China says GSK executives have confessed to bribing doctors

UK drugs maker GlaxoSmithKline under fire after executives in China confess to 'serious economic crimes' to boost revenue

Executives working for the UK drug maker GlaxoSmithKline in China have confessed to "serious" corruption and tax-related offences, China's security ministry said on Thursday, amid a wide-ranging series of investigations into foreign firms operating in the country.

The allegations, which the ministry classified as "serious economic crimes", include the bribing of doctors and officials in order to "open new sales channels and increase drug revenues". The employees are also claimed to have used fake receipts to violate tax regulations, according to a statement on the ministry's website. It did not reveal the employees' identities, how many were detained or when they were questioned.

"After initial questioning the suspects have admitted to the crimes, and the investigation is ongoing," the statement said, adding that police were carrying out investigations in Shanghai, Zhengzhou and Changsha, where GSK employees – whose identities have not been revealed – were detained two weeks ago on charges of fraud.

GlaxoSmithKline executives offered bribes to Chinese government officials, medical associations, hospitals and doctors to boost sales and pricesA spokesman for GSK rejected the charges, saying: "We take all allegations of bribery and corruption seriously. We continuously monitor our businesses to ensure they meet our strict compliance procedures. We have done this in China and found no evidence of bribery or corruption of doctors or government officials. However, if evidence of such activity is provided we will act swiftly on it."

He added: "We are willing to co-operate with the authorities in this inquiry. But this is the first official communication GSK has received from the PSB [public security bureau] in relation to the specific nature of its investigation."

A spokesman for the Foreign Office said: "We are aware of the Chinese investigation and we are in contact with GSK and the Chinese authorities."

The allegations follow similar claims that GSK sales staff in China showered doctors with money, dinners and all-expenses paid trips in promoting its Botox anti-wrinkle treatment.

The Botox allegations, reported in the Wall Street Journal following a tip-off from an anonymous source, centred on claims that GSK marketing staff in China had planned to pay doctors up to $490 (£325) for meeting prescription quotas between 2004-2010.

There is no evidence any payments were made and GSK's spokesman said the company had looked thoroughly at these allegations and had found nothing.

GSK's sales in China account for 3% of the group's turnover, but are expected to grow.

The allegations come as Beijing conducts a series of investigations into foreign companies across an array of industries. European and US-based companies Mead Johnson, Nestle and Danone have cut their infant milk formula prices in recent days amid a major government investigation into alleged price fixing. Earlier this year Chinese media targeted Apple and Volkswagon in scathing consumer rights investigations.

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

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Shell names Ben van Beurden as new chief executive

Dutch executive will replace Peter Voser, who is leaving to spend more time with his family and a 'change in lifestyle'

Royal Dutch Shell has named Ben van Beurden as its next chief executive from 1 January 2014.

He will succeed Peter Voser, who will leave at the end of March next year after 29 years with the Anglo-Dutch energy giant.

Van Beurden, 55, joined Shell in 1983 and has held a number of technical and commercial roles, working for the company in the Netherlands, Africa, Malaysia, the US and most recently the UK.

Since January the Dutch national has been downstream director, and has regional responsibility for Europe and Turkey.

Ben van Beurden joined Shell in 1983 and has held a number of technical and commercial rolesShell's chairman, Jorma Ollila, said: "Ben has deep knowledge of the industry and proven executive experience across a range of Shell businesses.

"Ben will continue to drive and further develop the strategic agenda that we have set out, to generate competitive returns for our shareholders."

Ollila added that the appointment had been made after a "comprehensive assessment" of both internal and external candidates.

Shell said in May that Voser would retire in the first half of 2014. Voser, 54, said that he was leaving to spend more time with his family, and for a "change in lifestyle".

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

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Payouts to former Tesco boss Sir Terry Leahy since retirement top £8m

Former CEO has received two tranches of three-year-performance payouts, despite doubts about his legacy

Sir Terry Leahy, the Tesco chief executive who led the supermarket group for 14 years before retiring two years ago, has received almost £8.5m in performance-based payouts since his departure.

The payments, revealed by a Guardian analysis of share awards no longer disclosed in Tesco annual reports, comes against a backdrop of writedowns, profit warnings and mounting criticism of Leahy's strategic legacy. Last year the company revealed its first profits fall in two decades; Fresh & Easy, Leahy's foray into the US, is being scrapped at a cost of £1bn; and £800m has been wiped off the value of the land bank built up by the former chief executive.

The Guardian study found Leahy had received two tranches of three-year-performance payouts worth £2.95m since departing. Tesco's remuneration committee, chaired by Stuart Chambers, has judged the performance targets to be met, or partly met.

In addition, shares worth £5.47m have been released to Leahy from Tesco's "executive incentive scheme" since his departure. These were deferred annual bonus rewards, held by the company for three years before being released to executives. In Leahy's case, however, the release schedule was accelerated because of his departure.

