Before he was detained by police in Shanghai on July 10 in connection with the GlaxoSmithKline bribery investigation, Peter Humphrey warned of the treacherous business environment for foreign firms trying to navigate China's opaque business climate.
"There is one industry that is booming in China like everything else but doesn't often get written about -- it's called fraud," wrote Humphrey, a British consultant, former journalist and past president of the Rotary Club of Beijing, in a 2008 magazine published by the British Chamber of Commerce.
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"It can be in your supply chain, among vendors, distributors, employees and joint venture partners. Or it can be among the people who you use to transact an acquisition or a new partnership or a securities deal," he added. Humphrey's company, ChinaWhys, bills itself as "international business advisors with eyes in China, walking multinationals through the labyrinth of opportunity, risk and unfamiliar cultural environment." But now he has become the first foreign businessman detained in a widening bribery scandal.
It is not clear how Humphrey figures into the investigation of an alleged scheme to funnel millions of dollars in illicit payments to doctors, hospitals and government officials. GSK -- which admitted on Monday that "senior executives" of the drug company "acted outside of our processes and controls which breaches Chinese law"-- acknowledged to the Financial Times that Humphrey had done work for the company, but he has not been named by British embassy in Beijing or the Chinese government.