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U.S. 'concerned' about being barred from GSK-linked China trial

By John Ruwitch and Adam Jourdan

SHANGHAI (Reuters) - The United States is worried that its officials have been barred from attending the Aug. 7 trial in China of British investigator Peter Humphrey and his American wife Yu Yingzeng after the couple were arrested last year following work they did for British drugmaker GlaxoSmithKline PLC.

The concerns, voiced by the U.S. embassy in Beijing, adds a political dimension to the trial, which could become another thorny issue between the two economic powers, already tussling over areas ranging from cyber security and human rights to Chinese policy in the South China Sea.

"We are concerned that consular officers will not be allowed to attend Ms. Yu's trial in August 2014 despite the fact that under the 1982 bilateral consular convention between our two countries consular officials are permitted to attend such trials," U.S. Embassy spokesman Nolan Barkhouse said on Friday.

The British embassy also said it was "engaging" the Chinese authorities about the need for a transparent and fair trial. China's foreign ministry did not immediately respond to a request for comment.

The trial of Humphrey and Yu is part of a tangled web of probes into drugmaker GSK, which Chinese police accused last year of funneling up to 3 billion yuan ($482 million) through travel agencies to bribe doctors and officials in China.

The couple are on trial for illegally buying and selling private information. The proceedings will be held behind closed doors with consular officials and the couple's teenage son barred from attending, two family friends with knowledge of the matter told Reuters on Thursday.

ChinaWhys, the risk consultancy run by the couple, was employed by GSK in April 2013 to investigate an ex-employee suspected of sending anonymous emails, including the circulation of an intimate video of former GSK China head Mark Reilly with his girlfriend, as well as emails containing allegations of widespread bribery at the British drugmaker.

Three months later, authorities detained Humphrey and Yu. Chinese authorities have not openly made a link between GSK and the case against ChinaWhys.

Reilly has been charged along with other GSK executives of widespread bribery and corruption, and could face decades in a Chinese jail.

"CHEATED"

In a note written last year when he was already in detention, and seen by Reuters on Friday, Peter Humphrey said he felt "cheated" by GSK, adding that the drugmaker had not shared the full details of the bribery allegations against the company contained in the 23 emails from an anonymous whistleblower.

"GSK only asked us to do a background investigation on the suspected whistleblower. They never asked us to investigate the allegations and they did not tell us the details of the allegations," he said in the note.

Humphrey said he had seen the detailed allegations only after the firm had completed its investigation. "I realized we had been cheated because the allegations looked real," he added.

The head of GSK China later revealed that the suspected whistleblower - someone Humphrey described as "very influential" and who he believed to be the actual whistleblower - had obtained a copy of the ChinaWhys report.

"Ten days after GSK told us this, we were arrested and our office was shut down," Humphrey's dictated note said.

GSK said in a statement on Friday that the allegations raised in the whistleblower's emails were "deeply concerning" and that the firm had zero tolerance for any kind of corruption.

It said internal probes had not been able to substantiate the specific whistleblower allegations.

"GSK takes all whistle-blowing allegations very seriously and actively encourages whistleblowers to come forward if they have concerns," the company said.

Corruption is endemic in the Chinese pharmaceutical market, where bribes are often used to smooth business ties with underpaid doctors and hospitals which rely on drug sales for over 40 percent of their revenues.

(Additional reporting by Ben Blanchard in BEIJING and Ben Hirschler in LONDON; Writing by Adam Jourdan; Editing by Miral Fahmy and Ron Popeski)

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