U.S. judge dismisses ex-sleuths' lawsuit against GlaxoSmithKline

By Nate Raymond

(Reuters) - A U.S. judge has dismissed a lawsuit by two former corporate investigators who accused GlaxoSmithKline Plc (GSK) of misleading them into investigating a whistleblower in China, leading to their arrest amid a bribery scandal involving the drugmaker.

U.S. District Judge Nitza Quinones Alejandro in Philadelphia on Friday threw out the case by British investigator Peter Humphrey and his American wife, Yu Yingzeng, who were arrested in 2013 in China after GSK hired them to look into a former employee.

The judge said a U.S. Supreme Court ruling barred lawsuits filed under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) over injuries that occur entirely outside the United States such as this one involving incidents in China.

"For this reason, Plaintiffs lack standing to assert civil RICO claims, and these claims are dismissed," Quinones Alejandro wrote.

A lawyer for Humphrey and Yingzeng declined to comment on Monday. GSK said it was pleased with the ruling.

The lawsuit was filed in November 2016 by Humphrey and Yingzeng, the co-founders of ChinaWhy, a company that according to court papers helped U.S. and European businesses address compliance issues related to anti-bribery regulations.

The lawsuit said GSK hired them in 2013 to investigate an ex-employee in China who Humphrey and Yingzeng were told was fired for expense fraud and was suspected of trying to smear it by sending false emails about bribery to Chinese officials.

Humphrey and Yingzeng claimed they were led to believe the former employee was a disgruntled ex-worker motivated to make false accusations. Their lawsuit claimed that GSK officials knew the allegations of corruption and bribery were not false.

After a GSK unit's offices in China were raided by the Chinese police in June 2013, GSK asked Humphrey to investigate various Chinese government entities to determine who was conducting the probe, according to the lawsuit.

Chinese police subsequently arrested Humphrey and Yingzeng, who were later convicted of illegally obtaining private records of Chinese citizens and sentenced to prison terms of 2-1/2 years and two years, respectively.

GSK in 2014 was fined a record 3 billion yuan ($489 million at the time) for paying bribes to doctors to use its drugs.

In September 2016 it agreed to pay $20 million to resolve a U.S. Securities and Exchange Commission investigation into claims it bribed Chinese officials to boost sales.

(Reporting by Nate Raymond in Boston; editing by Susan Thomas)