Alarmed that colleagues were bribing Chinese doctors and giving kickbacks to hospital workers to boost drug sales, an employee at the British pharmaceutical giant GlaxoSmithKline began documenting the alleged crimes in the fall of 2010 and sending detailed notes to the United States Securities and Exchange Commission and the U.S. Department of Justice.

Using an anonymous email address, the GSK employee sent similar packages to regulators in China.

No one responded — for years. 

So in early 2013, the Shanghai-based whistleblower began writing directly to GSK’s board and top executives at its London headquarters, and also contacted journalists at The Wall Street Journal, who then published a lengthy article on June 12. In that story, the paper detailed the anonymous tipster’s allegations, including claims about kickbacks and how the company pushed its epilepsy drug, Lamictal, for unapproved uses, a decision the tipster claimed nearly killed a patient.

Soon after, police raided GSK’s office in Shanghai and arrested dozens of people, including four senior executives. At a press conference in Beijing, prosecutors accused the drug maker of operating like a “organized crime syndicate,” and employing as many as 700 middlemen to systematically bribe doctors and other health professionals with cash and sexual favors. 

The scandal left Glaxo — a $40 billion drug maker — humiliated in one of its fastest-growing markets, and was followed by probes in London and Washington, D.C. The company was slapped with a $500 million fine and the authorities sentenced its top executive in the country, a British national named Mark Reilly, to three years in prison for being the “mastermind” of the conspiracy, and then promptly expelled him from the country.

This was “the biggest fine in Chinese history,” says Huang Yanzhong, a senior fellow for global health at the Council on Foreign Relations, in New York. “It set a precedent for imposing big fines on pharmaceutical firms — foreign or Chinese — involved in bribery or fraud.”

The scandal attracted a lot of attention. But behind the scenes, another troubling tale has emerged — one about the role of the GSK whistleblower.

The company, it turns out, had fired a Shanghai-based employee named Vivian Shi in late 2012, on suspicion that she was the whistleblower. Then, three years later, after the company settled its bribery and corruption case in China, GSK rehired Shi. Some analysts interpreted the move as a sign that the global company recognized that it may have violated whistleblower protection laws that guard against retaliation by employers. 

But now, years after the case was settled in China, The Wire has uncovered evidence that indicates that Vivian Shi was not the author of the whistleblower emails sent before her dismissal in December 2012. In other words, a global corporation with enormous resources and highly paid lawyers not only targeted an employee in an apparent effort to quash a corruption investigation, but it targeted the wrong one.

This reporter has interviewed the original GSK whistleblower, a corporate insider who for 10 years has waged a fierce and protracted campaign to expose wrongdoing at the British drugmaker’s Chinese operations. The person has sent documents, spreadsheets, photographs and even financial statements to the S.E.C., Justice Department, British Serious Fraud Office, as well as GSK’s executives, board, and auditors. And after all these years, this lone whistleblower, residing in China, is still waiting for word from the S.E.C. on a payout.

In this issue of The Wire, we dial the clock back several years, to tell you the story of the real GSK whistleblower, and why the wait to hear from Washington goes on.

IN SEARCH OF THE GSK WHISTLEBLOWER

Back in summer of 2013, when the whistleblower’s allegations first grabbed headlines, I was stationed in Shanghai as a foreign correspondent for The New York Times, and designated to write about the unfolding scandal at GlaxoSmithKline, a drug company best known for a wide range of asthma, cancer, HIV and diabetes drugs, as well as Aquafresh, the toothpaste brand.

Over the course of several years, I wrote about the Chinese government’s prosecution of the GSK case; confessions on state-run television; and how a small travel agency allegedly funneled bribes and sexual favors to doctors (as well as its penchant for document shredding). I also wrote about the arrest of Peter Humphrey, the former journalist and Shanghai-based private investigator who GSK had hired to look into the background and activities of the suspected whistleblower, Vivian Shi. 

But in late 2016, while working on my final story about the case for The New York Times, I made a puzzling discovery. 

I had obtained a huge trove of records about the case, including copies of emails the main whistleblower had sent to regulators and GSK’s top executives in London. And there, in the top portion of some photocopies, I noticed the whistleblower’s digital fingerprints: an email address.

How could I have missed that for so long?

Even before I emailed the whistleblower, I was certain my message would lead to Vivian Shi, since she had been identified in some of GSK’s internal corporate documents as the author of the detailed emails sent to regulators and the company’s offices.

I was almost certain I would not get a response. 

But one came almost immediately. “You have reached who you are looking for,” the GSK whistleblower wrote, responding to my email.

What followed was an email exchange in which this person claimed to have written the GSK whistleblower emails. But no, “I am not Vivian Shi. I have seen many press reports suggesting that Vivian was the one who sent the bribery whistleblower emails from (the gmail account). That is not true. I am aware of Vivian but I am not her.”

