Huawei Discovers Corruption After Internal Investigation

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Over a hundred Huawei staffers reportedly implicated in making and receiving bribes, after CEO admits internal investigation

The boss of Huawei Technologies has admitted that some of his employees are being investigated for allegedly soliciting and accepting bribes.

And the internal investigation at the Chinese network equipment firm has reportedly found four staffers guilty of violating its policies on corruption, according to Reuters, which quoted a source familiar with the matter.

Graft And Bribery

Huawei is based in Shenzhen, China, and is one of the world’s largest telecom equipment suppliers. It also has aspirations to be one of the leading smartphone players, and has about 150,000 employees globally.

The news that a number of its staff are being investigated for corruption was revealed by Chief Executive Ken Hu, speaking to the Financial Times. However, he said it was a “routine investigation” done annually and was “nothing new.” He said it had only attracted media attention this year.

follow-the-moneyThe exact nature of the corruption charges has not been revealed, but a local Chinese media outlet (Caixin) reportedly said last week that a total of 116 employees had been implicated in soliciting and accepting bribes from outside sales agents in exchange for rebates.

“Huawei has a very clear policy on what constitutes acceptable business practice and we expect all our employees to comply fully with these standards,” a Huawei spokeswoman told the Wall Street Journal. “Where evidence is presented that any of our employees has failed to meet those standards, we take appropriate action,” she said.

The firm is also known to have faced official bribery investigations in certain countries.

Security Concerns

But the corruption admission comes at a sensitive time for the firm. For years now it has faced suspicion and investigation by Western governments over national security concerns.

Huawei and its fellow Chinese firm ZTE were famously the subject of a 2012 report from the Intelligence Committee of the US House of Representatives. That committee said that both companies should not be allowed to sell their wares in the US, as they pose a genuine security threat. Huawei eventually withdrew from the US telecommunications market.

Huawei has struggled to overcome Western fears about its ties to China’s People’s Liberation Army (PLA) and the Chinese government. Former Huawei CEO Ren Zhengfei for example worked as an engineer in the PLA, reportedly in the IT research division, but did not hold military rank.

Canada has refused to allow Huawei to be involved with the construction of a government communications network and Australia has also banned the use of the firm’s equipment for its communications infrastructure. This was despite Huawei’s offer to allow Australian and British officials to examine its source code.

That said, it has found a warmer reception in the UK where it established a Cyber Security Evaluation Centre in late 2010, and has also opened a new HQ in Reading as part of a £1.3 billion UK research investment programme. It also recently opened a R&D centre in Bristol.

However, despite this, security concerns have persisted, with the Intelligence and Security Committee last year questioning how the UK checks Huawei equipment. That prompted the Prime Minister’s National Security Adviser Kim Darroch to reveal that the Cabinet Office would review the Huawei operated centre.

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Author: Tom Jowitt
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