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Huawei confronts its ‘biggest challenge’ — internal graft

Image courtesy of HuaweiChina’s biggest telecommunications equipment maker has investigated 116 employees and turned four over to prosecutors for alleged graft.

Staffers in Huawei’s consumer and corporate sales units are suspected of taking bribes in China, according to a report Wednesday by the South China Morning Post, citing mainland outlets Caixin and the China Business News.

“The employees reportedly sold Huawei products and services at a discount in exchange for kickbacks from clients,” the report said.

Huawei employees asked 67 China distributors for bribes and 53 agreed to pay, the report said.

At an internal meeting in early September, Huawei management said the bribes amounted to $16.3 million.

Huawei said in a statement it takes “a zero tolerance approach to any form of employee practice that fails to meet the standards we set for ourselves.”

The founder of Huawei, Ren Zhengfei, called “internal graft a challenge bigger than any competitor. The only thing that can stop us is internal graft.”

Richard Yu Chengdong, CEO of Huawei consumer business group, said in July the staffers accused of bribery had been named.

“Momentary greed [only brings] unease, ill-gotten gains can’t be hidden . . . and will lead to jail time and the loss of freedom,” he wrote in a memo to employees.

Huawei is based on the mainland in Shenzhen near Hong Kong.

It’s the world’s third-largest maker of smartphones and accounted for 6.7 percent of global smartphone shipments in the second quarter this year, the South China Morning Post said.

The company generates annual revenues of about $40 billion.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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