These rewards were not assessed on performance criteria, but the final batch were subject to a "clawback" clause, designed to prevent payments for failure. However, Tesco said clawback was not relevant to Leahy payouts as it was only triggered by a "material misstatement" in Tesco's accounts.

The bulk of the £8.42m in performance bonuses received by Leahy since leaving were paid out between February and July 2012. During that period the company was still reeling from a shock January profits warning that wiped 16%, or £5bn, off the share value of the group in one day. It was reportedly the biggest fall in the stock since Black Monday, during the stock market crash of 1987.

Terry Leahy, former CEO of Tesco. His tenure included the failure of the supermarket group's foray into the US, Fresh & Easy.Shares have recovered some ground , but the stock is still 16% below the price when Leahy departed in March 2011. Meanwhile, over the same period, the wider FTSE 100 index has climbed 6.8%.

Leahy also took with him an £18.4m pension pot when he stood down. In addition he held options over almost 7m shares – all now unlikely to produce a windfall because of the share price slump and the scrapping of Fresh & Easy.

A Tesco spokesman confirmed the Guardian analysis of post-retirement performance payouts to Leahy was accurate. "These awards were made during Terry Leahy's time as Tesco chief executive," he said. "They were awarded and vested in line with the performance criteria set for them. No new awards will be made to Terry Leahy."

In its latest annual report Chambers said the remuneration committee had strengthened performance criteria "to ensure that they remained motivational for management while still representing long-term value creation for shareholders".

The full extent of the re-evaluation of Leahy's legacy was laid bare at the supermarket group's annual shareholder meeting last week when his predecessor Lord MacLaurin, attending as an ordinary shareholder, delivered a swingeing attack from the floor.

"I think you would probably agree with me that when you judge the performance of a chief executive, you not only judge the performance of his day-to-day operation, but you also have to judge his legacy and I think we're all very sad to see the legacy Sir Terry Leahy has left," he said.

MacLaurin later told the Guardian Leahy had "lost the plot", and that the US venture was a "disastrous" enterprise he had counselled against – even though it was to be run by his son-in-law Tim Mason.

He added: "It's also unforgivable that he [Leahy] took money out of the UK business and allowed it to flounder when our rivals were catching up and expanding."

Leahy's successor Phil Clarke – who still occasionally takes informal soundings from MacLaurin on Tesco business – has shied away from direct criticism of his immediate predecessor. However, he has said "the strategy wasn't delivering", claiming Tesco had been "running up the down escalator" with its focus on land purchases.

"Space growth is too fast. More very big stores aren't the answer any longer," he said last April. "Customers are moving faster to smaller stores and to the internet." He promised to "strike a better balance between growth and returns for shareholders".

Two years ago Leahy had appeared to retire on a high when he was feted by outgoing chairman David Reid as "undoubtedly one of the leading businessmen of his generation … [who] has put in place a strategy which can secure the progress of Tesco for years go come."

Former Asda boss Allan Leighton, for a long time an arch rival, also paid tribute. "The test of all great leaders is the legacy they leave. Terry Leahy inherited a company that was the best food retailer in Britain … He has made it into the best food retailer in the world."

No one appeared more sure of Leahy's achievements than himself. "In every business the chief executive wakes up in the morning wondering where the growth will come from," he reflected in valedictory remarks. "And we have answered that question at Tesco."

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

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Queen scores record profit from booming London property

The Crown Estate - owned by the Queen - on Thursday said it made record profit in the year to March, thanks to the strong performance of its central London properties.

Crown Estate's 5.2 percent rise in profits to 252.6 million pounds gives the Queen a 38 million pounds 2014/15 payout, pegged at 15 percent of the total by a 2012 law designed to link her income to the UK's economic health.

The rest of the profits go to the Treasury. Chancellor George Osborne on Wednesday detailed 11.5 billion pounds of spending cuts.

Owner of wind farms and most of Britain's sea bed along with its Regent Street properties, the company has outperformed the wider economy due to strong overseas interest in London property and the UK's growing reliance on green energy.

"We are proud that another record Crown Estate performance will again make a strong contribution to the nation's finances," said Chairman Stuart Hampson. The company's property portfolio is now worth 8.1 billion pounds.

The Queen - whose payout rose 20 percent to 36 million this year - was previously paid by taxpayers through an allowance set by parliament and other government grants.

It is not allowed to borrow in capital markets and has formed joint ventures with overseas funds to finance its redevelopment plans. In May, it signed a 320 million pound deal with Oxford Properties, owned by one of Canada's largest pension funds, to redevelop London's upmarket St James's Market district.

The Queen, who celebrated the 60th anniversary of her coronation earlier this month, uses her salary mainly to pay the royal household's staff as well as items such as laundry, stationery and official functions.

The Crown Estate belongs to the reigning king or queen but its properties cannot be sold by the monarch. King George III ceded its profits to the government in 1760.

Article Source :http://uk.reuters.com

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