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GlaxoSmithKline Sex Tape Pulls Back the Covers on Chinese Corruption

China accused the drug company of spending as much as $480 million and arranging sexual favors from prostitutes to bribe Chinese doctors.

by Max Cherney
Jul 3 2014, 7:10pm

Photo by Ian Wilson

One risk of having sex with your mistress in China is that someone might record a video and send it to your boss.

That's what happened to an executive who was formerly in charge of transnational drug manufacturer GlaxoSmithKline’s billion-dollar interests in China, according to reports of the sex tape that surfaced this week. A whistleblower sent a copy of the video to the company last year along with allegations of bribery against executives in China. The Chinese government also received 23 emails detailing GSK bribery.

According to the Sunday Times, which broke the story, GSK investigated the claims but could not authenticate them. “While some fraudulent behavior relating to expense claims was found, we did not at that time find evidence to substantiate the specific allegations,” a spokesperson said.

GSK hired ChinaWhys — a company run by a British investigator named Peter Humphrey and his American wife, Yu Yingzeng — to determine the source of the sex tape. Humphrey and Yu didn’t learn who was responsible, but Chinese police detained them last summer for illegally collecting the private information of Chinese citizens. After formally charging them, they forced Humphrey to make a confession on a state-controlled television channel. He and his wife remain in custody.

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Following the couple’s detention, authorities last summer accused GSK’s staffers of spending as much as $480 million and arranging sexual favors from prostitutes to bribe doctors in China into prescribing its drugs. The investigation led to corruption charges filed last month against Mark Reilly — the executive who was secretly recorded knocking boots with a female companion. Reilly returned to China in order to address the corruption charges but is now barred from leaving.

Other than the video coming from the whistleblower, there is no clear link between it and the corruption charges — although it’s possible that China’s government might have been involved. Liao Ran, program director for China and South Asia at the anti-corruption organization Transparency International, told VICE News that the Chinese government uses courtesans to gather intelligence — especially when going after high-profile targets such as Reilly.

“Mistresses and concubines are the main anti-corruption informants,” Liao said. “Many party officials and other powerful figures live in environments impossible to infiltrate through other means.”

Reilly’s apartment in China was located within a gated development that was monitored by around-the-clock security. Although some media outlets have referred to his partner in the sex tape as his girlfriend (Reilly is separated from his wife), Liao said that it was possible that she was a government informant.

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China’s interest in GSK and Reilly’s alleged indiscretions are part of a vast anti-corruption campaign launched by President Xi Jinping. The campaign so far has brought down thousands of government officials at all levels. On Monday, General Xu Caihou, a former vice chairman of China’s Central Military Commission, was expelled from the Communist Party and accused of taking bribes in exchange for military promotions.

Caihou rose to prominence under a previous president, Jiang Zemin. Some observers have interpreted Xi’s purge as a dismantlement of Jiang’s old power base, a faction of affiliates known as the “Shanghai Gang.”

Jiang’s successor, Hu Jintao, had a notably softer approach to corruption than Xi.

“He was weak,” Liao said. “His policy was don’t challenge me, and you can do what you want.”

Corruption has long been the status quo in China, particularly since the 1980s.

“There have been three decades of this, now it’s suddenly coming to a halt,” Liao added.

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Graft and misconduct are so rampant at the upper levels of China’s government that once Xi initiated his crackdown — which included a prohibition on official extravagance — demand for luxury goods in the country fell dramatically.

According to Transparency International, three ad hoc ombudsman teams have trekked across China to take note of corruption and report suspicions to the central government. The crackdown has put the millions of people employed in the country’s bloated bureaucracy on notice.

“Almost every week there’s someone getting arrested,” Liao said.

Follow Max Cherney on Twitter: @chernandburn

Photo via Flickr

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