payments, and promotion expense.  Throughout this period GSK failed to 
devise and maintain a sufficient system of internal accounting controls and lacked an effective anti-
corruption compliance program. 
 
D. The deficiencies in GSK’s internal accounting controls and compliance program 
also led to instances of similar improper conduct in connection with sales in other countries in 
which GSK operates. 
 
 
Respondent 
 
E. GlaxoSmithKline plc is a corporation organized in the United Kingdom.  Its 
headquarters are located in Middlesex, United Kingdom.  GSK’s common stock is registered with 
the Commission under Section 12(b) of the Securities Exchange Act and trades on the New York 
Stock Exchange under the symbol ‘GSK’. 
 
F. GSK is a global provider of pharmaceutical and consumer health care products and 
its products are sold in at least 150 countries. 
 
  
                                                 
1
  The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  
 

 3 
Other Relevant Entities 
 
G. GlaxoSmithKline (China) Investment Co Ltd (“GSKCI”) is operated from 
Shanghai, China.  GSKCI operations include the sale and marketing of pharmaceutical products.  
GSKCI is a wholly-owned indirect subsidiary of GSK. 
 
H. Sino-American Tianjin Smith Kline & French Laboratories Ltd (“TSKF”) is a 
public-private joint venture with Tianjin Zhong Xin Pharmaceutical Group Corporation Ltd and 
Tianjin Pharmaceutical Group Co Ltd.  GSK indirectly owns 55 percent of TSKF. 
 
Facts 
 
I. From at least 2010 to June 2013, employees and agents of GSKCI and TSKF 
engaged in transactions and schemes to corruptly transfer things of value to foreign officials in 
China to increase sales of pharmaceutical products.  The payments were made to increase sales 
through increased prescriptions by individual HCPs and purchases by hospital administrative staff 
responsible for product selection or purchase.  The conduct occurred across all geographic areas 
within the sales and marketing functions and impacted all product lines.   
 
J. The corrupt payments took varied forms, including gifts, improper travel and 
entertainment with no or little educational purpose, shopping excursions, family and home visits, 
and cash.    The costs associated with these payments were recorded in GSK’s books and records 
as legitimate expenses, such as medical association sponsorships, employee expenses, conferences, 
speaker fees, and marketing costs. 
 
K. These improper practices were pervasive among GSKCI’s and TSKF’s sales and 
marketing representatives and were condoned by regional and district managers.  For example, a 
2013 work plan submitted by a sales representative to a regional sales manager described the intent 
to pay, among other things, an HCP RMB 20/box of prescribed product every month, and deliver 
appropriate gifts on each holiday in exchange for a guarantee of more than 40 boxes of prescribed 
product every month. 
 
L. Among the ways employees were able to fund payments to HCPs was the use of 
collusive third party vendors, such as those used to perform planning and travel services for events 
involving HCPs.  Between 2010 and June 2013, GSKCI spent nearly RMB 1.4 billion (USD $225 
million) on planning and travel services.  Test sampling showed that approximately 44 percent of 
the sampled invoices were inflated and approximately 12 percent were for events that did not 
occur. 
 
M. Controls weaknesses also permitted ostensibly legitimate speaker fees to be used to 
improperly influence HCPs.  While GSK’s policies as of 2010 placed limits on the amount of fees 
paid to speakers per hour and by 2012 cumulatively per year, there was no effective system in 
place to ensure the actual identity of a speaker.  Of approximately RMB 106 million (USD $17 
million) spent by GSKI in speaker fees, approximately RMB 14 million (USD $2.2 million) was 
paid to persons whose qualification as an HCP could not be verified. 

 4 
 
N. Marketing programs were another mechanism used to improperly influence HCPs.  
For example, in 2010, GSKCI engaged a local vendor to facilitate a national marketing program 
called the Cold Chain Project.  The project was intended to provide healthcare clinics with tools to 
facilitate the storage and administration of vaccines that required refrigeration.  However, the 
project was instead used to provide HCPs with gifts such as laptops, tablets, and other electronic 
devices.  Over the life of the project, GSKCI paid out RMB 14.6 million (approximately USD $2.3 
million).  The project was created and administered by senior marketing and sales managers of 
GSKCI.  The clinics selected were based upon the potential to market additional pharmaceutical 
products.   
 