I could not be sure, though. The person declined a face-to-face meeting, or to talk by phone. And then, this person vanished, and stopped responding by email. From what little I knew, I deduced that the GSK whistleblower was most likely a native English speaker, since the whistleblower emails were finely crafted, in English.

My article, published in the Nov. 2, 2016, edition of The New York Times, made clear to readers that I could not be sure of the identity of the author of the whistleblower emails, but there were indications that Vivian Shi, a Chinese national who had worked in Glaxo’s government relations office, was not behind the initial email writing campaign.

After the article was published, I placed my GSK documents in storage folders and moved on to my next reporting assignment.  And then, more than a year later, I opened my laptop one day to find an email from an unknown person, and a large file attachment with photographs and documents, including a 973-page report on the GSK case.  

I was back in touch with the GSK whistleblower.

I spoke by telephone some weeks later with the whistleblower, and reviewed the case file, which dated back years. (This was material from the years leading up to 2013). And finally, after a lengthy negotiation for this story, I was granted permission to tell the whistleblower’s story, on the condition that I do not reveal a name or too much detail about the identity, since the individual still fears for his or her safety in China. 

One thing I can say: the whistleblower is Chinese born.

Why is the whistleblower talking now? To “shine some light on some of the darkest corners of the Chinese pharmaceutical industry,” I was told, “and in particular, at GSK China.”

WHAT I SAW AT GSK CHINA

I have no doubt about the identity of the original GSK whistleblower. 

The files I reviewed include the person’s full name, address, identity card number, spouse’s name, and official documents filed with the S.E.C. I have spoken to this person’s U.S. lawyer, and I have also read notes of meetings this person had with the S.E.C., U.S. Department of Justice and special agents from the Federal Bureau of Investigation. 

I also have a photograph of the person standing in front of the glass sheathed headquarters of the S.E.C., in Washington. While none of this is conclusive proof, it is substantial evidence that this is the author of the original GSK whistleblower emails.

The whistleblower’s story, as they explain it, is simple. Bribery was pervasive at GSK’s operations in China. For years, the whistleblower saw that cash payments, or bribes, were being funneled to the country’s low-paid doctors and medical professionals in exchange for more prescriptions. 

There was outrage, the whistleblower said, because “virtually the entire Botox team was even using their personal emails to help conceal their bribery of doctors.”

The GSK employee decided to act. 

With help from a pair of American lawyers, the whistleblower began writing detailed letters to the company, regulators and even outside auditors. The emails were sometimes supplemented by photographs, spreadsheets, internal company memos, corporate presentations and details about secret email addresses used to carry out illegal schemes. The whistleblower claims this was done to avoid running afoul of the U.S. Foreign Corrupt Practices Act, which bars U.S. citizens or people working for affiliates of U.S. registered companies from bribing foreign officials for business interests.

In one email, the whistleblower wrote, “GlaxoSmithKline (“GSK China”) has engaged in illegal marketing and large-scale bribery to sell its products to Chinese hospitals and doctors.” About the cash practices, the whistleblower wrote that there were simple explanations: “Physically handing doctors cash is the most effective, efficient, and favored ‘marketing’ tactic used by GSK sales personnel to win business in China.”

The whistleblower’s favored delivery mechanism was email, sent using a Yahoo and Gmail account.

The timing was prescient. In 2010, the year the whistleblowing effort began, President Barack Obama signed the Dodd Frank Bill, creating a federal law that promised greater investor protections. It included a whistleblower provision, one that barred employers from retaliating against whistleblowers. In addition, the U.S. would offer a reward to whistleblowers who come forward to file claims with the S.E.C. — potential payouts are worth up to 30 percent in a case where a successful prosecution leads to a corporate fine.

And the law did not simply apply to Americans. Citizens of any country could apply for whistleblower status and reap the bounty.

Since the law was enacted, tips originating from China have steadily ranked fourth or fifth globally, on average, with close to 40 a year being filed with the S.E.C. And according to the S.E.C.’s whistleblower annual report, whistleblower payouts have totaled about $500 million over the past five years. (The S.E.C., however, does not disclose details of who receives the payouts.)

The GSK whistleblower began sending material to the S.E.C. in 2010. But according to Reuben Guttman, an attorney at Guttman, Buschner and Brooks in Washington, after the GSK scandal erupted in China in 2013, other GSK whistleblowers emerged and filed claims with the S.E.C. By some estimates, there are now as many as a dozen GlaxoSmithKline claims pending before the securities regulator.

Some time in 2012, after GSK’s China office began hearing about the whistleblower emails, the company undertook an internal hunt for the whistleblower. It fired Vivian Shi for carrying out a “smear campaign” against the company, according to internal corporate documents. 

