China: Spectre of Corruption Haunts Huawei

(Beijing) – More than 100 company employees at Huawei Technologies, China’s biggest telecoms equipment maker, have been implicated in allegations of graft, triggering tightened internal scrutiny on its employees and sales agents. FCA - Huawei China

At an internal meeting in Beijing on September 4, Huawei executives highlighted the company’s urgent attempt to fight against corruption in deals involving rebates in corporate businesses.

According to the company, as of August 16, Huawei detected 116 employees on suspicion of corruption in cases which were linked to 69 sales agents of the company. Four employees have been handed over to the judicial system.

Several of Huawei’s agents told Caixin that one of Huawei’s branch heads was detained during a trip, and many of his subordinates are also involved in the case.

“The current figures only refer to cases with detailed evidence,” said one source from Huawei, adding the company has stepped up internal reviews on corrupt activity and promised harsh punishment for misconduct.

Facing lukewarm growth in device sales and business with telecom operators, Huawei has focused on the corporate network business. In 2013, corporate business reported 15.2 billion yuan in revenue, a year-on-year increase of 32 percent.

However, aggressive competition among sales agents in corporate deals and the reward power of sales managers to offer rebates has shaped opportunities for corruption.

A Huawei staffer said corruption usually occurs in giving product rebates to sales agents. Huawei has a complicated rebate system with large gaps in varying rebate levels.

The bigger the rebate, the larger the profit margin for agents, said the source. “To get more rebates, some agents bribe Huawei employees while other employees even ask for a bribe.”

Sources told Caixin that among the 69 agents accused of bribery by Huawei, 53 sent bribes solicited by company employees.

In addition to the corporate network business, other divisions of Huawei are taking more precautions against corruption. Recently, Yu Chengdong, chairman of Huawei’s device department, issued an internal email to his employees warning that some of the department’s staffers had been found taking bribes from agents.

Huawei’s device department has products ranging from mobile phones, tablets to broadband devices and corporate network equipment. In 2013, revenue from device sales reached 57 billion yuan.

Huawei’s total revenue amounted to 239 billion yuan last year, an increase of 8.5 percent from the previous year.

Source: Caixin


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