Repairing a Bad Barrel? Selective Enforcement of Corruption Statutes in Corrupt Environments

In 2013, Xinhua, the Chinese news agency, announced that Chinese police were investigating the "massive bribery network," organized by British pharmaceutical manufacturer GlaxoSmithKline (GSK), through which it had allegedly pocketed billions of yuan in illicit revenues. A regional court later found GSK liable for bribery and tax fraud, issuing a fine of 500 million Euros--the largest in Chinese history--and sentencing five employees to prison. The company quickly issued a remarkable statement of apology. Chinese regulatory oversight of the pharmaceutical industry had been historically lax; bribery of doctors had become common practice. The Glaxo case is a landmark. What explained the state's strong reaction in this particular case? To construct the case, I conducted a content analysis of articles about GSK appearing in Xinhua, one of the principal means that the Chinese state communicates with the wider world--and a lens with which to understand Chinese government attitudes and values. Xinhua used a variety of rhetorical strategies to defend selective regulatory action against GSK. GSK's record of corruption convictions in other countries, made the company an easy regulatory action. The conviction of GSK was intended to send a signal to pharmaceutical manufacturers (particularly multinationals), that the state intended to significantly curb kickbacks associated with drug sales. Xinhua also recognized that medical bribery constituted a large portion of the government's rapidly growing healthcare costs. This case has clear implications for the understanding of the prevalence of organizational corruption within e environments rife with corruption.