Four months later, in March 2013, an anonymous email arrived at GSK’s London headquarters, this time with not just allegations of bribery and corruption but with an attached “sex video” apparently showing the company’s China boss, Mark Reilly, and a young Chinese woman — images that the company later concluded were filmed in Reilly’s corporate apartment in Shanghai, by a hidden camera.

The whistleblower told me they were aware of the press reports about a “sex tape” email but had nothing to do with it. (Records reviewed by The Wire show it came from a different email address, not the Gmail address associated with the GSK whistleblower.)

“I didn’t send the sex tape,” the whistleblower said.

The sex tape and GSK’s subsequent investigation and treatment of Vivian Shi — which included hiring private investigators to look into her background and family — reshaped the unfolding GSK scandal. When the authorities raided GSK’s Shanghai headquarters in June and then, soon after, arrested and imprisoned the company’s private investigators, Peter Humphrey and his wife Yu Yingzeng, it seemed like the dramatic and tragic end to a massive corruption scandal.

These developments, the whistleblower said, heightened his or her fears for safety in China. (And Humphrey and Yu later sued GSK in state court in the U.S., saying their business was destroyed by the drug maker’s actions.)

For its part, GSK executives say the company radically restructured its China operations to root out bribery and cash payments, following the scandal.

A spokesperson for GSK, made aware of the contents of this article last week, issued this statement to The Wire. “GSK is committed to operating its business to high ethical and legal standards. All inquiries by authorities into these historical matters have been closed.”

GSK rehired Shi in 2015, a sign that the company may have recognized its earlier actions against her were illegal, and the case retreated from the headlines and global attention. But the case was far from over for the original whistleblower.

THE LONG JOURNEY

In the winter of 2014, at the request of the S.E.C., the whistleblower flew to Washington, D.C., at their own expense, to meet the staff of the S.E.C., and also investigators from the F.B.I. and the Department of Justice. (The whistleblower later returned to the U.S. to meet officers from the U.K. Serious Fraud Office.)

Accompanied by an American lawyer and a language interpreter, the whistleblower offered testimony for a full day. At the time, the case had dragged on for nearly four years, and the whistleblower believed a U.S. settlement was near, as did the whistleblower’s lawyers.

China had already extracted confessions from senior executives. And soon after the trip to Washington, GSK began settling its case with the Chinese authorities. In late 2014, the company agreed to pay a $500 million fine for engaging in fraud and bribery. And near the end of the year, Mark Reilly, the company’s top executive in China, agreed to stand trial and plead guilty to corruption. 

And yet now, nearly a decade after the first whistleblower emails, the case is still winding its way through the American regulatory system. Legal experts say the S.E.C. could decide at any moment on whistleblower payouts, but it’s unclear when or whether they will pay bounties, or simply close the case.

The GSK whistleblower made it clear that he or she is worried that the S.E.C. will claim that the individual had no real impact on the case, and on that basis, attempt to deny a reward.

In September 2016, the S.E.C. announced that GSK had agreed to pay a $20 million fine to settle violations of the Foreign Corrupt Practices Act for what the agency said was the company’s “pay-to-prescribe scheme” in China. In its press release, the S.E.C. said the scheme “involved the transfer of money, gifts, and other things of value to healthcare professionals, which led to millions of dollars in increased sales of GSK pharmaceutical products to China’s state health institutions.”

Last week, a spokesperson for the S.E.C declined comment on this article.

Some attorneys with whistleblower claims before the S.E.C. were stunned by what they considered a meager fine. “The magnitude of the settlement in this case shows a flaw in the S.E.C. enforcement scheme,” said Guttman, who represents former GSK employees who filed claims with the S.E.C. “$20 million is a drop in the bucket for GSK. And you never want to be in a position where a company is paying a relatively small fee for the license to break the law. This has no deterrent value.”

Then came another blow. In February 2019, the British Serious Fraud Unit (SFO), dropped its own long-standing investigation into GSK, saying that after a “detailed review of the available evidence and an assessment of the public interest there will be no prosecution in this case.”

It’s not clear why the SFO would not pursue a case that involved confessions and an admission of guilt. A spokesman for the SFO could not be reached before publication. 

Legal experts say it’s unclear how the S.E.C. decides whistleblower payouts, since there is no obligation to disclose any of the details. 

“There’s so little transparency,” says Guttman, the attorney. “You don’t know how these cases are being investigated. This really warrants congressional oversight.”

In other words, the GSK whistleblower is once again waiting for a response from the S.E.C. After this article was initially published, the whistleblower sent me this statement.

“It’s been a long road. I have lived and breathed this case for nearly a decade now. After the S.E.C. settlement, I filed a whistleblower application and have been patiently waiting for more than three years now for the S.E.C. to finally acknowledge my valuable contribution to bringing the massive bribery occurring at GSK China to light, especially given that I was personally told during my S.E.C.-D.O.J-F.B.I. interview that the big compliance changes at GSK were the result of what I had done.”

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