O. During this period, local internal audit and compliance reviews identified controls 
deficiencies and evidence of some mechanisms that were used to fund the improper payments, but 
they were treated as isolated instances rather than signs of a larger problem. For example, in 2013 a 
Sales Rep Office Audit was conducted by internal audit with respect to the Guangzhou office.  
Among the problems identified were: 
 
 Issues of falsified POS slips and fake bank statements 
 Issues of fake invoices claimed from hotels and restaurants for sales 
meeting activities.  These invoices came from a local preferred meeting 
agency used by the Guangzhou office. 
 Compliance and New Employee training not timely completed 
 Sales employees’ salaries were significantly driven by commissions that 
could lead to an incentive to improperly inflate sales. The audit sampled 20 
percent of the sales team for the office and found that for 41 percent their 
sales commission bonuses were greater than 50 percent of their income. 
 
P. As early as 2010, internal audit identified problems related to sales and promotions 
staff practices in China.  Among other findings it noted:  
 
[d]uring 2010, several new policies governing commercial 
activities such as grants and donations and sponsorships 
were introduced.  The significant changes, combined with 
the high staff turnover, contribute to an environment where 
many commercial and medical staff do not understand how 
to apply policies or the rationale behind them.  This was 
evidenced by approval of non-compliant activities, a lack of 
clarity on which policy to apply for activities such as grants, 
and weaknesses in documentation to support the legitimate 
intent of activities such as advisory boards and sponsorships 
of HCPs to attend meetings. 
 
Q. As a result of the conduct described above, Respondent violated Sections 
13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78m(b)(2)(A) 
and 78m(b)(2)(B)]. 

 5 
GSK’s Remedial Efforts 
R. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Respondent and cooperation afforded the Commission staff. 
1. During the course of the investigation, Respondent provided prompt and 
regular briefings regarding its own internal investigation in China, and with 
respect to other countries.  Respondent timely conveyed the facts it learned in 
the course of its own investigation, promptly responded to document requests 
by the Commission staff, and provided translations of documents as needed. 
2. Respondent also provided detailed and timely information regarding its 
remedial efforts, enhancements to its compliance program and implementation 
of key initiatives.   
3. Respondent made global changes to its business.  This included the 
elimination of most payments to doctors, including fees to HCPs to speak 
about the Company’s prescription medicines, and altering the compensation 
structure for its sales force to eliminate incentive pay based on the number of 
prescriptions generated.  Respondent enhanced its global risk assessment 
process, strengthened its monitoring and risk assessment tools, and increased 
its global compliance organization.  Respondent also enhanced its third-party 
oversight program, including increasing the number and scope of third-party 
audits, and increased training and education of employees on anti-bribery 
issues. 
Undertakings 
 
 S. Respondent has undertaken to: 
 
1. Report to the Commission staff periodically, at no less than nine-month intervals 
during  a  two-year  term,  the  status  of  its  remediation  and  implementation  of 
compliance measures.  During this two-year period, should Respondent discover 
credible   evidence,   not   already   reported   to   the   Commission   staff,   that 
questionable  or  corrupt  payments  or  questionable  or  corrupt  transfers  of  value 
may  have  been  offered,  promised,  paid,  or  authorized  by  Respondent,  or  any 
entity or person acting on behalf of Respondent, or that related false books and 
records have been maintained, Respondent shall promptly report such conduct to 
the  Commission  staff.    During  this  two-year  period,  Respondent  shall:    (a) 
conduct  an  initial  review  and  submit  an  initial  report,  and  (b)  conduct  and 
prepare at least two follow-up reviews and reports, as described below: 
 
i. Respondent  shall  submit  to  the  Commission  staff  a  written 
report within 180 calendar days of the entry of this Order setting 
forth a complete description of its Foreign Corrupt Practices Act 
(“FCPA”) and  anti-corruption  related  remediation  efforts  to 

