Where are the Controls?: Corporate Ethical Breaches Identified by Auditors

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According to a 2011 internal audit, executives at the British drug maker GlaxoSmithKline were warned about critical problems with the way the company conducted research at its drug development center in China. Potential financial risk and regulatory action are likely due to the sales practices that are currently at the center of a bribery and corruption scandal in China. These actions may extend to its Shanghai research and development center, which develops neurology drugs for Glaxo.

Questions:
1. Which of the audit red flags do you see as the most serious?
2. What is described as the “mortal sin” in the world of drug research?
3. What is the scheme that the Chinese claim Glaxo used to funnel illegal payments to doctors and government officials in order to bolster sales?

Source:
Thomas, K. (2013) Drug Research in China Fall Under a Cloud. The New York Times, July 22 (Retrievable online at http://www.nytimes.com/2013/07/23/business/global/drug-research-in-china-falls-under-a-cloud.html?pagewanted=1&_r=0&hp)

Youtube.com. (2013). The China bribery scandal engulfing Glaxo-Smith-Kline, ABC_BBC_Sky_CNN_CBS News, July 18 (Retrievable online at http://www.youtube.com/watch?v=oTXk1GPt5lc)