- Chinese smartphone maker ZTE reportedly had an elaborate internal system for bribing officials.
- This is the company President Donald Trump spoke about over the weekend saying he wants to help it “get back into business” after the Department of Commerce implemented a seven-year trade ban over sanction breaches.
- An internal department managed bribes to foreign officials, and sign off was required from several managers including some based at ZTE’s Chinese headquarters, according to a report from Fairfax Media in Australia.
- Fairfax also reported that ZTE and Huawei have been shortlisted for crucial rail and telecommunications projects Australia, despite warnings from the US.
Sanctioned Chinese smartphone maker ZTE, which President Donald Trump wants to help “get back into business”, reportedly had an elaborate system for bribing foreign officials.
Last month the Department of Commerce banned American firms from selling products and technology to ZTE for seven years because the company misled regulators after settling charges for violating sanctions against North Korea and Iran. The firm said it has been forced to pause its main operations because of the order, and Trump tweeted Sunday that he wants to see the situation end.
“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” Trump said. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”
But according to an investigation by Fairfax Media, ZTE not only regularly bribed foreign officials but had an entire department dedicated to managing bribe payments.
ZTE files obtained by Fairfax Media reportedly show $US12.8 million in bribes were paid in 2005 and 2006 to 29 individuals in the West African country Benin. As a result, ZTE reportedly won two contracts for mobile phone networks.
A source told Fairfax Media that the bribery system required sign off from multiple managers within ZTE, including a number at its headquarters in Shenzen.
The payments – to late president Mathieu Kerekou, three of his children, ministers and telecommunications executives – were usually paid in cash, though one did originate from a ZTE-run account. Some bribes were reportedly hidden by the use of doctored or false invoices issued to MR International, which was hired to build telecom infrastructure.
ZTE and Huawei shortlisted for major Australian contracts
Fairfax Media’s investigation also found that ZTE, along with Huawei, another Chinese technology company, have been shortlisted to bid for Telstra’s 5G network and a state transport contract.
In Western Australia, ZTE and Huawei are the only shortlisted bidders for the $US90.6 million rail communications system, which is expected to eventually run a driverless train network.
The findings are extraordinary considering recent developments in the US and Australia concerning ZTE and Huawei, which is also reportedly being investigated by the US for sanctions breaches.
During visit to the US earlier this year, Australian Prime Minister Malcolm Turnbull was reportedly briefed by the head of the National Security Agency and Department of Homeland Security regarding concerns over ZTE or Huawei supplying equipment for a 5G network in Australia.
In February, six intelligence chiefs – including the heads of the CIA, FBI, and NSA – testified they do not use, and would not recommend private citizens use Huawei and ZTE products.
Weeks later Australia’s defence department confirmed it was phasing out the use of the two brands and the Pentagon announced in early May that it has stopped selling Huawei and ZTE phones and modems in stores on its military bases because they “may pose an unacceptable risk.”
Australia also secured a $US100 million project to construct an underwater internet cable that runs from the Solomon Islands to Sydney to prevent Huawei from controlling the project.
In 2012, Huawei was not allowed to tender for Australia’s National Broadband Network (NBN) due to cybersecurity concerns, a decision based on advice from the national security agency, the Australian Security Intelligence Organisation (ASIO).
Read the Fairfax Media report here.
Business Insider Emails & Alerts
Site highlights each day to your inbox.