Azure Global : 09/03/13

Tuesday 3 September 2013

GSK ran hospital bribery programme, say Chinese police

State media report claims wrongdoing was part of GlaxoSmithKline's corporate strategy and not caused by rogue salespeople

Chinese police claim to have found evidence showing GlaxoSmithKline organised a bribery programme targeted at major hospitals at a company level in China, dismissing suggestions that abuses may have been the result of overenthusiastic or rogue sales staff, according to a state media report.

An increasing number of individuals reputedly involved in corrupt payments are said to have made confessions, according to the Xinhua news agency. "As the investigation is moving on, it is becoming clear that it is organised by GSK China rather than drug salespeople's individual behaviour."

GSK issued a statement denying that wrongdoing had been part of a sanctioned corporate strategy. "The issues identified would be a clear breach of our corporate values and we have zero tolerance for any behaviour of this nature."

GSK accepted in July that some of its executives appear to have "acted outside of our processes and our controls to both defraud the company and the Chinese healthcare system". The drug firm is accused of funnelling up to 3bn yuan (£312m) to travel agencies to facilitate bribes to doctors and officials.

The GSK chief executive, Sir Andrew Witty, told investors the company's headquarters had "no sense" of the "shameful" and "deeply disappointing" allegations.

Tuesday's report from the Xinhua news agency quoted Huang Hong, a general manager for GSK in China and one of the detained executives, saying the company had set goals for annual sales growth as high as 25% – 7% to 8% higher than the average growth rate for the industry.

"Huang admitted that the growth rate of sales could not reach such a high number only by the efforts of the salespeople themselves if there was no dubious corporate behaviour," Xinhua reported.

Chinese police reportedly claim to have evidence that GSK China "went through the motions in internal auditing so as not to discover these violations".

The Xinhua report followed an article in the official People's Daily newspaper that quoted Guo Jianhua, head of recruitment at GSK China, saying the company had turned a blind eye to illegality.

"When the problems were exposed, the company pushed all responsibilities to individual employees," Guo said. It was unclear to which problems Guo was referring or if he was one of the detained executives.

Official media routinely get access to detainees in China. Other detained GSK executives have been interviewed on state television.

Bribes in China's drug industry are reportedly commonplace, fuelled in part by low salaries for doctors. A number of other multinational drugs firms are facing investigations similar to the GSK inquiry as whistle-blowers have come forward.

GSK's continuing controversy in China comes after the drugmaker last year reached a $3bn (£1.9bn) deal with criminal prosecutors in the US, pleading guilty to a raft of offences linked to the illegal promotion of drugs. Many of the allegations related to extravagant travel provided to doctors whose business GSK was courting.

Article Source : http://www.guardian.co.uk

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Large retail chains urged to pay levy to help revive high streets

Bill Grimsey, who is leading review into plight of town centres, calls for national chains to 'put something back'

Major retail and leisure chains should pay a one-off levy on UK sales that would raise £550m to help revive Britain's high streets, according to Bill Grimsey, the veteran retail boss, who is fronting a review into the plight of town centres this week.

Every local area should also set up a town centre commission to produce a 20-year vision for their high street, supported by costed, five-year business plans.

Grimsey, former boss of the now defunct DIY chain Focus and the Iceland frozen food chain, is leading a group of eight industry experts who have put together an alternative review to that by Mary Portas, the self-styled Queen of Shops.

He dismissed Portas's effort as "little more than a PR stunt" that simply served as the basis of her "lucrative TV makeover show", as he produced 31 recommendations including changes to business rates and more defined targets for town centre teams, which should be co-ordinated with all local planning decisions.

After sending out 100 freedom of information requests his review found that more than half of the local authorities questioned had no town centre plan in place, despite widespread concerns about the health of high streets.

His report was released as Portas appeared in front of a parliamentary committee on Monday to provide an update on progress since her review, launched nearly two years ago. She defended her efforts amid complaints that high streets continue to suffer during the economic downturn as national chains pull out and supermarkets continue to expand.

