GlaxoSmithKline’s corruption in China

Here is an interesting and thoughtful piece by David Barboza in today’s New York Times about GlaxoSmithKline’s bribery scandals in China. The piece raises the question of why Glaxo, as a multinational company, had been so incredibly slow to investigate corruption of its own employees abroad.

I can add a few words based on my own experience as a lawyer advising foreign companies seeking to do business in China from 1979 to 2001. Multinationals, in dealing with China, often reflect their national corporate cultures as well as their own distinctive ones. Among the key factors are, at headquarters, the position enjoyed by the legal department in relation to the company’s overall management and, in the field, the extent to which the headquarters legal department seeks to keep informed about and influence what the company’s representatives in China are up to.

Some American-headquartered companies’ general counsel play very prominent roles both at home and in China and nip in the bud any evidence that the company’s staff in China might be engaging in illegal conduct, whether initiated by the staff or in response to the blandishments of local officials. Attitudes among European companies vary, of course, but there has been, and perhaps even today is, a tradition of somewhat greater tolerance for bribery when competing in a foreign business environment, despite legal regulations that ban it. Japanese companies, although notorious for the methods often used in some Asian countries, seem to demonstrate considerable ambivalence in China, frequently smoothing their way with the usual array of gifts and other “friendly” gestures but showing sometimes exaggerated sensitivity at headquarters about avoiding actions that could be interpreted as corrupting in a major way. Japan’s wartime history in China still makes them more sensitive than most other foreign competitors. 

This is a great and important subject worthy of scholarly and journalistic research. Unfortunately, my own experience with multinationals is relatively limited and long out of date.