 6 
date,  its  proposals  reasonably  designed  to  improve  the  policies 
and procedures of Respondent for ensuring compliance with the 
FCPA   and   other   applicable   anticorruption   laws,   and   the 
parameters of the subsequent reviews (the “Initial Report”).  The 
Initial Report shall be transmitted to Charles Cain, Deputy Unit 
Chief,  FCPA  Unit,  Division  of  Enforcement,  United  States 
Securities    and    Exchange    Commission,    100    F    St    NE, 
Washington,  DC  20549.    Respondent  may  extend  the  time 
period  for  issuance  of  the  Initial  Report  with  prior  written 
approval of the Commission staff. 
 
ii. Respondent shall undertake at least two follow-up reviews, 
incorporating any comments provided by the Commission staff 
on the previous report, to further monitor and assess whether the 
policies and procedures of Respondent are reasonably designed 
to detect and prevent violations of the FCPA and other 
applicable anti-corruption laws (the “Follow-up Reports”). 
iii. The first Follow-up Report shall be completed by no later than 
270 days after the Initial Report.  The second Follow-up Report 
shall be completed by no later than 450 days after the 
completion of the Initial Report.  Respondent may extend the 
time period for issuance of the Follow-up Reports with prior 
written approval of the Commission staff.  
iv. The periodic reviews  and reports submitted by Respondent  will 
likely     include     proprietary,     financial,     confidential,     and 
competitive  business  information.    Public  disclosure  of  the 
reports   could   discourage   cooperation,   impede   pending   or 
potential  government  investigations  and  thus  undermine  the 
objectives   of   the   reporting   requirement.   For   these   reasons, 
among  others,  the  reports  and  the  contents  thereof  are  intended 
to  remain  and  shall  remain  non-public,  except  (a)  pursuant  to 
court  order,  (b)  as  agreed  by  the  parties  in  writing,  (c)  to  the 
extent that the Commission staff determines in its sole discretion 
that  disclosure  would  be  in  furtherance  of  the  Commission’s 
discharge  of  its  duties  and  responsibilities, or  (d)  is  otherwise 
required by law. 
 
2. Certify,  in  writing,  compliance  with  the  undertaking(s)  set  forth  above.    The 
certification  shall  identify  the  undertaking(s),  provide  written  evidence  of 
compliance in the form of a narrative, and be supported by exhibits sufficient to 
demonstrate compliance.  The Commission staff may make reasonable requests 
for  further  evidence  of  compliance,  and  Respondent  agrees  to  provide  such 

 7 
evidence.    The  certification  and  supporting  materials  shall  be  submitted  to 
Charles Cain, Deputy Unit Chief, FCPA Unit, with a copy to the Office of the 
Chief Counsel of the Enforcement Division, no later than sixty (60) days from 
the date of the completion of the undertakings. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer.  Accordingly, pursuant to Section 21C of the Exchange Act, it is 
hereby ORDERED that: 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 
[15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)]. 
 
B. Respondent shall, within 10 days of the entry of this Order, pay a civil money 
penalty in the amount of $20,000,000 to the Securities and Exchange Commission for transfer to 
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.  Payment 
must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying GSK as a 
Respondent in these proceedings, and the file number of these proceedings; a copy of the cover 
letter and check or money order must be sent to Charles Cain, Division of Enforcement, Securities 
and Exchange Commission, 100 F St., NE, Mailstop 5631, Washington, DC 20549.   
 
 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

 8 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a "Related Investor Action" means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 D. Respondent shall comply with the undertakings enumerated in Section III above. 
 
 
 By the Commission. 
 
 
 
       Brent J. Fields 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 79005 / September 30, 2016 

 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 3810 / September 30, 2016 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-17606 

 

In the Matter of 

 

GlaxoSmithKline plc,  

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-DESIST 

PROCEEDINGS, PURSUANT TO SECTION 

21C OF THE SECURITIES EXCHANGE ACT 

OF 1934, MAKING FINDINGS, AND 

IMPOSING REMEDIAL SANCTIONS AND A 

CEASE-AND-DESIST ORDER 

   

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”), against GlaxoSmithKline plc (“Respondent”). 