Grimsey is calling on national chains with a turnover of more than £10m to invest 0.25% of one year's UK sales from 2014 – about £550m between them – into a local economic development fund to help sponsor startups and new ventures that could entice shoppers back to local high streets.

The fund would dwarf the £18m the government has spent on high street initiatives including 24 "Portas pilots" which each received £100,000 grants to improve their town centres, and nearly 330 town teams which have been handed smaller grants.

"I honestly think the time has come for the big chains to put something back and help redesign the high street," said Grimsey. "What we've seen in a lot of secondary town centre locations is that as the chains move out to more lucrative out-of-town sites they're hollowing out the high street."

Grimsey said a central fund could be overseen by independent trustees that would include some of the biggest contributors.

But some industry groups, including representatives of smaller shops, have dismissed the idea. Michael Weedon, of the British Independent Retailers Association, said: "A one-shot solution to try to solve the problems is not what's needed. We think addressing the longer term issues by rewriting the way that business rates work will enable the high street to change sustainably."

The BIRA's call for change is part of pressure on the Treasury to adapt the property-led rates system to reflect a changing retail environment in which major players are less reliant on physical outlets because of online sales while small businesses on high streets are suffering. The British Retail Consortium has called for a complete overhaul of the system after a string of major retail failures this year.

Helen Dickinson, the BRC director general, said: "There is a growing consensus that the business rates system is no longer fit for purpose, and a complete reform of it would be the single most important step towards reviving our high streets and boosting retail jobs across the country."

Grimsey's group of eight experts also endorsed more short-term ideas such as discounts for businesses moving into empty shops and a freeze on rates in 2014.

The Treasury has so far been silent on the issue of a rates rethink, but the government has doubled small business rate relief for three and a half years.

Article Source : http://www.guardian.co.uk

Business Bank of England Funding for Lending Scheme stalls in first year

Scheme to increase the flow of cheap finance to credit-starved businesses sees no increase in lending in its first year – and overall business lending to small business continues to decline

A flagship Bank of England scheme to increase the flow of cheap finance to credit-starved businesses has resulted in no increase in lending in its first year.

Threadneedle Street said that despite having access to billions of pounds of subsidised credit since the Funding for Lending Scheme (FLS) was launched in the summer of 2012 net lending by banks and other financial institutions taking part in the scheme had fallen slightly.

The results of the Bank's quarterly survey show a small increase in lending during the second quarter of 2013 but the £1.6bn increase was insufficient to make up for the cumulative £3.9bn fall in the previous three quarters.

Under the scheme, UK financial institutions can obtain funding from the Bank of England at lower cost provided they pass on the benefits to households and firms.

When the FLS was launched, ministers were particularly keen to find ways of providing credit for small and medium-sized enterprises (SMEs) but the evidence suggests that the cheap funds have found their way into the mortgage market.

The Bank's overall figures for business lending – including both FLS and non-FLS participants – show that lending to SMEs continued to decline in the second quarter, although less rapidly than previously.

Paul Fisher, executive director for markets at the Bank of England, said: "The FLS is continuing to support lending to the UK economy with a range of indicators suggesting that credit conditions are steadily improving for households and firms, and FLS participants collectively expect net lending volumes to pick up over the remainder of this year."

Richard Sexton, director of e.surv chartered surveyors, commented: "The Funding for Lending Scheme has bathed the mortgage market in cheaper credit, but has left the SME market parched and arid. Although net lending is flat, banks have used the scheme to lower mortgage rates, ease criteria and introduce a wider choice of loans, which has prised open the first-time buyer market and sent house prices skywards.

"Gross mortgage lending has recovered to its pre-financial crisis levels, and looks set to remain strong. House purchase lending is 30% higher than last year and the number of loans could hit 70,000 per month by the end of the year. The scheme has done wonders for the housing market, but the main point of it was to provide credit to SMEs, who are starved of funding and can't grow."

Article Source : http://www.guardian.co.uk