 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings  

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings, Pursuant to 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth 

below. 

  



 2 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that  

 

Summary 
  

A. These proceedings arise out of GSK’s violations of the internal controls and 

recordkeeping provisions of the Foreign Corrupt Practices Act of 1977 (the “FCPA”) [15 U.S.C. § 

78dd]. 

 

B. Between at least 2010 and June 2013, employees and agents of GSK’s China-based 

subsidiary and a China-based joint-venture engaged in various transactions and schemes to provide 

things of value to foreign officials, including healthcare professionals (“HCPs”), in order to 

improperly influence them and increase sales of GSK products in China.   

 

C. This misconduct was facilitated in part by the use of collusive third parties that 

ostensibly provided legitimate travel and other services.  The funds used for the improper 

inducements were frequently obtained under the guise of, and falsely recorded in GSK’s books and 

records as, legitimate travel and entertainment expense, marketing expense, speaker payments, 

medical associations payments, and promotion expense.  Throughout this period GSK failed to 

devise and maintain a sufficient system of internal accounting controls and lacked an effective anti-

corruption compliance program. 

 

D. The deficiencies in GSK’s internal accounting controls and compliance program 

also led to instances of similar improper conduct in connection with sales in other countries in 

which GSK operates. 

 

 

Respondent 

 

E. GlaxoSmithKline plc is a corporation organized in the United Kingdom.  Its 

headquarters are located in Middlesex, United Kingdom.  GSK’s common stock is registered with 

the Commission under Section 12(b) of the Securities Exchange Act and trades on the New York 

Stock Exchange under the symbol ‘GSK’. 

 

F. GSK is a global provider of pharmaceutical and consumer health care products and 

its products are sold in at least 150 countries. 

 

  

                                                 
1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.  

 



 3 

Other Relevant Entities 

 

G. GlaxoSmithKline (China) Investment Co Ltd (“GSKCI”) is operated from 

Shanghai, China.  GSKCI operations include the sale and marketing of pharmaceutical products.  

GSKCI is a wholly-owned indirect subsidiary of GSK. 

 

H. Sino-American Tianjin Smith Kline & French Laboratories Ltd (“TSKF”) is a 

public-private joint venture with Tianjin Zhong Xin Pharmaceutical Group Corporation Ltd and 

Tianjin Pharmaceutical Group Co Ltd.  GSK indirectly owns 55 percent of TSKF. 

 

Facts 

 

I. From at least 2010 to June 2013, employees and agents of GSKCI and TSKF 

engaged in transactions and schemes to corruptly transfer things of value to foreign officials in 

China to increase sales of pharmaceutical products.  The payments were made to increase sales 

through increased prescriptions by individual HCPs and purchases by hospital administrative staff 

responsible for product selection or purchase.  The conduct occurred across all geographic areas 

within the sales and marketing functions and impacted all product lines.   

 

J. The corrupt payments took varied forms, including gifts, improper travel and 

entertainment with no or little educational purpose, shopping excursions, family and home visits, 

and cash.    The costs associated with these payments were recorded in GSK’s books and records 

as legitimate expenses, such as medical association sponsorships, employee expenses, conferences, 

speaker fees, and marketing costs. 

 

K. These improper practices were pervasive among GSKCI’s and TSKF’s sales and 

marketing representatives and were condoned by regional and district managers.  For example, a 

2013 work plan submitted by a sales representative to a regional sales manager described the intent 

to pay, among other things, an HCP RMB 20/box of prescribed product every month, and deliver 

appropriate gifts on each holiday in exchange for a guarantee of more than 40 boxes of prescribed 

product every month. 

 

L. Among the ways employees were able to fund payments to HCPs was the use of 

collusive third party vendors, such as those used to perform planning and travel services for events 

involving HCPs.  Between 2010 and June 2013, GSKCI spent nearly RMB 1.4 billion (USD $225 

million) on planning and travel services.  Test sampling showed that approximately 44 percent of 

the sampled invoices were inflated and approximately 12 percent were for events that did not 

occur. 

 

M. Controls weaknesses also permitted ostensibly legitimate speaker fees to be used to 

improperly influence HCPs.  While GSK’s policies as of 2010 placed limits on the amount of fees 

paid to speakers per hour and by 2012 cumulatively per year, there was no effective system in 

place to ensure the actual identity of a speaker.  Of approximately RMB 106 million (USD $17 

million) spent by GSKI in speaker fees, approximately RMB 14 million (USD $2.2 million) was 

paid to persons whose qualification as an HCP could not be verified. 



 4 

 

N. Marketing programs were another mechanism used to improperly influence HCPs.  

For example, in 2010, GSKCI engaged a local vendor to facilitate a national marketing program 

called the Cold Chain Project.  The project was intended to provide healthcare clinics with tools to 

facilitate the storage and administration of vaccines that required refrigeration.  However, the 

project was instead used to provide HCPs with gifts such as laptops, tablets, and other electronic 

devices.  Over the life of the project, GSKCI paid out RMB 14.6 million (approximately USD $2.3 

million).  The project was created and administered by senior marketing and sales managers of 

GSKCI.  The clinics selected were based upon the potential to market additional pharmaceutical 

products.   

 

O. During this period, local internal audit and compliance reviews identified controls 

deficiencies and evidence of some mechanisms that were used to fund the improper payments, but 

they were treated as isolated instances rather than signs of a larger problem. For example, in 2013 a 

Sales Rep Office Audit was conducted by internal audit with respect to the Guangzhou office.  

Among the problems identified were: 

 

 Issues of falsified POS slips and fake bank statements 

 Issues of fake invoices claimed from hotels and restaurants for sales 

meeting activities.  These invoices came from a local preferred meeting 

agency used by the Guangzhou office. 

 Compliance and New Employee training not timely completed 

 Sales employees’ salaries were significantly driven by commissions that 

could lead to an incentive to improperly inflate sales. The audit sampled 20 

percent of the sales team for the office and found that for 41 percent their 

sales commission bonuses were greater than 50 percent of their income. 

 

P. As early as 2010, internal audit identified problems related to sales and promotions 

staff practices in China.  Among other findings it noted:  

 

[d]uring 2010, several new policies governing commercial 

activities such as grants and donations and sponsorships 

were introduced.  The significant changes, combined with 

the high staff turnover, contribute to an environment where 

many commercial and medical staff do not understand how 

to apply policies or the rationale behind them.  This was 

evidenced by approval of non-compliant activities, a lack of 

clarity on which policy to apply for activities such as grants, 

and weaknesses in documentation to support the legitimate 

intent of activities such as advisory boards and sponsorships 

of HCPs to attend meetings. 

 

Q. As a result of the conduct described above, Respondent violated Sections 

13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78m(b)(2)(A) 

and 78m(b)(2)(B)]. 



 5 

GSK’s Remedial Efforts 

R. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by Respondent and cooperation afforded the Commission staff. 

1. During the course of the investigation, Respondent provided prompt and 

regular briefings regarding its own internal investigation in China, and with 

respect to other countries.  Respondent timely conveyed the facts it learned in 

the course of its own investigation, promptly responded to document requests 

by the Commission staff, and provided translations of documents as needed. 

2. Respondent also provided detailed and timely information regarding its 

remedial efforts, enhancements to its compliance program and implementation 

of key initiatives.   

3. Respondent made global changes to its business.  This included the 

elimination of most payments to doctors, including fees to HCPs to speak 

about the Company’s prescription medicines, and altering the compensation 

structure for its sales force to eliminate incentive pay based on the number of 

prescriptions generated.  Respondent enhanced its global risk assessment 

process, strengthened its monitoring and risk assessment tools, and increased 

its global compliance organization.  Respondent also enhanced its third-party 

oversight program, including increasing the number and scope of third-party 

audits, and increased training and education of employees on anti-bribery 

issues. 

Undertakings 
 

 S. Respondent has undertaken to: 

 

1. Report to the Commission staff periodically, at no less than nine-month intervals 

during a two-year term, the status of its remediation and implementation of 

compliance measures.  During this two-year period, should Respondent discover 

credible evidence, not already reported to the Commission staff, that 

questionable or corrupt payments or questionable or corrupt transfers of value 

may have been offered, promised, paid, or authorized by Respondent, or any 

entity or person acting on behalf of Respondent, or that related false books and 

records have been maintained, Respondent shall promptly report such conduct to 

the Commission staff.  During this two-year period, Respondent shall:  (a) 

conduct an initial review and submit an initial report, and (b) conduct and 

prepare at least two follow-up reviews and reports, as described below: 

 

i. Respondent shall submit to the Commission staff a written 

report within 180 calendar days of the entry of this Order setting 

forth a complete description of its Foreign Corrupt Practices Act 

(“FCPA”) and anti-corruption related remediation efforts to 



 6 

date, its proposals reasonably designed to improve the policies 

and procedures of Respondent for ensuring compliance with the 

FCPA and other applicable anticorruption laws, and the 

parameters of the subsequent reviews (the “Initial Report”).  The 

Initial Report shall be transmitted to Charles Cain, Deputy Unit 

Chief, FCPA Unit, Division of Enforcement, United States 

Securities and Exchange Commission, 100 F St NE, 

Washington, DC 20549.  Respondent may extend the time 

period for issuance of the Initial Report with prior written 

approval of the Commission staff. 

 

ii. Respondent shall undertake at least two follow-up reviews, 

incorporating any comments provided by the Commission staff 

on the previous report, to further monitor and assess whether the 

policies and procedures of Respondent are reasonably designed 

to detect and prevent violations of the FCPA and other 

applicable anti-corruption laws (the “Follow-up Reports”). 

iii. The first Follow-up Report shall be completed by no later than 

270 days after the Initial Report.  The second Follow-up Report 

shall be completed by no later than 450 days after the 

completion of the Initial Report.  Respondent may extend the 

time period for issuance of the Follow-up Reports with prior 

written approval of the Commission staff.  

iv. The periodic reviews and reports submitted by Respondent will 

likely include proprietary, financial, confidential, and 

competitive business information.  Public disclosure of the 

reports could discourage cooperation, impede pending or 

potential government investigations and thus undermine the 

objectives of the reporting requirement. For these reasons, 

among others, the reports and the contents thereof are intended 

to remain and shall remain non-public, except (a) pursuant to 

court order, (b) as agreed by the parties in writing, (c) to the 

extent that the Commission staff determines in its sole discretion 

that disclosure would be in furtherance of the Commission’s 

discharge of its duties and responsibilities, or (d) is otherwise 

required by law. 

 

2. Certify, in writing, compliance with the undertaking(s) set forth above.  The 

certification shall identify the undertaking(s), provide written evidence of 

compliance in the form of a narrative, and be supported by exhibits sufficient to 

demonstrate compliance.  The Commission staff may make reasonable requests 

for further evidence of compliance, and Respondent agrees to provide such 



 7 

evidence.  The certification and supporting materials shall be submitted to 

Charles Cain, Deputy Unit Chief, FCPA Unit, with a copy to the Office of the 

Chief Counsel of the Enforcement Division, no later than sixty (60) days from 

the date of the completion of the undertakings. 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer.  Accordingly, pursuant to Section 21C of the Exchange Act, it is 

hereby ORDERED that: 

 

 A. Respondent cease and desist from committing or causing any violations and any 

future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 

[15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)]. 

 

B. Respondent shall, within 10 days of the entry of this Order, pay a civil money 

penalty in the amount of $20,000,000 to the Securities and Exchange Commission for transfer to 

the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.  Payment 

must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying GSK as a 

Respondent in these proceedings, and the file number of these proceedings; a copy of the cover 

letter and check or money order must be sent to Charles Cain, Division of Enforcement, Securities 

and Exchange Commission, 100 F St., NE, Mailstop 5631, Washington, DC 20549.   

 

 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 



 8 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a "Related Investor Action" means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

 D. Respondent shall comply with the undertakings enumerated in Section III above. 

 

 

 By the Commission. 

 

 

 

       Brent J. Fields 

       Secretary